4 Step Approach to Evolving Your Channel Partner Ecosystem

A Structured Approach to Align Resources and Drive Profitable Revenue Growth

Manufacturing leaders are rethinking their channel partner ecosystems to adapt to the ever-changing buyer landscape. Evolving buyer expectations, expanded distributor abilities, new routes to market and the need to provide value at each customer touchpoint are the driving forces behind this re-evaluation.

Converging Trends

Manufacturing leaders must assign limited resources to initiatives that drive profitable growth. To do so, they must first understand the following critical trends and how these factors impact their ecosystems.

Complex buyer expectations. Buyer expectations are evolving, and the decision-making process is becoming more complex requiring cross-functional collaboration across corporate and field-level decision-makers. Manufacturers can influence and persuade these decisions, but only if they understand when and where to reach their customers.

Growing distributor capabilities. Distributor partners are the most widely used partner type by manufacturers. Distributors are evolving their business to respond to the new buyer’s decision-making processes and market changes. For instance, e-commerce and digital engagement are now table stakes for buyers, requiring manufacturers and distributors to invest in these technologies. Distributors are also increasing their services capabilities to ensure their customers are achieving the business outcomes they desire.

Increased M&A and market growth. M&A activity is on the rise, requiring the entire ecosystem to navigate convoluted routes to market. In addition, the industry cannot ignore industrial distribution market size growth, which is expected to grow at 4.5% CAGR from 2022 to 2027¹. The result? Rapid changes create a constantly shifting, if not unstable, playing field.

A clear value proposition. Manufacturers and distributors respond to market changes by creating new customer solutions that support their customers’ expanding needs. But all players must focus on a single challenge: what is the value proposition, and how does it contribute to profitable growth? 

Achieving goals in an evolving market requires focus, resource alignment and a structured approach to address these evolving trends. By continuing forward without adapting to this new world or by using a piecemeal approach, manufacturers risk falling behind their peers who are making these changes. Manufacturing leaders benefit by adopting a playbook that details an integrated approach for all participants, creating partnerships across the ecosystem.

The Playbook for Evolving Your Channel Partner Ecosystem

A step-by-step approach offers a repeatable process for supporting the channel partner ecosystem. Each step builds upon another, aligning resources for profitable revenue generation. The benefits of a structured approach include:

• Aligning activities to buyer needs.
• Identifying hidden opportunities for revenue growth.
• Optimizing the mutual value by incorporating and capitalizing on each participant’s unique value proposition.
• Identifying opportunities for new partners that add value to the entire ecosystem.

Step 1: Map the Buyer’s Journey

In the past, manufacturers used the “Field of Dreams” approach—build it, and they will come. However, a passive market approach will soon be overwhelmed by competitors who actively focus on researching and documenting their buyers’ decision-making process and devote resources to persuade and influence buyers’ decisions.

Manufacturers and distributors can start by determining specific market segments and buyer behaviors and mapping the steps within those segments. Decision-making steps, required information and stakeholder interests should be included in each unique journey.

Step 2:  Determine Routes to Market

After mapping the buyer’s Journey, it becomes evident where manufacturers, distributors and other ecosystem players can offer value. This map will indicate the best routes to market for given offerings and provide a structural approach for determining which players add the greatest value at each stage.

Success lies in determining partner value from the buyer’s point of view. Partner value can take on many forms, including corporate or plant-level relationships, sales, service, integrators and digital engagement alternatives. The primary goal is to assign responsibility for each aspect within the route to market, assigning accountability and success measurements that benefit the buyer.

Step 3:  Develop the Partner Program

Partnership programs are more than just a contract with negotiated discounting incentives. Distributor partners should offer specific value to buyers and include enablement and reward programs.

• Base financial incentives reflect the value that each partner owns. Their responsibilities may include driving awareness of offerings, sales, fulfillment and more. Each responsibility will have a corresponding incentive that varies from co-marketing and MDF funds to discounts and rebates. The core theme is tying value offered to incentives.
• Training and enablement benefits help partner sellers to better serve the buyer’s evolving needs. Viewing the ecosystem as a whole benefits all players by increasing their knowledge base and providing additional value for buyers.
• Engagement approaches will differ by ecosystem. Manufacturers with a small partner community can maintain visibility to their communities with one-off negotiations of terms and benefits. However, large partner ecosystems require technology investments and structured benefits programs to track activity and value. The engagement approach should fit the partnership’s needs and help them consistently deliver value while tracking activity.

Step 4:  Identify Roles and Coverage

Once the buyer’s journey, routes to market and partnership support strategies are in place, manufacturers can fall into the trap of believing they have outsourced their revenue growth opportunities. However, manufacturers must remain actively involved in delivery to meet profitable revenue growth goals. Reaching strategic goals requires having the proper roles that drive accountability and engagement.

Similar to aligning the partner’s role in the customer buyer journey, manufacturers need to assign their seller roles and responsibilities in the partner engagement lifecycle. After defining the steps along the partner engagement lifecycle, manufacturers can identify coverage responsibilities and the appropriate roles to fulfill those responsibilities. The coverage model can range from simple to complex, depending on what offerings and values they aspire to deliver.

Large manufacturers now deploy more complicated models to ensure proper coverage of their partners and key customers, which may include:

• Partner development roles, including relationship managers, are primarily responsible for influencing strategic planning and investment at high-priority and strategic partners.
• Execution roles will include field or inside reps whose primary function is partner development and sales coordination.
• Specialist roles include overlay roles with strong technical, functional or industry knowledge. These roles may support business development or partnership development efforts of partner or execution roles.
• Efficiency roles are designed to support the administrative and informational needs of the partnership community.

This customer-first, value-focused approach supports manufacturers in allocating resources based on increasingly complex buyer journey requirements. Minor tweaks to an existing ecosystem will not offer the benefits of a customer-first, comprehensive strategy. An integrated playbook approach has the value of maximizing partnerships’ ROI and creating a value-driven ecosystem that benefits all players.

¹ Industrial Distribution Market Size, Trends, Report 2032 (precedenceresearch.com)