The idea of partnering with third parties to increase a business' reach and expand their sales network isn't new, but the types of channel partner programs we see today are very different from the typical brick-and-mortar sales rep asking the store owner to resell their product.
Even though software was once sold on disks and distributed via a network of physical channel partners, the landscape has changed dramatically in the past decades. Today, you're much more likely to see even consulting firms offer compelling partner programs.
Yet the definition of channel partner remains the same:
"A company — such as an affiliate, referrer, or reseller — that partners with another company to market or sell their services or products."
It's a clear definition that includes 3 types of channel partners. Let's look at each of these to better understand how they can help a company like yours sell more effectively and reach parts of your target market that would otherwise be almost impossible to get to.
- 1. What Is a Channel Partner in Practice?
- 1.1. Why Are Channel Partners Important in Business?
- 1.2. The Goals & Responsibilities of a Channel Partner
- 2. The 3 Types of Channel Partners To Know About
- 2.1. Channel Partner Type #1: Affiliates
- 2.2. Channel Partner Type #2: Referrers
- 2.3. Channel Partner Type #3: Resellers
- 3. Real-World Examples of Channel Partner Types
- 4. Start Your Channel Partner Program in Just Days
Table of contents
A channel partner is an organization that, either via custom agreement or through an existing partner program, decides to sign an agreement with your company boosts the marketing and sales efforts on a specific product or service, and in a specific way (the "channel").
The channel part indicates how and where that marketing and sales effort will take place. For example, an affiliate partner may send out newsletters (the "where") to a high-value audience of potential buyers that they've built through their business blogging efforts (the "how").
That is a marketing channel that the partner will cover.
So, the idea of establishing relationships with channel partners is to cover as many of these high-value areas in a way that significantly boosts your marketing and sales efforts.
The reason why channel partners make so much sense in business—especially for B2B organizations like SaaS companies —is that they provide a range of benefits to your organization; not just a noticeable boost in sales volume.
(Although that's the primary reason for establishing a partner program)
Some of the benefits channel partners offer are:
Helping your company expand its reach to segments of your target market that were previously either impossible to reach because of constraints such as territory and technology, or that were too costly to get to without losing money.
On that note, reducing costs related to marketing and sales efforts is another benefit of onboarding channel partners that are aligned with your business goals. Companies are deeply aware of how costly marketing truly is—partner programs are a great solution!
Creating stronger relationships with both customers and partners enables your company to build a network of connections that make it possible to discover bigger hidden opportunities and go upmarket rather than focusing on just one market segment.
These are only 3 examples of why channel partners and the programs behind them are so important to businesses. We have a handy list with 7 more if you're curious to dive deeper.
Becoming a channel partner comes with responsibilities that should be understood and taken seriously on both ends of the relationship. This is the one area that is most overlooked by companies and where most channel partner programs fail in the first place.
Without set objectives that are clearly-defined and that fit well with both a partners' marketing and sales network as well as the issuing company's culture, a partner program is just an empty shell that comes through as a "partner with us but we don't really know why" type of message.
Depending on the types of channel partner, some of their goals may be:
Driving X targeted monthly traffic to a specific website page that upsells visitors on a personalized offer unique to that partner and converts Y% of leads into customers
Referring X new leads to your company when certain criteria for each lead are met and provide early support for up to Y months before the success team takes over
Introducing a discounted $X dollar product offering directly into their sales process as part of their proposal and driving $Y quarterly revenue based on that "special" price
All of these are good examples of objectives that channel partners commit to achieving for something in return, whether that be commissions, revenue share, or product discounts.
Although there are many types of channel partners, there are 3 that we believe yield the best returns to consulting firms and SaaS companies selling to customers via digital means.
The idea of an affiliate in business is quite recent, with the term "affiliate marketing" being thrown around for the first time in 1989 as part of an internet sales scheme.
Today, the concept is well-known:
» You sign up to an affiliate program, receive a personalized URL to send potential customers to, and get a commission for each that purchases something.
It's a simple concept that revealed itself to be powerful in a world of "virality" and network effects (i.e. the internet). And now it can be applied to B2B sales efforts as well—not just B2C.
An affiliate channel partner is someone who has access to an audience—small or large—that is deeply interested and invested in a specific topic and that follows that person (sometimes called an influencer or thought leader) to learn and understand more about the subject.
An affiliate channel partner is someone who has access to an audience—small or large—that is deeply-interested and invested in a specific topic.
More importantly though, the audience trusts the person and would happily follow certain directions given to them by the influencer if relevant and non-spammy.
This lends itself really well to selling a specific product or service offered on commission; it doesn't work as well with one-on-one types of discounts or perks as the affiliate will have no control over the individual people they are talking to.
They will be mass communicating essentially.
Of course, that might also mean a huge spike in sales.
So, if you're looking to invest in this type of channel partner, make sure your internal resources (systems and support teams especially) are able to handle the growth they can provide.
A "referral" may sound familiar, but you shouldn't mistake it for a customer referral , rather a partner referral. The partner is the referrer in this case, and the prospect is the referee.
You as the product owner are the beneficiary; the organization that ultimately benefits from gaining that customer under certain circumstances that benefit the partner as well.
It's important to look at your channel partners as companies you want to share success with, not organizations to exploit for your own benefit only. The relationship should be mutual, and there should be responsibilities and objectives to meet on both ends, not just the partners'.
Referral partners are a great way to grow your sales efforts because they've already gained the trust of the customer on the other end, meaning that the probability of conversion is a lot higher.
With referrals, there are also expectations on the referees' end that may be a bit different than what you usually experience from the average customer.
That is due to how the referrer talked about your service in the first place as they may end up purchasing without consuming much of your marketing materials.
It's key for referral partners to get access to that marketing material—especially internal documents that aren't shared publicly—so that they can educate the prospect beforehand.
Our third and final type of channel partner is the reseller, an organization that embeds your product or service within their own sales process, meaning that they will go to lengths to highlight the benefits offered from your solution, almost as if it was effectively theirs.
You can think about a reseller program as a co-branding effort; a product or service sold within a proposal that includes two or more brand names.
In B2B, resellers are some of the most powerful partners you can onboard as they take on most of the marketing and sales efforts that your internal sales team would normally take on. This is also called Indirect sales, and it drives the costs of running sales operations down to a minimum.
Plus, the relationship is a win-win situation on both ends because the reseller usually gets a discounted version of your product that they can pitch in a value-added proposal.
That means that the likelihood of sales increases on both ends; the partner gets their part of the deal (and may use your solution with the customer they've landed you), and you get a new customer without having to do any of the heavy lifting.
It may be hard to visualize some of the channel partner types described in the previous section, so we've prepared a handy infographic with a few real-world examples for reference:
You now know the benefits of developing relationships with channel partners, and the different types of partners that will deliver the strongest ROI on your program.
Now it's time to create the program!
(Or manage it—if you already have one)
The problem is, designing, launching, and managing a channel partner program can be quite a lengthy, time-consuming, and ultimately expensive process. For that, you'll likely need the support and help of a platform that can guide you through the process.
Kiflo is the all-in-one, affordable Partner Relationship Management (PRM) that allows you to design, launch, and manage your new channel partner program effectively.
And it covers all 3 types of channel partners!
With the thoughtfully-designed interface and functionality, you'll be able to empower your channel partners to deliver new qualified leads for your business while helping you manage things in the backend and keep aligned on all quarterly or yearly objectives.
It's a powerful tool that allows you to launch your own partner program in just days and iterate on it in a quick yet highly-valuable manner. And it delivers the ROI you're looking for.
Get a free demo and try it out for 7 days below »
Frequently Asked Questions (FAQ)
What are some examples of channel partners?
Three examples of channel partners are affiliates, referrers, and resellers. Affiliates have access to a large, high-value audience that fits your ideal customer profile, whereas referrers and resellers work with their existing and potential customers to pitch your offer individually.
Is launching a channel partner program worth it?
Yes! Launching a channel partner program reduces workload on your internal sales team, it increases Customer Lifetime Value, and it opens up a new world of sales opportunities. Especially for B2B organizations like consulting firms and SaaS companies, a channel partner program increases both your margins and the overall health of your sales pipeline.
What's the ROI on a channel partner program?
Depending on your industry and scale, a standard ROI rate to expect is anywhere between 2 to 3x Year-over-Year (YoY) growth in sales. Building a channel partner program is a long-term business strategy so it's important to stick to it before you see strong returns.