Trade Relation

Channel Partners

Overview

An effective reseller program should help you and the dealer build the overall sales category while building sales.

Many organizations sell through some form of “channel partner,” such as a distributor, dealer, or independent sales or service agent. Some dealer or distribution organizations may use independent agents or representatives as well. For our purposes, we’ll refer to all such organizations collectively as “channel partners” or “resellers.”

The key to targeting channel partners and the people they employ is to remember: These people work for their own organizations or for an organization other than yours – they are not employees of your company. Further, they likely represent other companies with which your organization competes and which have their own marketing and management strategies to get them engaged and maximize their performance.

Bottom line: A channel partner and its people will generally be driven to do what is best first for their own organization, and not necessarily what your organization wants them to do.

What generally is most important to a channel partners is to make money, so incentive programs that target channel partners should help that company do so in a way that is convenient for the channel partner and which recognizes its desire to satisfy its own customers and bottom line.

Resellers are on the front lines of selling your company’s products and services, but they are doing so only to the degree that it is profitable or otherwise beneficial for them to do so. Therefore, the first steps in developing an incentive program targeting resellers involve:

• Identifying channel-wide trends—what companies in your business do the best job engaging resellers, and what is it they are doing?

• Understanding individual partner requirements—what’s in it for the reseller to sell your product or service or participate in your incentive program?

• Assessing the current level of partner commitment and loyalty to your brand—how does your product or service measure up with your resellers and why?

• Identifying specifically who within partner organizations can influence the sale of your product or service.

The ultimate rewards to the sponsors of a reseller incentive program can include increased sales, increased mindshare, and greater loyalty, based on the latest research on incentive practices by The Incentive Federation. This section of Incentivecentral.org provides the information and resources your organization needs in order to reap the rewards of a successful channel partner or reseller incentive program.

Facts and Figures

Some 49 percent of all companies surveyed in the 2005 Incentive Federation Survey of buying practices make use of dealer incentive programs. Increasing or maintaining sales, creating new markets, and gaining a larger share of market are common goals for reseller incentive programs.

Types of Resellers

Resellers come in many shapes and forms, and the nature of your business relationship with your resellers will say a lot about how to design your program. Resellers include:

• Distributors who take the billing for the products or services they sell to other companies and often warehouse it prior to sale or delivery.

• Dealers, who often buy from distributors or directly from manufacturers, and who sell products or services directly to consumers or businesses.

• Agents and independent representatives, who usually sell to distributors, dealers, or end users and who receive a commission from the companies they represent. In some industries, exclusive agents are the norm; in others, exclusivity is rare.

Resellers or channel partners