What is a channel partner?
A channel partner is a company or individual in some cases that partners with a manufacturer or vendor to market and sell their products, technologies or services. The channel company although sells products and services on behalf of their partnering vendor and belongs to the indirect sales force, it is and acts as an independent company. This means that a specific channel partner may have partnerships with more than one vendor and in fact the average channel partner works with 7-10 different IT vendors at a given period. Due to the explosive evolution in the Software-as-a-Service (SaaS) industry many channel partners produce and promote their own products as well.
What are the different types of channel partners?
Channel partner models have evolved over time and there are new breakthroughs in the partnership models due to the complex of the vendor-partner relationship. Nonetheless, some broad categories still dominate the market today.
The reseller model has existed for many decades and it’s the traditional relationship were a channel company resells a product or service as it is on behalf of its vendor.
Software resellers have played a key role in the growth of this industry offering software products and solutions to local businesses either on premise or using the SaaS model mainly in the last decade. Many SaaS companies also offer a white label solution that allows a channel partner to resell the product as it is using its own branding instead of the vendor’s.
Value Added Reseller (VAR):
A Value Added Reseller (VAR) is a company that buys a product (hardware or software) and adds value by integrating additional features or services to the original product and then resells it to its customers. For example, a VAR might buy a hardware product add its own developed features and then sell it or it may just offer services like installation, support and training for SaaS products. Some of these companies are also referred as solution providers.
IT consultants have been on the rise and more and more vendors are interested to partner with consultants to help them promote their offerings. An IT consultant is a professional that provides advice, network design services, project management and support. IT consultants usually don’t have long term contract to manage and monitor the clients’ infrastructure as opposed to MSPs described below, but rather engage in the beginning of the implementation process.
Managed Service Provider (MSP):
A Managed Service Provider (MSP) is a company that manages and monitors the IT infrastructure for their clients. Usually, small and mid-sized businesses hire an MSP because they lack the IT personnel or they want to minimize their overhead while they ensure that their IT department runs efficiently. MSPs monitor and manage a customer’s IT equipment remotely, the end user devices, new product installation and many more.
Systems Integrator (SI):
Although systems integrators (SI) have been around for more than three decades, today SIs play a vital role for many businesses due to the different systems they use to run their business or to meet customer demand. A SI integrates different hardware or software products into one customized solution that meets the criteria of its customers to help them run efficiently or achieve specific business objectives.
A distributor is a middleman, the company between the vendor that produces the product and the channel partner who resells it to the end customers. A distributor has already in place a network of channel partners and this is the main reason why some vendors prefer to work with distributors, to minimize their time to market. Also, it has some other advantages as reduces the complexity due to the fact that the vendor will maintain a smaller partner network and won’t have to deal with support etc. of the channel. Some distributors offer additional services to become more lucrative such as training, technical assistance, marketing and sales support for their channel partners.
Original Equipment Manufacturer (OEM):
Although OEMs were traditionally building products to be modified, rebranded and resold, today there are two cases. OEMs will purchase a technology to rebrand it and sell it as their own or will bundle additional features and resell it.
How to build a channel partnership?
Channel partnerships can be a win-win relationship for both the vendor and the channel partner. A vendor should create an ideal channel partner profile before engaging with potential partners. Then there are several criteria on our platform to help you track these companies and reach out to them. When reaching out make sure to provide your potential partners a concise message of what are the benefits and requirements partnering with your company. And please keep in mind that the most important part comes afterwards, how to maintain a successful relationship with your partners.