As businesses grow, so does their need for wider distribution and access to new markets. One way to achieve this is by partnering with individuals or other businesses that can promote and sell their products or services through their own channels. These partners, known as channel partners, can be:
- Wholesalers
- Retailers
- Resellers
- Value-added resellers
- Integration partners
- Agents
- Brokers
- Fulfillment partners
- Strategic partners
- Affiliate partners
- Referral partners
- Recruited advocates
Each type of partner has its own unique benefits, and in this article, we’ll explore different types of channel partners in detail to help you decide which channel partner programs are best suited for your business needs.
What are channel partners? Why do you need them?
In business, a channel partner is an individual or business that enters a formal agreement to market and sell your products/services through its own channels.
A good partnership program is essential for startups and small businesses looking to widen their distribution and open up new markets and verticals for sales. A successful partner program can help you rapidly increase brand awareness, accelerate your growth, and scale your business.
What do all channel partner types have in common?
Regardless of the type of channel partner program, your partners are bound by a formal agreement and earn incentives for the sales they make for you. Additionally, all partners open up new marketing, sales, and/or distribution channels, essentially serving as an extension of your sales and business development teams. Below, we’ll look at key benefits of the different types of channel partners you could choose for your partner ecosystem.
11 best channel partner types
There are many different types of channel partners, each with its unique benefits. Here are the 11 best channel partner types to consider.
1. Wholesalers (distribution partners)
Wholesalers typically buy large quantities of your products from you at a discount, then sell the products to many different retailers and resellers. They are generally the “middle persons” who can help you break into many different markets by getting your products into the hands of resellers and retailers. Wholesalers typically have a large network of resellers and retailers that they provide with product or service information, pricing, and marketing support.
Key benefits of wholesalers:
- Access to a wider distribution network and new markets
- Reduced costs of inventory storage and management
- Ability to leverage the wholesaler’s expertise in distribution logistics
Best for: Manufacturers and suppliers of goods
2. Retailers
Retailers are businesses that sell smaller, specific quantities of your product to more targeted audiences via their own stores. They typically buy the products from wholesalers. You’ll be able to expand to many specific markets via retailers.
Key benefits:
- Increased brand visibility and access to a wider customer base
- Reduced costs of sales and marketing
- Access to valuable customer insights
Best for: Companies that sell physical products or services directly to end customers
3. Resellers
Like retailers, resellers sell small, specific quantities of your products to end users. While retailers are always businesses, reseller partners could be businesses or individuals. Resellers might also purchase your products directly from you and then sell them on their own channels, without going through a wholesaler.
Key benefits:
- Access to an established customer base and market presence
- Reduced costs of sales and marketing
- Ability to leverage resellers’ expertise in a specific industry or market
Best for:
- Software companies
- SaaS companies
- Other digital service providers
4. Value-added resellers (VARs)
VARs not only sell your product through their own channels, but they are also considered experts in the product. They might be trained to offer services related to your product or be experts in a specific industry or use case. They could help with installation, customization, training, and support. VARs can also promote businesses they’re partnered with by developing marketing materials, such as product information sheets and brochures.
In addition, VARs may bundle and sell your product with other products that add value, such as software that integrates together. They can also host webinars and other events to promote your products or services. With VARs, you have experts backing your offerings, which builds trust and makes people more likely to buy your product.
Key benefits:
- Ability to customize and integrate products and services to meet specific customer needs
- Access to expertise in product implementation and customer support
- Opportunity to expand the range of products and services offered to customers
Best for:
- Technology companies
- Software providers
- Hardware manufacturers
5. Integration partners
Integration partnerships happen when two non-competing software companies agree to integrate seamlessly with each other’s software and share information between the two programs, usually via APIs. This creates a smoother experience for end users in less time, and without the need to expend energy on developing new features directly in your product. With integration partnerships, you each agree to feature the other software on each other’s websites as an integration. You’ll each link to your partner’s site, where users can purchase the software.
Key benefits:
- Ability to integrate products and services with other complementary solutions
- Access to expertise in software development and API integration
- Ability to offer customers a more comprehensive solution, with new features
Best for: Software providers (SaaS providers)
6. Agents and brokers
Agents and brokers are third parties who make meaningful connections with people or businesses that could benefit from the products they represent. They set up connections between your company and other companies, but they don’t sell your products for you.
Key benefits:
- Access to an established customer base and market presence
- Reduced costs of sales and marketing
- Ability to leverage agents’ or brokers’ expertise in a specific industry or market
Best for:
- Insurance companies
- Real estate firms
- Financial institutions
7. Fulfillment partners
Fulfillment partners will help your business handle tasks such as order fulfillment and administrative responsibilities. They don’t buy or sell your products on their own, but they help your company fulfill your direct orders.
Key benefits:
- Ability to streamline logistics and order fulfillment processes
- Reduced costs of inventory storage and management
- Opportunity to expand the range of products and services offered to customers
Best for: E-commerce companies and online retailers
8. Strategic partners
Strategic partners are non-competing businesses that partner with your business to help both of you achieve mutual goals. You might promote each others’ products or even collaborate on joint ventures.
Key benefits:
- Access to new markets, customers, and distribution channels
- Ability to leverage strategic partners’ expertise in a specific industry or market
- Opportunity to collaborate on joint marketing and promotional activities
Best for: Companies in a variety of industries that have complementary products or services
9. Affiliate partners
Affiliate partners promote your products or services on their own channels in exchange for commissions. Rather than sell your products, they direct leads to your website via an affiliate link, which tracks the sales they help you make. Affiliates’ trusted recommendations will encourage their audience to check out and purchase your products. Note that an affiliate is not always considered a channel partner, but affiliate programs provide a type of partnership that’s often easier to access than most channel partnerships.
Key benefits:
- Access to an established customer base and market presence
- Reduced costs of sales and marketing
- Ability to leverage affiliates’ expertise in a specific industry or market
Best for: E-commerce companies, B2Bs, and SaaS providers that offer products that appeal to a wide audience
10. Referral partners
Referral partners help you sell products by connecting you with people they know personally who could benefit from what you offer. They are usually representatives of related but non-competing businesses, who refer their own customers to you when they know they could benefit from what you have to offer. Occasionally, your B2B customers might also function as referral partners, and refer people they know from other B2Bs. Because a referral partnership is relationship based, those partners will often be involved in either the qualifying of the leads, or the actual selling on your business’ behalf.
Key benefits:
- Access to an established customer base and market presence
- Reduced costs of sales and marketing
- Ability to leverage the trust that peers place in the referring parties, for reliable lead generation and conversions
Best for: Companies in a variety of industries that want to leverage referrals as a key source of new business
11. Recruited advocates
Recruited advocates are a powerful marketing tool for companies looking to expand their reach and build their brands. These individuals are handpicked by the company to promote their products or services and are often chosen because they are already fans of the brand.
One type of recruited advocate is the brand ambassador. Brand ambassadors are individuals who represent the company and its products or services in a positive light. They are often chosen for their outgoing personalities, their ability to connect with others, and their social media presence. Brand ambassadors may be paid for their work, or they may receive free products or services in exchange for their advocacy on key marketing campaigns.
Recruited advocates are valuable because they have a trusted influence among their audience. Whether they have a strong social media following, are experts in a particular niche or industry, or are well-connected in their community, recruited advocates can help to amplify your brand’s message and reach new customers.
When you recruit advocates to market your brand, they will promote your products both online and offline. This could include sharing your social media posts, creating blog content or videos featuring your products, or even hosting in-person events to showcase your brand.
One important distinction to note is that recruited advocates do not sell your products on their own channels. Instead, they will use tracked links to direct their followers to your website or other sales channels. This helps to ensure that all sales are properly tracked and that credit is given to the recruited advocate for their efforts.
Key benefits:
- Increased brand awareness and customer loyalty
- Access to a wider audience through advocates’ social networks
- Opportunity to generate user-generated content and positive reviews
Best for: Consumer goods companies, lifestyle brands, and any other company with a strong brand identity
Choosing the right channel partner type
Resellers, distributors, referral partners, and recruited advocates are all viable options, depending on the goals and needs of the business. Resellers offer access to new markets, while distributors provide logistical support and streamline the sales process. Referral partners leverage their network and expertise, while recruited advocates bring a trusted influence to a niche or industry.
So, how to choose the right channel partner type(s)?
- Consider whether you want partners who distribute and sell products for you, or partners who market your products and direct leads to your own website
- Consider the new markets and verticals you want to break into
- Consider what’s the most cost-effective way to scale at the moment – generally, affiliates, referral partners, and ambassadors are more accessible than distribution-type partners, but distributors can often lead to quick scaling if you can afford them
Ultimately, it’s crucial to understand the unique strengths and weaknesses of each type of channel partner and choose the ones that align with your business’s objectives.
Conclusion
Channel partnerships are essential for businesses that want to expand their reach and increase revenue. Different types of channel partners offer distinct advantages, and choosing the right ones can make a significant impact on the success of a company.
With the right partners in place, companies can leverage their strengths and expand their reach, driving growth and success in today’s competitive business landscape. You will also want to establish systems, onboarding processes, and metrics to ensure proper partner relationship management and optimal functionality of your program. And regardless of the type of channel partner you choose, you’ll need PRM software to run and manage your partnerships efficiently.
For more help establishing channel partnerships and exploring different channel partner types, reach out to us at Referral Rock to schedule a demo and learn how a channel partner strategy can take your business to the next level.
