Today, channel sales partners are on their way to becoming key drivers of revenue growth for many emerging companies. It is no surprise that 75% of world trade goes through indirect sales.

With nearly two-thirds of revenue coming from third-party channels, manufacturing businesses are now focusing on the partner experience almost as much as customer experience, with 39% naming “partner experience/PX” as a top priority, according to Forrester.

Although most emerging manufacturers consider the channel partner sales model at some point, many hold back because they do not want to dilute their existing sales model or cut down on margins. But with the advancements in the digital ecosystem, the channel partner model isn’t limited only to large-scale manufacturing giants; mid-market companies with a growth mindset can benefit significantly too. Depending on the product mix and the revenue plan, a channel ecosystem has the potential to accelerate a company’s profitability—irrespective of size.

But how can manufacturing leaders objectively determine whether investing in a new sales channel will be a hit or miss? In this guide to channel relationships, we’ll break down everything you need to know about the evolving channel landscape. 

You’ll learn how to overcome common channel sales challenges, choose the right channel partners, and take your program to the next level.

The evolving role of channel partners in manufacturing sales

Over the past year, manufacturers have quickly pivoted and reimagined how they work with channel partners to keep up sales momentum and gain market share in the midst of the pandemic. Here’s how they are going about this:

Leveraging channel data for revenue growth

“Data is the new oil” as the saying goes. But the COVID-19 crisis has particularly accelerated the need for data and analytics even further, with 49% of companies now using these more or much more than before.

OEMs are using data from channel marketers and sales engagement tools to understand market potential, new untapped accounts, profiles and skillsets of sales engineers, and training strategies. Some OEMs have also been analyzing large volumes of point of sale (POS) data over time. This includes intelligence on what, when, where, and why specific product mixes/bundles get sold, as well as the same information for on-the-shelf unsold products. 

Channel partners are increasing their reliance on sales data from manufacturers, and vice versa. Channel partners are using this information to get a single view and identify cross-sell/up-sell opportunities as a part of their business recovery strategy.

Learn how you can get complete context about your customer with a single 360° view

Investment in new skills and technologies

A global survey of 700 CIOs showed that 89% said their digital transformation has accelerated in the past 12 months. Predictably, businesses are eager to invest in digital transformation as those with a higher degree of digital maturity consistently score higher on revenue growth and cost-saving metrics, according to Deloitte.

In the channel partner space, companies are investing in new technologies for market intelligence and improved partner relationship management as they look to uncover new revenue streams through an expanded services model. Some of these new technologies include specialized PRM software that manages partner lifecycle, opportunity handling, channel pricing, and distribution of incentives from analytics based on AI and ML, and digital gamification strategies for learning and development.

These organizations are also investing in new skills, integrating their in-house training with channel training in areas like product updates, sales and marketing strategy, sales negotiations, and customer service standards.

More pricing autonomy

Given their increasing importance, channel sales partners today want more independence in their sales process. One way manufacturers are resolving this concern is through pricing and quoting autonomy.

Pricing autonomy is becoming popular, as it can incentivize channel sales partners and empower them to make more sales on behalf of OEMs using their knowledge of the market.

Many manufacturers also make use of configure, price, quote (CPQ) software to help both their internal sales team and channel partners streamline the quoting process where complex discounting rules need to be configured.

Channel sales partners are also setting up a harmonized quote and price structure to accommodate complex bundles that include multiple product families and different models. With more pricing autonomy, channel partners aim to bring down back-office costs and get a greater slice of the revenue-share pie.

Learn how you can automate pricing computation to create dynamic sales quotes

 

Four-step guide to building a channel strategy for revenue growth

Step 1 : Select the right channel partners

Strong partner relationship management programs will differentiate companies in the next decade, according to Forrester. But not all channel partnerships are alike, with some being unproductive and damaging to both sides. So how do you (manufacturers) select the best channel partners and decide where to expend the most time and effort in your channel strategy?

For starters, the best channel sales partners have an in-depth understanding of their industry and can offer strategic growth recommendations to manufacturers, helping them pilot-test new markets with advanced solutions or a superior customer base. They also provide smooth implementation, commissioning and technical services to your existing clientele, so the two of you can enjoy a win-win sales relationship.

Here’s a checklist to consider when selecting new channel partners:

 

Have a strong partner profile and clear onboarding criteria

 
To start with, have a set of well-defined criteria for the ideal channel sales partner.
Consider their current business model:
  • Who are their customers and what are the markets they serve? Do these align with your products and services? 

  • What do they sell? Is their product/service complementary to your own?

  • Do they have any links with your competitors? If so, how can you differentiate yourself from your competitors if you plan to co-market and co-sell together?

  • What specialist resources does the channel partner have? Do they have the ability to offer sales presentations, implement solutions, and train the customer to a large extent?

  • How committed to you is the channel partner? Are they ready to invest in demo training and cold prospecting? If so, what is their plan to commit to their yearly sales targets?

Analyze past data and future growth plan

Next, you’ll want to investigate your potential partner’s past performance. You should consider:

Understand your channel partner’s expertise in technology

To avoid the problems legacy systems can create, seek out a channel sales partner who already has an inherent digital culture at their company. Ask yourself:

Do a cost-benefit analysis

As with any major business decision, it’s a good idea to perform a cost-benefit analysis and do some area-level forecasting before starting out with a new partner. 

Choosing a channel partner is a serious decision, and it’s one that can be difficult and expensive to reverse. Try to carefully select channel sales partners that align well with the short-term revenue goals and long-term growth vision of your business.

 

Step 2 : Identify key metrics to streamline the partner relationship management process

You’ll want to define and track certain metrics and KPIs, benchmarking these against authorized or experienced channel partners to find out what’s working and what isn’t. The exact way you calculate these metrics may differ, depending on how your business is set up. 

Channel sales contribution 

Of course, a very basic measure of channel partner success is how good they are at selling your products. To calculate their impact on your top line growth, consider:

Partner engagement score

Partner engagement score is a metric that can be used to understand how much your channel sales partners interact with your business throughout the partner lifecycle. If you notice partner engagement levels on the decline, make sure your channel marketing strategy is effective, and incentivizes ideal behavior and feedback. 

Here are some factors to consider when calculating your partner engagement score:

Channel churn

A successful channel partner relationship management model will be able to retain partners over the long term. By calculating your channel churn rate (the rate at which channel partners stop doing business with your company), you can determine whether your program is offering partners enough incentives and support to retain them.

 

Step 3 : Enable channel partners with the right sales tools

Once you've identified the right channel sales partners, it's crucial to equip them with the right tools and technologies to co-sell. Here are a few to consider:

PRM: To be successful, manufacturers need a streamlined approach to partner recruitment, onboarding, and sales enablement. A partner relationship management solution serves as an extension of your sales strategy and is specific to managing indirect sales teams and their customers. Your partners can use your PRM system to submit leads and register new deals and eventually claim channel compensation credit.

Manufacturing CRM: For companies with a larger partner base, a manufacturing CRM that offers partner portals is the perfect way to share critical training, pricing, product, and certification information. For example, you could use it to share brand guidelines on how your channel sales partners may use your logo and marketing materials. All these activities can take place in an organized way with built-in analytics that give actionable insights.

Having a blended manufacturing CRM/PRM approach helps you profile partners into specific clusters, based on factors like customer base, installation or commissioning experience, markets served, financial performance, and more.

Find out more ways to automate your sales process that can save you time and money

Step 4 : Incentivize partners to fuel growth 

For a successful incentive program that avoids overspending and generates results, avoid using too many ad-hoc initiatives and focus on changing behavior and driving engagement rather than rewarding existing habits.

 

With a manufacturing CRM, you’ll be able to connect the CRM to your internal loyalty and channel rebate programs, generating greater ROI. Besides being able to easily track sales and incentives paid, you’ll also be able to use data to improve your programs and better tailor them to your channel partners’ needs.

For best results, try to tailor your incentives to activities such as completed training modules, certifications, or successful manufacturing implementations. In addition, you can help partners understand minimum performance thresholds, and encourage them to redeem rewards.

Find out how Evans Manufacturing leaves a lasting impression on its customers in spite of the pandemic

 

Key takeaways

Although channel sales make up a significant portion of sales for most manufacturers, many companies still struggle with partner communication and management. Creating a good channel strategy is not just about selecting the right partners, but a journey of establishing relevant KPIs, success metrics to help manufacturers exceed their revenue growth goals. If there’s friction in your channel partner program, fortunately there are steps you can take to ease the process. You can always do this by investing in digital transformation tools, like a manufacturing CRM or PRM application, which can help you create a winning go-to-market strategy together.

While the need of the hour is to implement a PRM strategy with technology, you may still come across challenges that a technology implementation alone cannot address. Two of these are misaligned goals and training gaps.

Partner and manufacturer priorities may conflict when it comes to revenue generation, where partners may not always be adequately trained on an OEM’s product line. Investing in training and streamlining the sales process can help manufacturers and partners achieve greater alignment in the future.

Learn how you can redefine customer-centricity with the best manufacturing CRM