Learning channel partner lingo will help you understand exactly what the manufacturer offers as a part of its program and what the expectations are that you, as a reseller or channel partner, will need to meet and exceed.
Channel partner is the common phrase used to describe a business-to-business (B2B) relationship where a smaller company or organization partners with a corporate manufacturer to market and sell that producer’s products, services or technologies usually through a reseller relationship. In reselling, the partner takes title to product and resells. Usually, the relationship is defined by the manufacturer’s equipment being part of a larger solution offered to customers by the channel partner. The partner will “add value” (see VAR) to the product or technology, or even build a solution that utilizes one or more of the vendors’ products.
Establishing the Business Relationship
In establishing the business relationship and partner program, channel partners may be any number of different types of businesses, including distributors, vendors, retailers, consultants, systems integrators (SI), technology deployment consultancies, value-added resellers (VARs) and other organizations. Basically, it could be any business who would have a need to resell the manufacturer’s products, services or technologies as a part of its own IT services or portfolio.
Large manufacturers or producers, such as IBM, Microsoft, and Oracle to name but a few offer channel partner programs that give businesses the opportunity to promote their established products or services. When joining a channel partner program, the business benefits by receiving product and marketing training, discounts, technical support, lead generation tools and other important ‘perks’.
Generally, a business will partner with a manufacturer only when the business utilizes that specific type of technology or product in their portfolio, and only when an increase in access and support offered through the channel partner program will provide the business with a greater revenue.
Channel Partners Glossary of Terms
Entering in to a channel partner relationship or vendor program is a bit like entering a little world all on its own. This IT business relationship has many unique phrases and abbreviations that are commonly used to describe functions and processes within this type of business relationship. Learning channel partner lingo will help you understand exactly what the manufacturer offers as a part of its program and what the expectations are that you, as a reseller or channel partner, will need to meet and exceed. To get you started, here are 30 popular channel partner terms that you need to know.
accrual
Authorized Education Reseller
brand
channel
channel captain
channel partner
channel strategy
Cisco Consumer Channel Network
co-marketing
early adopter
ESP
Full Packaged Product
ICPP
IHV
loyalty program
Microsoft Volume Licensing
MSRP
OEM
proprietary
pull strategy
push strategy
Retail Software License Terms
sales target
SI
software licensing
stuffing
systems integrator
total solution
VAR
vendor
Different Types of Channel Partner Relationships
Channel partners form relationships for a number of different reasons and results. For the manufacturer, a channel partner can help bring a new product to market and increase visibility of a brand and boost sales. For the business, it helps open the doors to new business with a lower cost and a smaller risk factor than producing your own technology or merging/acquiring to obtain the technology for your service portfolio.
Where it gets confusing is that a channel partner relationship is not the same between all manufacturers and all types of businesses. For example, some partners may be distributors, resellers or vendors who sell the technology (usually a hardware or software product), and at the same time they are also distributing other manufacturer’s products. Some service providers and consultants may also use this type of channel partner program. This is more of an indirect relationship that isn’t as loyalty-based as others might be. Examples include retail outlets or e-commerce stores.
Strategic Business Relationships
Another type of channel partner relationship is a more strategic relationship where the manufacturer and business form an affiliation or partnership and use each other’s products or technologies in their own portfolio. They may also partner to integrate their respective technologies. For example, a small networking company may partner with a leading security software manufacturer to offer that manufacturer’s product integrated into its own hardware system.
Managed Services Provider
A managed services provider is another type of channel partner, in which the reseller uses a manufacturer’s products to build a network or IT infrastructure for their customer. Here, the channel partner (or reseller) would provide services to help the customer maintain the network or infrastructure. This type of relationship is growing in prevalence, particularly as mid-sized and larger organizations build out IT infrastructures, or data centers, that contain many different types of equipment from multiple manufacturers. A number of Cisco’s channel partners, for example, operate in this manner.
The primary difference between distributors and channel partners is that distributors do not usually sell directly to end users — instead they are in the middle between vendors and channel partners, often providing their own value in terms of special pricing, training, technical support, marketing and other types of assistance that benefit the channel partners with whom they work.
Related Channel Partner Articles
The following articles, courtesy of IT Channel Planet and Datamation provide examples of different types of channel partner relationships and IT channel programs.
- Tech Data Expands Support, Products For Data Center Resellers
- IBM Adapts Services Approach to Channel Partners
- The Enterprise Software Market: It’s the Channel, Stupid
- Novell Updates SUSE Appliance Toolkit For ISVs
Based in Nova Scotia, Vangie Beal is has been writing about technology for more than a decade. She is a frequent contributor to EcommerceGuide and managing editor at Webopedia. You can tweet her online @AuroraGG.
This article was last updated on January 13, 2015
