The Path Forward: Maximizing ROI with Indirect Channels

Unlocking Channel Partner Potential in Manufacturing

In today’s manufacturing landscape, understanding the dynamics of indirect channels is crucial for staying competitive and maximizing ROI. Alexander Group’s latest Manufacturing Indirect Channels Research provides invaluable insights into the complexities and opportunities within the space. This article highlights key findings and statistics from the research, emphasizing why manufacturers must grasp this information to thrive in an environment with ever-expanding routes to market.

Complexity and Diversity of Indirect Routes to Market

Alexander Group research reveals that indirect routes to market are continuously evolving, with manufacturers selling through an average of 3.6 distinct partner types. Each partner type (e.g., distributors, dealers, rep agencies, contractors, etc.) delivers unique value tailored to specific end-customer needs. A well-rounded channel strategy is therefore necessary to efficiently manage diverse partner types while still applying the appropriate nuance to each.

The study also highlights rising expectations for channel partners. Manufacturers are demanding higher customer service and support standards, increased technical knowledge, and more frequent communication and reporting. These heightened expectations necessitate continuous assessment and optimization of the partner ecosystem to identify performance gaps and delineate clear rules of engagement. 

Strategic Approaches to Partner Programs

The research identifies several strategic approaches to partner programs ranging from ad-hoc to fully structured, each with distinct tradeoffs. A formalized partner program, while more administratively complex, ensures consistent engagement expectations, especially for large partner communities. Additionally, exclusive selling rights are on the rise, supporting stronger partner relationships and reducing channel conflict. 

Manufacturers are also leveraging a diverse set of incentives to motivate partners, with an average of three different incentives used across partner types. These incentives, including volume discounts, marketing development funds and rebates, are tailored to align with the partner’s role in the value chain. Data sharing between manufacturers and partners further supports product development, sales and marketing analytics, and performance evaluation.

Investment in Roles and Technology

To drive deeper collaboration with channel partners, manufacturers are investing in various roles such as channel account managers, channel operations roles and channel success roles. These roles are designed to support all phases of the customer and partner engagement lifecycle, ensuring a holistic approach to channel management. While challenging in some cases due to lack of sell-through data visibility, aligning compensation to actual sales results program objectives and seller responsibilities is critical, with bookings and margin being the most common measures.

The use of Partner Relationship Management (PRM) tools is also highlighted by the research. PRM tools serve as multi-functional hubs, centralizing co-marketing and sales analytics, onboarding and recruiting new partners, and providing a partner-facing engagement portal. Furthermore, manufacturers are beginning to invest in AI to support channel content generation, segmentation and marketing automation use cases.

The Path Forward

This research underscores the importance of a comprehensive and strategic approach to managing indirect channels in the manufacturing industry. By understanding the complexities and leveraging the right tools and strategies, manufacturers can enhance their channel partner engagement and maximize ROI. This research is a valuable resource for manufacturers and distributors looking to stay ahead in a competitive market.

The evolving landscape of indirect channels presents both challenges and opportunities for manufacturers and distributors. By diversifying partner ecosystems and programs, investing in roles to drive collaboration, offering diverse incentives, and fostering data sharing, manufacturers can optimize their channel strategies and achieve long-term success. A proactive, data-driven approach to managing indirect channels ensures that manufacturers and their partners are well-equipped to meet the challenges and opportunities of the future.