If you are searching for a channel partner meaning, you have landed in the right place. In this article, you will come across everything related to the channel partners. This post is worth reading if you have been into business for a long and struggling to meet your goals. Let’s start!
A channel partner is a third-party organisation or individual that markets and sells products and services for manufacturers or service providers. Channel partners work as mediators, they may be vendors, affiliates, resellers, agencies, retailers, managed service providers, system integrators, etc. Such organisations or entities help companies to spread their business to a wider audience through indirect channels. A company can work with different channel partners simultaneously to sell more products or services.
When talking about channel partner meaning, it is more than a contract between two organisations. It is a mutually beneficial relationship where one partner drives sales for another by selling the products and generating revenue for themselves. A channel partner is a great way to increase revenue and grow market share without hiring and training employees and investing in office space, equipment and other resources. It saves your time & money and helps the business with the best results.
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Facts About Channel Partner
Now that you know the channel partner meaning, it is time to dig into the facts. A channel partnership is one of the three kinds of partnerships. The other two partnerships are technology and strategic. Think of the channel partners as the extension of your sales team. They can sell more products and services than your in-house team since they have more resources and adequate skills.
Channel partnerships have become important for B2B companies. According to a survey report, 96% of the companies saw a growth in their revenue by channel partnership. It would be surprising to know that Google was nothing before becoming the world’s pervasive brand. Well-known sites like AOL and Yahoo help the company in its initial days; now, it makes billions as a channel partner for thousands of smaller brands.
If done correctly, channel sales can drive new revenue streams and help propel growth.
After channel partner meaning and facts, let’s learn about its advantages and disadvantages.
Get Insights Into the Advantages & Disadvantages Of Channel Partnership
Everything has good and bad sides, and so does channel partnership. For starters, channel partners are like a backbone. Once they understand the channel partner meaning, startups will start taking its leverage. A channel partner acts as a brush for the drawing. When the sales team is unable to keep up with all of the demands, that time channel partner puts your product into the customer’s hands without needing to hire new employees. Here is a few good and bad channel partnership.
- Strengthen your brand and credibility among the customers
- Focus on core business
- Bring you close to the target audience
- Give your products and services to customers’ hands
- Save cost and time to expand your business
- Increases revenue
- Lower customer acquisition cost
- Gain market share in geographics without having to invest in infrastructure
- Your brand is more exposed to reputation risks
- No direct customer feedback
- Less control over the sales process
- Difficult to forecast revenue
When discussing channel partner meaning, it is essential to include everything related to make it helpful to understand the term thoroughly. Now is the time to explain the types of channel partnerships.
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Different Types of Channel Partnership
Here are the primary types of channel partnerships that a business owner should know about.
1. Channel Value Added Resellers
Channel value added resellers (VARs) are also known as Solution Providers. They basically take your product, add a profit margin and deliver it to the end users. Channel VARs significantly increase sales by selling your solutions to their existing customer base.
2. High Velocity Partners
High velocity partners are beneficial for those businesses struggling to sell their products in the hard-to-reach markets. It is also known as fulfilment and can help to manage the administrative and contractual challenges of selling your products. Unlike other types of channel partnerships, they do not add significant value to the product, but they can manage order fulfilment on high-volume transactions for a relatively low rate.
3. Service Delivery Partners
Unlike other types of channel partnerships, service delivery partners do not resell products or software; they enhance the product’s value by providing a host of services. This type of partnership makes your products more attractive by increasing the product’s importance in the relevant market.
4. Technology Alliance Partners
This type of channel partnership is not directly involved with reselling; it simply brings two products together with integrated solutions. For example, if you sell software for the X-ray machine, you may choose a partner that manufactures or sell machines. A technology alliance partner is beneficial for companies that want to make new market segments.
5. Cloud Service Providers
Cloud Service Providers do not resell; instead, they offer components of cloud computing like SaaS, PaaS and IaaS. Simply put, if you are a software company and looking for customers, a cloud-based service provider enables you to deliver solutions to the end user. The companies expect brand recognition to be ideal for using cloud service providers.
So with the channel partner meaning, we have also explained its types. Now you can choose the best type of channel partnership for your business niche. People often confuse channel partners and distributors; let us tell you that both are different. If you are willing to learn the channel partner vs distributor, drop your answer in the comment section.