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What Is a Channel Partner?

Is your company facing challenges as you strive to maintain growth and get your products and services in front of your customers? It happens all the time. It takes great ideas and a lot of hard work to get your Software as a Service  (SaaS) company to where you’re at. If you’re struggling to reach a wider audience, you may need a channel partner. Channel partners that share your values and align with your business goals can absolutely change the game and help you grow your business. In this article, we’re going to dive into what is meant by “channel partner” and go over a variety of examples to give you a solid understanding of the value that partnerships can bring to your business.

What Is Meant By Channel Partner In Business?

Simply put, a channel partner is a third-party company that collaborates with your company to sell products and services through the partner’s existing customer base or distribution network. The primary role of a channel partner is to act as an intermediary between the SaaS company and its customers, leveraging their expertise and resources to drive sales and increase market penetration. This is the answer to the question, “What is meant by channel partner in marketing?” 

What is the role of a channel partner?

The specifics vary from partnership to partnership, but many channel partners will manage marketing, sales, and customer support. They will help to promote the SaaS company’s products and services, generate leads, and close deals. Channel partners also provide customer support and training to ensure customer satisfaction and retention. 

It’s a symbiotic relationship. You increase your company’s revenue thanks to the increased customer base, and the partner is able to generate additional revenue with each new sale they make thanks to your product. There are various types of channel partners, including value-added resellers (VARs), system integrators, referral partners, and distributors. Each partner type has its own strengths and weaknesses. 

Channel Partners Examples

When you think of channel partners, a few things may come to mind. There are multiple examples of channel partners, including resellers, consultants, system integrators, and managed service providers (MSPs). In the realm of Cloud services, channel partners often leverage platforms like AWS Marketplace, Google Cloud Marketplace, and Azure Marketplace to connect with customers and streamline the distribution of software and services. All of these entities exist as separate organizations or individuals in their own right. However, they are also an extension of you as the creator or developer of your product.

Alliances, Strategic Partnerships, and Channel Partnerships

There are several key relationships your business can have with other businesses. Channel partnerships are often viewed in light of alliances and strategic partnerships. Let’s clear up the confusion and go over these three different partnerships so it’s clearer exactly what makes channel partnerships distinct. 

Alliance Partner Meaning

An alliance is a formal agreement between two or more companies to work together for a common goal, often for a specific project or initiative. Alliances can take many forms, such as joint ventures, research and development collaborations, or channel partnerships. 

Strategic Partnerships

By contrast, strategic partnerships are generally more long-term relationships between two or more companies that work together to achieve mutual objectives. This could involve joint product development, shared technology, or even a merger or acquisition. 

Channel Partner vs. Distributor

Additionally, let’s have a real quick talk about a channel partner vs. a distributor. A distributor, or reseller, is a company that purchases products from a company and resells them to end customers. In our analogy about a book, the publisher is the channel partner, and the bookstores are distributors. The bookstores are not vested in marketing you as the author, but the publisher is. Channel partners are often much more heavily involved with marketing efforts and sales than distributors. 

As you can see, although there may be some similarities between channel partnerships and these other business associations, both alliances and strategic partnerships are much broader and more complex than channel partnerships. Nonetheless, all three types of partnerships can be valuable for growing your business and reaching new customers. 

SaaS Channel Partner Agreement

First off, remember that the goal of any channel partnership agreement is to establish a mutually beneficial relationship. Generally, the channel partner is responsible for marketing, sales, and customer support. The SaaS company in the agreement provides the product or service and may also offer training and support to the channel partner. The typical channel partnership agreement will outline the responsibilities of each party, as well as the commission structure for the channel partner. 

The commission structure for SaaS channel partners can vary, but it typically involves a percentage of the revenue generated from sales made through the partner’s network. For example, a SaaS company may offer a 20% commission on all sales made by the channel partner. The commission may be paid out monthly, quarterly, or annually, depending on the terms of the agreement.

When it comes to Cloud services, SaaS channel partner agreements are crucial. These agreements outline the terms and conditions under which channel partners can market, sell, and support SaaS solutions. Cloud marketplaces serve as central hubs for these collaborations, providing a platform for vendors and channel partners to connect seamlessly.

The Next Step – Partnership Management

If you’ve already signed agreements with channel partners, the next step is to manage your relationships with these partners. As you grow, so will the number of partners you work with. Soon, you’ll need some kind of software to streamline your partner onboarding, automate channel marketing, and get the data you need to optimize your partnership ecosystem. That’s where Torchlite comes in.

Improve Your Channel Partner Management With Torchlite

Many organizations tend to think of channel management as a strictly-human job because relationships are built by people. And while that is true, partnership management skills can only take you so far in the business world if you don’t have the tools to effectively manage your partner portfolio. Even the most skilled carpenter can only do so much with a simple hammer, after all.

Think of Torchlite as an entire toolbox for channel partner managers: it’s a software platform that provides an entire suite of tools, capabilities, and channels that can house an entire partner portfolio. On top of that, Torchlite’s “Simply Intelligent” software design makes it easy to customize workflows, channels, and portals for each partner, meaning that as your relationships evolve, Torchlite evolves alongside them. You’ll always have the tools you need and the ability to incorporate new ones through our seamless integration. Perhaps then, it’s better to think of Torchlite as not just a toolbox, but the entire tool shop.

It’s time to set fire to the old ways of Channel Management—and Torchlite is here to offer you the match. Book a demo with us today and see the power of Torchlite software for yourself.

Kelly Schwedland

Kelly Schwedland is the CEO of Torchlite, where he is at the forefront of scaling partner programs and revolutionizing the way businesses collaborate and drive growth, with a passion for driving revenue and fostering innovation through partnerships.