Channel Definitions Every Business Should Know
When establishing a partner channel, it's important to understand the key terms that will guide the buildout and modeling of a successful program. Here’s a 101 essential lists of channel terms, along with examples of companies that fit each category that need to be navigated.
Channel Partner - A company or individual that partners with another organization to market and sell their products or services. Channel partners can include resellers, distributors, embedded/OEM, agents, and brokers. Examples: CDW, Insight, Tech Data
Value-Added Reseller (VAR) - A business that adds features or services to an existing product and then resells it as an integrated solution. VARs enhance the value of the product for the end customer. Examples:ConvergeOne, Presidio, World Wide Technology (WWT)
Distributor - An intermediary entity that buys products from a manufacturer and sells them to resellers or retailers. Distributors handle warehousing, logistics, and product delivery. Value Added Distributors (VAD) provide supplementary services & solutions that go beyond the traditional role of logistics and order fulfillment to provide additional services that enhance a company's products or solutions. Examples: Ingram Micro, Arrow, Synnex, Infinigate, Carahsoft
Original Equipment Manufacturer (OEM) - A company that produces parts or equipment that are marketed by another manufacturer. OEMs provide components that are incorporated into the final product of another company. Examples: Intel, Dell, HP
System Integrator (SI) - A company that specializes in bringing together various components and subsystems into a whole, ensuring that they function together seamlessly. System integrators provide comprehensive solutions tailored to customer needs. Accenture, Capgemini, IBM Global Services, Data, Cognizant
Agent - An individual or business authorized to act on behalf of another (the principal) to negotiate and sell products or services. Agents typically earn commissions based on sales. Examples: Insurance agents, real estate agents, manufacturer's representatives
Referral Partner - A partner that recommends a product or service to potential customers in exchange for a referral fee or commission. Referral partners do not sell the product directly. Examples: Affiliate marketers, business consultants, industry influencers, SIs, associations
Co-Sell Partner - A partner that collaborates with another company to jointly sell products or services. Co-sell partners work together on sales strategies, share resources, and jointly approach potential customers to provide comprehensive solutions. Examples: Microsoft Azure co-sell program, AWS Partner Network, SAP, SIs, Big 4
Influence Partner - A partner that influences a customer's purchasing decision without directly selling the product. Influence partners use their reputation, expertise, or network to drive awareness and preference for a product, often earning a fee or commission for their efforts. Examples: Industry analysts, tech bloggers, subject matter experts, GSIs, Big 4
Managed Service Provider (MSP) - A company that remotely manages a customer’s IT infrastructure and/or end-user systems, typically on a subscription basis. MSPs offer a range of services, from network management to cybersecurity. Examples: Datto, ConnectWise, All Covered, Dataprise
Independent Software Vendor (ISV) - A company that makes and sells software products that run on one or more computer hardware or operating system platforms. ISVs often partner with hardware vendors to ensure compatibility. Examples: Microsoft, Adobe, Oracle, Salesforce.com
Cloud Service Provider (CSP) / Hyperscalers - A type of large-scale data center that offers massive computing resources, typically in the form of an elastic cloud platform. CSPs deliver these services on a subscription or pay-per-use basis, enabling businesses to scale resources up or down as needed. Examples: AWS, Microsoft Azure, Google Cloud Platform (GCP)
Direct Market Reseller (DMR) - A company that sells products directly to customers via telephone or the internet, often without a physical storefront. DMRs typically focus on high-volume sales and may offer a wide range of products from multiple vendors. Examples: CDW, Newegg Business, PC Connection
Channel Conflict - A situation where channel partners compete against each other or the parent company’s internal sales team, potentially leading to disputes and reduced sales efficiency. Examples: Competing resellers within the same territory, direct sales teams versus channel partners
Channel Incentives - Programs designed to motivate channel partners to increase sales and achieve targets. These can include discounts, rebates, bonuses, and other financial rewards. Examples: Cisco's Partner Incentive Program, HP Partner First Program
Deal Registration - A process that allows channel partners to register their sales opportunities with the vendor. This ensures that the partner gets credit for the deal and often provides additional support and resources. Examples: Dell's Deal Registration Program, Cisco's Opportunity Incentive Program
Market Development Funds (MDF) - Financial contributions by a vendor to support the marketing and sales efforts of their channel partners. MDFs are used for promotional activities, advertising, events, and other marketing initiatives. Examples: Microsoft's Co-op Marketing Funds, IBM's Market Development Funds
Co-op Funds - Funds provided by a vendor to a channel partner, typically on a reimbursement basis, to support joint marketing and promotional activities. Examples: HP’s Co-op Program, Samsung's Partner Marketing Program
Partner Portal - An online platform that provides channel partners with access to resources, training materials, sales tools, and other information necessary to effectively sell, engage, and support the vendor’s products. Examples: Zift, Impartner, Allbound, Salesforce
Channel Marketing - Marketing activities specifically designed to support and promote products through channel partners. This includes creating marketing materials, conducting joint campaigns, and providing market insights. Examples: VMware's Partner Marketing Program, Intel's Channel Marketing Program
Tiered Partner Program - A structured program that categorizes channel partners into different levels (e.g., Silver, Gold, Platinum) based on their performance, sales volume, and other criteria. Higher tiers typically receive greater benefits and support. Examples: Microsoft Partner Network (MPN), Cisco's Channel Partner Program
Partner Enablement - The process of providing channel partners with the tools, training, and resources they need to effectively sell and support a vendor’s products. Enablement activities can include product training, sales coaching, and technical support. Examples: Salesforce Partner Enablement Program, AWS Partner Enablement Program
Understand that these terms are basic building blocks for consideration in building a successful channel strategy. It is important to note that both partners and venders may think of these terms differently based on prior experiences, and clear communication and mutual understanding of these definitions in your ecosystem will help foster a strong, collaborative relationship.
