What does it mean to be channel-friendly? It’s a question that is often debated – sometimes hotly – in my industry. There are a few obvious answers: A channel-friendly company does not rely on direct sales alone; it creates strategic partnerships to reach customers through indirect sales opportunities. Vendors with channel partners (third-party affiliates) can expand their influence, seize more share of the market, and significantly increase top-line revenue.
Yet, as a global channel sales executive, it’s clear to me that there is more to channel-friendliness than being open to channel partners, or even having a seemingly robust channel program in place. I’ve noticed a distinct difference, for instance, between the way American companies and their foreign competitors approach international channel sales.
As our world grows more connected, U.S.-based companies must seize every available opportunity in order to better engage with international channel partners. Fortunately, it's more than possible for any business to create a successful global channel program with the right strategy, priorities and care.
Here are six steps that I’ve learned are necessary if American companies want to achieve more globally expansive channel-friendliness.
1. Recognize the benefits and recommit.
It takes a willingness to improve and commit to any improvement at all. But those that don’t prioritize channel sales are unlikely to commit to them, which would be a mistake given the many proven benefits. Indeed, channel partnerships have become increasingly useful sales vehicles for products of all types, especially on an international level.
“Many leading tech companies are realizing that the salespeople pulling new partners into the channel are actually generating much more revenue than the direct sales people,” says seasoned Channel Manager Tom Horton. “Some are even reporting that up to 80 percent of their revenue is coming from partners, while as little as 20 percent is from the direct sources.”
It’s also worth recognizing 10 of the 20 fastest-growing Inc 500 companies utilize indirect channel sales. These companies are clearly committed to the channel sales programs that have launched them to great heights.
This trend will only continue globally.
“With the global retail market expecting to grow 4.9 percent per year through 2020 and the United States anticipating a 0.15 percent decline per year over the same period, it is safe to say that global expansion is an enticing growth vehicle,” reads a report by Deloitte,
In other words, there's money to be made and scaling to be done if you are willing to put in the work.
2. Know it’s OK to leave your comfort zone.
We all have comfort zones, and we are all naturally inclined to stay there — especially when given few options or resources to do otherwise. American businesses are often reluctant to go to market abroad, but with globalization changing business quickly, many need international affiliates to optimize indirect sales opportunities.
A mentor once told me that the best way to manage is to nudge your people to act and think outside of their comfort zone. It’s happened to me, and despite my hesitance, I learned a great deal. Best of all, it forced me to think differently, and I use the strategies I learned to this day.
Forging productive channel partnerships can be difficult because change is inherent and flexibility is a must. But even if “there’s no place like home,” or your comfort zone, so to speak, you’d never find Oz by staying in Kansas.
3. Form a dedicated channel team.
According to research by the Frontier Strategy Group (FSG), as reported by HBR, “companies who hired a dedicated channel manager to manage their third-party distribution relationships within the last five years reported an 11.1 percent average increase in top-line revenue growth as a result of that hire.”
This should not be an extension of your sales team. As HBR states, “The capabilities and qualities that make someone a great sales manager are not the same as those that make an effective channel manager.”
You need someone who will manage, position, and coach distributors to sell the product as effectively as possible. Channel managers that can think globally and act locally may be best suited to strategize for specific regions and markets while staying true to the product and brand.
4. Identify the right partners.
Bridging the gap between cultures to forge channel partnerships doesn’t have to be a headache, especially if you tap into resources meant to ease the process of learning and adapting to identify the right partners.
One unsung resource is the U.S. Commercial Service, which works with American companies to help them expand internationally. For a minimal fee to cover overhead, they will contact local embassies on your company’s behalf, who will schedule meetings with potential partners. They will even visit potential partners to represent and recommend your company.
You can and should also utilize technology to identify viable partners. Emotions tell one story, but the metrics and data never lie. If you put into place clear criteria and evaluation processes bolstered by high-tech tools, you will have a strong inclination of which businesses are a good match for yours.
5. Learn and adapt.
According to Gregg Pugmire, senior vice president of sales and marketing at Nexsan, “The natural process for most channel organizations, even those that do have multi-international offices, is to push U.S. experiences and sales strategies in other countries, as this is where the bulk of their expertise lies.”
Pushing U.S. experiences and strategies is the definition of staying in your comfort zone even when jetted out of it; instead, companies should learn about their new partner and market, then adapt their strategies for a more harmonious relationship. This means understanding and respecting cultural nuance too.
Its wise for anyone doing business globally to take the time to learn the culture and be patient while establishing trust and building relationships. A lack of understanding and respect can harm relationships with channel partners and the like. It extends to business practices and general knowledge about what strategies work in different markets.
So instead of expecting them to cater to you 100 percent, learn how your partners do business, learn about the culture, the people, your buyer persona, their buying cycle and more. By learning and adapting to trends and traditions, you can become an extension of your channel’s team and make mutual success all the more likely. Proactively preparing for multicultural engagements and sales processes can make a significant difference to your bottom line and reputation.
6. Teach and be taught.
Resources don’t end when the partnership begins. If our channel partners are doing well and growing, we are too. But if we don’t give them the resources to grow while still expecting them to go above and beyond for us, the relationship will suffer — and sales will too.
Time and time again I’ve witnessed American suppliers approach a partner and ask, “What can you do for me?” instead of truly reaching out with a deal that goes both ways. The question instead should be, “What can we do for each other?” Every relationship involves a give and take, and good ones involve generosity and reciprocity. When it comes to channels, you will always get what you give.
You can’t translate your training into every language, so it’s true that you will need to be selective and strategic. For promising markets, it is worth allocating resources to translate documents and legal contracts, providing them with all the ammo they need to perform while, in turn, getting to know the market more. Learn how to sit down and do business with them. Create content that enables them; be their advocate in the U.S. And while you are coaching them, let them coach you too.
Perception Starts with Action
You attract more flies with honey than vinegar, and it’s the same with affiliates and customers. American companies are more than capable of doing just that by being open and prepared to branch out, fortifying strong and gainful relationships all the while.
I know it is possible because I’ve seen it happen. The thing is, once a business successfully masters global channel sales, they are no longer perceived as just a domestic company. They become an international player that is at once competitive and cooperative.
Following these guidelines should help you get there through thoughtful strategy and action. In the truest spirit of channel-friendliness, I wish you the best.
Ayesha Prakash is a director of global channels at a tier-one tech company. An accomplished executive and consultant with more than 13 years of success across the technology, cybersecurity, big data, marketing, PR and IT industries, Ayesha has extensive experience driving global business development and marketing efforts in the IT sector. Among her strengths: go-to-market strategy, channel expansion and strategic partnerships, PR and marketing support.