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Three Tips To Select The Right Channels For Your Company

How do you find the right channels for you? Selecting channels means understanding how your customers prefer to buy and matching your channel strategy to their preferences. Read on!

Be Savvy,
Debora

Three Tips To Select The Right Channels For Your Company

"Channels", "alliances", "partners" -how do you create a channel and partnering strategy that is right for your business? The answer: Understand how your customers prefer to purchase your solution, find companies that match your business model, culture and target audience and work together to build a win-win business agreement.

A quick definition of channels and partners and then more on building the channels that are right for you.

1. Channels refer to companies who re-sell your products or services while using your brand name, marketing materials and messages. These companies purchase your products, and market and sell them for a certain margin or commissions. Channels can include retail stores, online retailers, catalog companies, distributors (who represent many lines and generally sell to other resellers who sell to customers) or value-added resellers (who add value through services, other products or expertise or use your product to create solutions for specific segments of the market).
2. Generally, "partnering" or "alliances" is a general term for all kinds of relationships among companies that work together in some way, but don't typically resell each others' products. One word of caution: The word, "Partners", has legal implications which may make companies responsible for each other's actions and many company's legal departments caution against calling any company a "partner" without a clear legal agreement. Companies may create a joint solution together; they may put their products together and create a more complete product for their customers; they may partner to enter new vertical markets or new geographic markets or they may simply do marketing together or refer each others' products. Sometimes you may create a referral fee to pay each other; often you just have a joint agreement to refer clients to each other while each of you takes the revenue for your part of the solution.
3. OEM channels are unique channels that resell your products under their own brand names. Companies may need the product you develop to start a new line of business, add to a product they have or to get to market quickly and thus, choose to take your product and sell it as their own product under their name.

So How Do You Build Channels That Drive Your Business?

1. Start with your customers
   To develop the best strategy for any company, start with how your customers prefer to buy. Talk to prospects, look at what the competition is doing, understand the purchasing process from your customers and prospects. Understand who the actual buyer is for your product, how they find the solutions they need, what they are looking for in a solution and where they go. Do they buy direct? Do they use a consultant? Is your product just a part of a solution? If so, you'll have to sell to someone who integrates a solution for the customer. For example, if you distribute ink supplies for printers, you may distribute your products at retail outlets. However, you may find customers ask their IT consultants what suppllies to buy and you would want to have alliances with IT consultants to resell or advise customers to buy your products. Once you understand how and where your customers buy, you can select your channel strategy.
2. Identify possible channels and alliances for your channel strategy
   Focus on the geography, vertical niche or demographic segments that you will target. Identify the potential channels and alliances in that area. Determine if you'll be selling retail, through distributors, or through value added resellers or solution providers. Find the online sites your target shops at, outline the retail stores selling to your target, or identify the consultants or service providers offering the service that includes your product or service. Use professional associations, online searches, Yellow Pages, competitive sites, newspapers and publications to identify the possible channels and alliances you could make. Look at what your competition is doing...you may adopt the same strategy or identify areas they have overlooked to build your competitive advantage.
3. Develop the value proposition for your channel and alliance prospects
   You need to provide value to prospective channels and alliance partners. You must also ensure that the prospective companies will be a good match for your company products, business model and culture and vice-versa. What are their strengths? How do those mesh with yours? What is their business model and philosophy? Are they companies you want to work with?
   
   In addition, what benefits are you offering your prospects? What is the value proposition and is that important to them? Can you clearly define an upside opportunity for both of you? What will they do to make you successful? Make sure you also understand the investment and costs involved. Is there a reasonable level of investment each side is prepared to make? What does the partner expect from you and what do you expect from them in terms of revenue stream, profit margin, demand creation, creation of a market?

Once you have these three steps finished, you are ready to recruit partners and speed their success for positive results for both of you.

To Do Now:

1. Understand your customer, how they prefer to purchase and what they need to decide on your products and services
2. Identify possible channels and alliances which match the way your customer buys your products and services
3. Identify what you offer your channels and alliances in order to interest them in distribution, what is the value proposition, what is the business model, what do they receive (hopefully a positive revenue stream) by working with you.

For more articles on channels and partnering, go to the Highland Team Web site.

Contact Highland Team/Tager Group to help evaluate your situation and recommend the best marketing strategies for you.

Written by Deborah Henken, Highland Team and Tager Group