Say the word ‘channel’ to a marketer and they’ll almost certainly think SEO, PPC, email and many other digital media channels. But, to the rest of the business outside of marketing, the word ‘channel’ has another meaning entirely. Sometimes referred to as ‘partners’, ‘indirect’, ‘ecosystem’ – it’s the practice of selling and marketing through third parties.
Channel partner marketing as a discipline has played an enormous role in the growth of tech vendors since the 1990s, but it’s equally important in many other B2B industries, such as energy, manufacturing, retail, automotive and pharmaceuticals. Essentially, any organisation that is looking to scale, reach new markets and drive growth will almost certainly have an ‘indirect’ strategy.
Yet, channel partner marketing is very rarely discussed when looking at growth strategies in marketing forums. So, the question is: why?
Unfortunately, channel partner marketing is often considered tactical, basic and lacking the sophistication of newer marketing techniques. Therefore, it’s often perceived as less strategic than other marketing functions.
In this blog, I’ll explain what a great channel partner strategy looks like, as well as some of the various types of channel partnerships you might want to look at.
Why is channel partner marketing misunderstood and undervalued?
Budget ownership:
One of the biggest reasons is that the budget for channel partner marketing (market development funds, or MDF) is almost always reported separately from the marketing budget (OPEX). MDF budget generally sits within the signatory of the sales function (often referred to as channel sales), as it’s considered an investment in select partners upfront to support future growth.
Resourcing:
Where the responsibility for channel partner marketing sits within a business can vary, ranging from:
• Reporting into channel sales, with the individual often coming from an operational or administrative background, with limited experience of or exposure to the marketing function.
• Channel partner marketing may operate in a matrix, with a ‘dotted line’ into both channel sales and marketing.
• The role of channel partner marketing is an ‘add on’ to a marketing manager’s day-to-day role.
• A fully staffed channel partner marketing function, reporting into the CMO.
Lack of indirect business strategy:
Working with third-party channels means that a business must have a clear GTM/operating model, particularly if they also have a direct sales force.
Understanding how customers are acquired, managed and communicated with and who is responsible for the end-to-end customer journey is critical. Without these clear principles in place, channel conflict often occurs (where direct sales and an indirect partner are claiming ownership of the same customer). This can lead to a poor customer experience with both the vendor and partner’s brands suffering as a result.
The opportunity: Why it’s time to focus on channel partner marketing
The opportunity to do more with a channel partner agreement is undeniable, and can be split into three distinct sections:
Business growth:
According to the Boston Consulting Group (BCG) a typical tech vendor will drive approximately 70% of their revenue from indirect sales channels.
Budget optimisation:
In most organisations, MDFs are significantly larger than marketing OPEX. In some instances, they can be up to five times larger.
The commercial marketing function:
Working with indirect channel partners means that the channel marketing function must be very commercially focused, operating in a consultative manner to understand both the vendor and partner’s goals. Also, having such a market-focused role allows them to gain invaluable insights into competitive activity and market demands.
What should marketing leaders do now to unlock the power of channel partner marketing?
Stop:
Using the old channel partner marketing playbook. This is now considered a ‘one size fits all’ approach, and was originally designed around a ‘tiering’ of partners based upon value to the vendor. Typically, this approach includes the following:
• Partners given access to vendor marketing materials (according to their status) on partner portals.
• The vendor brand provides logo and co-marketing branding guidelines.
• The vendor provides product-led marketing campaigns, with no adaption permitted of messaging and content, aside from partner co-branding according to their partner status.
• Vendor rules on how MDF should be utilised, often involving outdated lead generation practices (such as cold calling), tactical events and SPIFF days
Customers’ and partners’ needs have evolved, so make sure your playbook has changed with them.
Start:
- Driving the development of the indirect partner strategy. In the same way that marketing is responsible for identifying the target audience, building customer insight, segmentation, profiles, customer/buyer journeys, value propositions and messaging, start applying the same methodology to understanding which partners to work with, why they should work with you, how you will find those partners and what the partner experience will be with you.
- Developing your marketing strategy with channel partner marketing as a key contributor towards the business KPIs.
- Building strong relationships with the right partners who will drive your business growth.
Continue - Demonstrating the business value of the marketing function and now with an increased focus on the opportunity to grow through indirect channels.
In this blog, I’ve given an overview of the opportunity that is there for all B2B marketers (and not just those in tech!), and hopefully provided some useful first steps to think about.
Georgie Gilmore is our in-house channel partner marketing expert in our global community for B2B marketers – Propolis. Propolis helps you to shape your marketing strategy, while building the skills and effectiveness of your team; all with the express goal of delivering business growth. If you’d like to learn more about Propolis, just click here.