An indirect sales channel is as good as the partners that make it. If there are quality partners committed to a manufacturer’s products or services, the channel will perform well. Otherwise, it will tank. Therefore, it is extremely important to recruit the right channel partners.
Obviously, there is no set rule to judge the quality of a partner, however, the general practice is to follow a traditional funnel model. This means enrolling a large number of partners in the starter program/partnership level—a category that requires very little commitment both from the partner and vendor—and then move them up the ladder based on their performance or after they have achieved a certain accreditation. For example, the easiest way to become a Microsoft partner is to sign-up as a "Registered Partner" and then move up the ladder to become a Certified partner and a Gold Certified partner, after accumulating certain points and attaining accreditation in the form of Microsoft certification. This process allows a manufacturer to build a strong partner base, segment partners based on their performance and dedicate its limited resources on the right partners.
No matter what technique you use to build a strong partner base, the starting point is to recruit the right partners. You can use following list of criteria to build your business specific partner evaluation checklist:
Partner Evaluation Checklist:
- General management:
- Overall management quality and stability
- Years in business
- Reputation in the marketplace
- Competitor relationships
- Financial strength
- Revenue growth
- Profitability
- Net worth
- Payment/credit history
- Technical capability and resources
- Size and quality of the sales force
- Service/support capabilities and systems
- Advertising and marketing budget
- Experience in related products
- Market performance
- Customer retention
- Key account development
- Market share
- Customer satisfaction
- Pricing stability (vs. discounting)
In order to build a strong partner base, it is vital to get rid of partners with low productivity. This will save your precious resources and improve the overall productivity index. Therefore, it is a good practice to pull the plug on the under-performing partners or degrade them to lower partnership levels. You will, however, need a way to judge the performance of a partner that we will discussed in detail later.
Here, I want to emphasize that the performance of an indirect partner channel is highly dependent on the quality of its partner. Good recruiting, combined with ongoing channel pruning ensures that every partner in the channel represents a worthwhile investment of time, energy, and money. Another way to improve the performance of partner network is to establish a comprehensive partner support network. Next section "Build partner support infrastructure" introduces you to the detailed involved in the process.