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Scaling Up International B2B Sales With Channel Partners: Why, When And How
January 11, 2021 by Oscar Torres. Forbes.com
Article from January 11, 2021 by Oscar Torres. Published by Forbes.com
Oscar Torres is the director of the B2B Management Program at Esade Executive Education.
The software industry is probably one of the most competitive sectors as there is practically no room for players to become category standards. Given that a sense of urgency to achieve market share is critical for software firms, companies in other industries can learn from them when they’re considering scaling up internationally.
I have often been asked the following question during my lectures at Esade: Why and when should B2B companies leverage channel partners to scale up their sales internationally? The answer is simple: The main reason for using channel partners is to deliver local value to clients and to accelerate coverage and revenue growth. And, what’s more: All of this without having to increase fixed costs by hiring thousands of new employees. Instead, companies can use their resources to innovate and offer best-in-class solutions.
This is the upside. The downside is that it requires a clear channel mindset to recruit, develop, and properly manage those partners. The right moment to recruit channel partners is when your business model is fully proven. Otherwise, it will be hard to find the right partners if you are incapable of recognizing what drives your success.
So, how does a company build the right B2B channel partners network at the international level?
First of all, it is important to be certain that candidates can provide local added value as future resellers of your solutions. This added value starts with the market knowledge you need, the companies’ local recognition, their access to your target clients, and a shared vision of your business values concerning sales, marketing, services, etc.
Understanding your partners’ CEOs and C-level profiles (and their coachability) is also critical as they will have to commit to your business model and values, share a passion for your mission, and align themselves with your strategy, as well as share a common understanding of how to do business with integrity and honesty.
Cultural fit is key. If you recruit channel partners looking to grow, their culture will have to be performance-driven with a sense of urgency to hit your targets in a specific market. Here the challenge will be developing a real partnership, which comes from both sides, yours and the partners’. A real partnership means commitment to a long-term view. We can sum this up in one magic word: mindshare. How much are they going to think about you compared to others?
Once you recruit them, another big question arises: How do you onboard and develop your international B2B channel partners network?
First of all, you should build a “field channel team” that has an in-depth understanding of and shares the local culture, while being field-oriented at the same time. The team’s key mission is scaling up your business by finding partners or value-added resellers (VARs).
Your field team will learn little through internal meetings and Excel spreadsheets. Instead, it has to learn about your channel partners’ skills by being with them in the field. In turn, channel partners will learn by doing, while the field team leads by example. Being field-oriented helps to develop a B2B culture that will enable your business strategy.
Developing the channel partners’ and their managers’ knowledge of strategy, business planning, sales and marketing management, talent management, data, finance, etc. is also fundamental. The objective is to achieve a holistic alignment between your strategy and your channel partners’ strategy and execution.
A solid channel management culture is probably the most important aspect to be able to lead an international channel partner network successfully. When it comes to the governance model, words like consistency, coherence, transparency, and simplicity are the foundations of a good channel management approach. It also requires clear upfront contracts, by which clear and common goals are shared. Always respecting the agreed-on rules and promoting fair competition with appropriate rewards and profits for both will be the basis of a true win-win relationship.
You need to develop channel partners that are accountable and loyal. You can achieve this by creating a sense of urgency and by celebrating shared successes that inspire everyone. The goal is to finally develop a common culture that will increase your partners’ mindshare with respect to your strategy.
But, what can go wrong? If you don’t pay attention to these previous considerations, here are some of the mistakes that I’ve seen across various industries and geographies. One of the most common is believing that a complex contract is a way to guarantee success, instead of creating a trustworthy relationship. Similarly, recruiting channel partners before you understand your own business model and its success factors is a problem. The same holds true for recruiting partners in a hurry, with a short pipeline of candidates, without involving the field team to consider the local culture, and without measuring the candidates’ local added value or checking for client references.
Another very common error is fantasizing that, if partners haven’t worked well with your competitors, they will work great with you. Similar mistakes include believing that, once you contract them, no onboarding will be needed for them to adopt your vision and culture or that you do not need to spend time with them in the field.
Last, but not least, never change the rules when they do not benefit you and do not be transactional with channel partners, expecting that they will not be transactional with you. Of course, if you make any of these mistakes, you know what the outcome will be. And let me tell you: These partners will not meet your expectations.
This article is inspired by my experience in creating, leading and developing B2B software channels, although, after being in contact with over four hundred B2B companies in the last few years, I’ve come to realize that these concepts are perfectly suited to many other industries that want to scale up internationally.
In sum, B2B companies that want to expand their presence in local and global markets and accelerate their international sales have a great opportunity to do so by building channel partner networks. But this requires a detailed analysis of when and how to do it to be truly effective.