What to Consider when selecting an Indirect Sales Partner – Part II

 In my last posting, I talked about a number of critical considerations/ activities that one must review when selecting to use an indirect channel. As I have said in other postings regarding channels  make sure you have an overall strategy and ask; will this channel selection support this strategy?  I then talked in more detail about the financial considerations and how this will have a great impact on the type of indirect method one chooses.

Personally, I believe the most critical consideration in implementing and maintaining an indirect channel of distribution is the partner programs.   The partner programs can be broken down into three major components. One, the strategy on why an indirect channel or partnership, two, the partnership selection process and three, the actual partnership programs.

Let’s look at these in more detail

Partnership Strategy:   What is the corporate strategy and will going indirect support this strategy?  Are you selecting indirect for added sales coverage, augmenting your product or service lines, augmenting a technology you do not have, or seeking to add specific skill sets from the distributor and or reseller? Whatever the case, make sure you understand the overall objective because in the long run if you do everything else and it doesn’t match your strategy, it will be nothing more than a waste of time and money.

Partnership selection: Assuming that everyone understands the strategy and how indirect will support this strategy, then the selection process is the next critical step. Selecting partners should be like conducting an interview for key positions within your company.  Some major areas to investigate are the following:

1-      What is the potential partner’s strategy and does it align with yours?

2-      Will this partner augment your product or service line or will he compete with you?

3-      Does this partner have the skill sets to sell your product or service?

4-      Does this partner have the support functions to provide best-in-class services?

5-      Does the partner’s territory/ coverage add or conflict with your territories?

6-      Will the compensation plan fit within you current sales force’s plans or if there is no direct sales force will the financials make it a win- win for each party?

7-      How well will the partners’ marketing function fit with your company’s marketing?

8-      Will the partner’s brand add or detract from your branding activities?

Partnership Programs:  Some of the programs that a best-in-class should contain are the following:

1-      Rules of engagement for your company and the distributors and resellers

2-      Well defined territory coverage for your company and the indirect partners

3-       Policies on demo units/loaners

4-      Policy on escalation and returns

5-      Warranty coverage, who, when and how long

6-      Volume, discount structure and are there any incentives

7-      Well defined joint marketing activities

9-      Promotional programs  (Push and Pull)

10-   Funding,  who funds what and when

11-   Schedule regarding investments in major activities  and mutual related  metrics

12-   Executive liaison for both parties

13-   Collateral for products and services that are tailored for the distributor and resellers

14-   Tradeshows/events/venues

As one can see going indirect requires a lot of planning and joint activities.   Indirect channels should be a true partnership not a vendor- reseller agreement.

If you would like more detail on areas of consideration for indirect or any other channels; give me a call (508-838-1073) or visit our Contact US.

RHL 02/22/11

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