Channel Partner

Definition

A channel partner is a company or individual that partners with a manufacturer or vendor to market and sell the manufacturer’s products, services, or technologies.

Channel partners can include: value-added resellers (VARs), systems integrators, managed service providers (MSPs), and other types of entities that help bring products to market and support end customers. Channel partners often work through co-branding relationships and may include distributors, retailers, and consultants as wellChannel partners can include: value-added resellers (VARs), systems integrators, managed service providers (MSPs), and other types of entities that help bring products to market and support end customers. Channel partners often work through co-branding relationships and may include distributors, retailers, and consultants as well.

What is a channel partner program?

A channel partner program is a business strategy designed by manufacturers or vendors to encourage partners to sell and promote their products and services. These programs typically offer various benefits such as training, resources, marketing support, financial incentives, and access to exclusive products or services. The goal is to create a mutually beneficial relationship that helps both the vendor and the partner grow their businesses. Ultimately, channel partner programs help companies sell more products to a wider audience through indirect channels. 

How do channel partners differ from distributors?

While both channel partners and distributors play roles in the distribution and sale of products, they operate differently.

Distributors focus on warehousing, logistics, and the physical delivery of products from manufacturers to retailers or end customers. 

Channel partners on the other hand, often provide additional value through services like installation, customization, consulting, and support. They are more involved in the sales process and customer relationship management.

Lastly distributors are often considered a type of channel partner, but with a more specific focus on product distribution

How do channel partners make money?

Channel partners make money primarily through margins on the resale of products and services. They purchase products at a discounted rate and sell them at a higher price.
Additionally, channel partners can earn revenue through various services they provide, such as:

  • Consulting
  • Installation
  • Training
  • Support
  • Maintenance
  • Referral fees

Some programs also offer performance-based incentives and rebates. 

Are channel partnership programs right for me?

Channel partnership programs can be highly beneficial, but they may not be suitable for everyone. Consider the following factors to determine if a channel partnership program is right for you:

  • Business Model Alignment: Ensure your business model aligns with the partnership program’s requirements and benefits. If you offer complimentary services or have a customer base that would benefit from the vendor’s products, it could be a good fit.
  • Resource Availability: Assess whether you have the necessary resources, such as skilled staff, time, and financial investment, to commit to the partnership. Successful channel partnerships often require dedicated efforts in training, marketing, and sales.
  • Market Demand: Evaluate the demand for the vendor’s products in your market. If there is significant interest and potential for growth, a channel partnership could provide substantial opportunities.
  • Long-Term Commitment: Consider your willingness to engage in a long-term relationship with the vendor. Channel partnerships often require ongoing collaboration and commitment to achieve mutual success.

Channel Partner is also known as:

  • Software/Technology Partner
  • Independent Software Vendors (ISV)
  • Value-Added Reseller (VAR)
  • Systems Integrator (SI)
  • Managed Service Provider (MSP)
  • Solutions Partner
  • Platform Partner
  • Referral Partner