The Ultimate Cheat Sheet on How to Make Channel Partners Happy

The Fallacy of Channels: Startups Beware

  • You’re investing in your channel partners’ success in the early years so that they’re motivated in your scaling years. That’s going to cost you margin.  It’s the definition of ‘investment.’ Margin deals can be all over the map.  My starting point mentally is about 30% for the channel partner.  You can get away with 25% if they’re not doing much.  You should be willing to go up to 50% if they play a significant role in the sales & marketing.
  • Another strategy Suster suggests is taking most (75-80%) of the sales margin for yourself, while giving all of the service revenue to channel partners, as long as they do the lion’s share of implementation or servicing.

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Channel Conflict Report Shows Vendor-Partner Relationships Are Improving

  • “The overall level of channel conflict remains moderate to high. However, value-added resellers and solution providers say they’re engaged in more collaborative, mutually beneficial sales activities with their vendors,” said Lawrence M. Walsh, President and CEO of The 2112 Group and Principal Analyst of the report. “This is a strong indication that vendors are working more closely with partners to uncover and close sales opportunities.”

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Creating Impact in B2B Relationships

  • Business-to-business companies that are narrowly focused on product and price are doing the bare minimum required to survive. Yet Gallup analysis shows that this approach is all too common — the majority of B2B companies operate this way.
  • A typical B2B company has an optimal relationship with fewer than one in seven of its customers.
  • Gallup has conducted thousands of interviews over the last few years with B2B customers and has found that only 13% of B2B customers are fully engaged.
  • Of the accounts with high engagement scores (at or above 4 out of a possible high score of 5), 21% of the accounts grew by 20% or more the next year, while 34% declined by 20% or more.
  • Of the accounts with low engagement scores (below 4 out of a possible high score of 5), 15% of the accounts grew by 20% or more the next year, while 60% declined by 20% or more.

From Promotion to Emotion: Connecting B2B Customers to Brands

  • Our research shows that perceptions of business value barely differ between leading brands within a given industry. Where differentiation does exist, we found that only 14% of business decision makers are willing to pay a premium for it.
  • Of the hundreds of B2C brands that Motista has studied, most have emotional connections with between 10% and 40% of consumers. Meanwhile, of the nine B2B brands we studied, seven surpassed the 50% mark.
  • Google and CEB’s Marketing Leadership Council worked with marketing research firm Motista to survey 3,000 purchasers of 36 B2B brands across multiple industries… Not only did the B2B brands drive more emotional connections than B2C brands, but they weren’t even close.
  • Personal value has twice as much impact as business value does.
  • Although B2Bs boast high levels of emotional connection among existing customers, the same isn’t true of non-customers. Indeed, less than one-third of non-customers believe B2B brands will provide personal value.

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  • To minimize drop-off during the middle of the purchase process, which we have come to describe as the “Unhappy Valley,” marketers should use emotional, personal value messaging throughout, not just at the start and end. To do so, marketers should exploit video and social media channels. Our research found that customers who engaged this way were up to 20% more likely to purchase at any given purchase stage.

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