The changing channel in the tech sector
As B2B marketing has developed rapidly over the past decade, channel approaches have remained fairly traditional (some would say old-fashioned). Today, channel marketing is ripe for a shake-up, and for enterprising B2B marketers, there are gains to be made through being bold and innovative.
Partners are still rewarded and remunerated in conventional ways, often via blunt rebates. For many, the vendor’s willingness to open its wallet is the biggest factor in how much support they’ll get. Measurement and success can often remain opaque.
The lack of change perhaps is surprising given the rapid development in the way products and services are delivered has advanced in the tech sector during the same period – from physical hardware and products to hugely complex IT services provided over the internet.
This is changing – but slowly – as partners move away from a focus on margin and volume toward providing enhanced services and support. This too has an impact on the market as partners that previously never competed now offer similar propositions. And in some cases, the relationship appears closer to partner or co-marketing.
Why is the channel important in the tech sector?
Channel has always been an important route to market in the tech sector and will continue to be so for the following reasons:
- It allows you to scale quickly. For young tech businesses that want to grow quickly, channel partners are a great way to drive sales without having to build your own internal sales function.
- Partners can extend your reach into new markets. Finding partners with expertise and connections in different regions can open up those geographies for your products or services without the expense and complexity of entering them yourself.
- The interconnected nature of the tech sector. In a vertical where many products interact and integrate with each other or offer complementary services, collaboration between vendors is desirable for users to help them navigate their stack.
The different types of channel partners
Do you know your VAR from your ISV? Here’s a brief overview of the most common types of channel partners used in the tech sector.
- Reseller: Traditionally, resellers have simply taken products and sold them on, usually in exchange for a rebate from the vendor based on the volume sold. This role is changing, as many tech companies have moved away from physical products and hardware toward a SaaS model. Resellers are often accredited by vendors as official suppliers of their products or services. Now, many resellers are becoming value added resellers (VAR). These provide additional services, such as integration, maintenance or service support, in addition to the product sold.
- Managed service provider: This partner operates and maintains technology in exchange for a recurring fee. Services provided could include maintenance, help-desk, installation etc. They will provide both the technology and bundle that with the other services. The main difference between a VAR and an MSP is the length of the contract – VARs tend to be more transactional, one-off purchases; whereas MSPs tend to be to long-term service agreements.
- Systems integrator: Systems integrators often provide a more consultative services to buyers than managed service providers, advising which technology an organisation should implement and then supporting them through that process. These can range from small, boutique agencies to huge multinational consultancies.
- Distributor: Distributors are the link in the chain between the vendor and other channel partners. Given the scale of their networks, they are often the quickest route to growth in a partner programme. Sometimes they offer other services including training, licensing or even financing.
- Independent software vendor (ISV): As suggested by the name, ISVs are companies that develop and sell software. Their position in the channel is that often the large platform providers such as Apple, Microsoft or Salesforce will partner with these vendors to develop applications for their platforms to enhance their attractiveness in the marketplace.
- Alliance partners: These are non-competitive vendors who have complementary products and services. You might choose to go to market jointly with them to leverage scale or take advantage of up-sell and cross-sell opportunities in new markets. These may also be ISVs themselves. Even within this broad overview, there is a whole host of different hierarchies and cross-over between these partners. A small reseller turning over $1 million a year is going to need a lot more support and direction than a multi-million dollar revenue Silicon Valley giant – but the big fish might not consider you to be its top partner.
What skills make a great channel marketing?
Channel marketers, of course, need all the skills you’d find in a general B2B marketer, but there will be certain parts of the role that will need specialist talents.
- Personal, and be able to work at all levels of an organisation. You’ll be selling your plans into CEOs, sales directors and marketing directors one day, then talking to and training field sales teams the next. This means you need to be able to explain your strategy simply and succinctly so everyone will understand what you want to achieve.
- Great multitasker. With so many relationships to manage, meetings to attend and campaigns on the go, channel marketing is a real juggling act, so you also need to be flexible and adaptable.
- Bold and brave. How are you going to make sure your brand is top of mind among partners? You need to stand out in their mind, and personality is a big factor.
- Master motivator. You have to either be very extroverted, or at least be able to turn on that side of your personality if you’re running a sales call out day (where you work with a partner to motivate their team) for instance.
- Tenacious, resilient, and thick skinned. You’ll be trying to force open a lot of closed doors, either with potential partners or internally with stakeholders.
- Strong salesperson. You’ll be selling your strategy internally, selling your vendor to your partners and training and motivating sales teams at the partners.
- Commercially aware. You’ll need to be able to understand the commercial objectives in the business, how partners can meet those – and work out what mix of partners will provide the optimum return.