Choosing A Good Channel Partner
Your Product Channel is Key to Your Success
When the customers discover your product or service, handling all the inquiries, support, contracts, and shipping can be a tall order. It is definitely time to look for a channel partner to expand your business and make sure customers are kept happy.
The type of channel you choose will depend on what it is you are selling. If you are selling a software product, system, or chip that can be held in inventory, then you will want a partner who can stock your product for ready distribution. If your end customers are businesses, then you will want a distributor who focuses on B to B sales. If your end customers are consumers, then your channel will be stores such as Frys or Best Buy, and web-based retailers.
In the semiconductor, automotive parts, and component sales arena, a two-tiered approach is used. At the top of the chain is a manufacturers representative who acts as an extension of your direct sales force. The next tier is your stocking distributors, who are managed by the representative.
In the systems space, distributors stock the product and form the first tier. The second tier is formed of resellers, who place orders with distributors in a JIT fashion.
Your channel model should form a solid section of your Business Plan, and should detail each tier as well as prospective partners you plan to engage. Whichever channel model you choose to pursue, it is crucial that you select your partners carefully.
If you are a small company and working to develop a brand, it helps to sign a well-known channel that can help you gain validity in your market. Be sure to get your logo added to their line card as soon as possible, and create a well-written press release announcing your relationship. The down side of using a larger partner is that you will be competing against other, larger companies for their "mindshare". Be sure to stay in front of them, and help them with superior collateral and sales tools.
Choosing a smaller partner will have its benefits in terms of "mindshare", and many smaller companies will make you their "bread and butter". I once had a one-man rep firm outperform a firm of five!
If you choose a store - retail or web-based, you will need to create a stocking plan. Be sure when you construct the contract that you list a minimum stocking amount that your partner must order to ensure customer's aren't disappointed.
The key thing to consider when looking at ANY channel partner is their reputation in the marketplace. Talk to their existing customers as well as principals to make sure that they handle issues professionally, and in a timely manner.
Another key point is to make sure that if they are a representative who will act as an extension of your sales force they carry NO competitive products. This will dilute your brand, and create confusion with your customers.
Make sure you have good "chemistry" with your new channel partners, and that you have constructed an airtight contract. Use a good attorney, and make sure you have indemnification provisions as well as detailed commission and stocking plans.
Create a good "kick-off" plan, have a party or dinner to raise excitement between your company and your new partner. Be sure to have a training session beforehand so that your partner knows as much as possible about your product at "kick-off".
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