Articles
/
Deeper Dives

What You Need to Drive Distribution Revenue in 2023

Growth in channel has never felt so right.

When you’re scaling and growing — reach matters. Distribution partnerships have become the key to unlocking vast exponential growth and are a crucial aspect of business strategy. Of course, these partnerships don’t come without their challenges. 

Foundational knowledge on marketing, finance and logistics will help give you an edge and stand out from the crowd when working with a distributor. As you begin, consider brushing up on some of the basics as it’s important to understand how to set yourself up for success when building your distribution channel from the start.

To gain the insights necessary to drive distribution revenue and growth, we spoke with PartnerStack’s Manager of Channel Partnerships, Nicolette Lopes. We dive into the key steps that need to be taken into consideration before working with distributors and the immense revenue opportunities they can drive for businesses in 2023. 

Let’s talk about what a distribution channel partner actually is

If you have some understanding around what distribution is and how it works — the concept doesn’t deviate far from what you already know. When it comes to B2B SaaS, a distribution channel can take what you already know and expand the definition for the modern business world. 

Ultimately, a distribution channel partner, whether a company or organization, acts as a key node between a SaaS provider and its end customers and plays a role in delivering your product to that customer. Lopes believes distribution channel partners are your outsourced sales team. “They have a strong hold on your industry and typically influence purchasing decisions before you, as the end vendors, are aware that a potential customer is in the market,” she says. 

See more: B2B Marketing Trends to Look Out for in Tech in 2023

Discover the advantages of partnering with a distributor

Growing your business globally can be difficult and expensive. It also requires significant ramp up time to launch. When you leverage channel partners who are local, you open yourself up to an even further expedited growth channel. From gaining access to a wide customer base to and international markets, distribution will help partners unlock prospects on a global scale and widen the net to support greater reach. Among the benefits to working with distribution partners, global expansion potential is key.

A great example of how a distributor partner program has driven new recurring revenue for a business, is through The Pinnacle Program powered by PartnerStack and Ingram Micro Cloud. 

Within six months, one of our top SaaS vendors landed:

  • 1,771 customer sign-ups
  • 669 total partners
  • $250K revenue 

 With the support from a distribution partner, there's a massive opportunity to grow existing relationships with retailers and other businesses in their areas, which can help a manufacturer reach new customers and overall increase sales. Building your partnership with a distributor gives you the opportunity for exponential growth. 

See more: What is co-selling in a partner ecosystem and how can you do it?

Steps to drive partners revenue through distribution programs

Within the distribution channel, there’s a habit of talking about partner sourced revenue versus partner influenced revenue, which unintentionally pins these two concepts against each other — but Lopes doesn’t think it has to be one or the other. “It's really important to understand the different services that each of your partners offer, the industries that they serve best and the regions that they service,” explains Lopes, who advocates for attaching partners to your business within an organization to support the health of customers. “They will do more in your network and be less likely to churn. There's a lot of downstream factors, but if you're only looking at your partners as an outsource sales team for net new revenue, you're missing a lot of really important variables.”


Related: The Ultimate Guide to Partnerships for Ecosystems in 2023

Make your product accessible to distribution channel partners

Organizations like Amazon, Ingram Micro and Microsoft are pitched products constantly, so how can you actually get mind share and separate your organization from the rest? Lopes says there’s only one way to go about it. “Stop trying to sell your product to these partners even if it's something that they need. It's a very dated model. You need to actually understand the company's business objectives, goals and priorities, in addition to ensuring your product, solution or offering fits organically into what they're already doing,” she advises. “It's going to be very difficult to enable your partners and get mind share if you can't help them understand how your tool makes their current jobs better or more effective.”’

How should you train distribution partners?

Lopes explains the importance of covering all bases of training and understanding your partner's business model, prior to going to market. “It’s important that you start building partner personas and understand the verticals of your partners long before you take your product to market. You must make sure you're going in depth with your partners to understand how they're going to be talking about your product and offerings.” When building out training material for distribution channel partners, it’s important to understand who your partners will be selling to as that will dictate what level of training they need. Below are three high level examples of training definitions. Note that each level can vary depending on the context and the field of study, and it may not be limited to only three levels.

Level 1: Basic, introductory, or surface-level information. It covers the most essential and fundamental concepts, often in a broad overview of the product or service.

Level 2: Intermediate or more in-depth information. It goes beyond the basics, providing additional details, examples, or explanations of the product or service.

Level 3: Advanced or specialized information. It covers complex or specialized concepts and requires a deeper understanding or prior knowledge of the product or service.

The wins and fails when building distribution business models

Most companies lose market share when they do not take in account what challenges they are facing. It's really important to prioritize hard metrics, as revenue will always matter most. Reviewing partner attachment rates and partner influence increases the understanding of how partners can help expand and grow your current customers. Here are some examples of business models wins:

  • Subscription-based model: Recurring revenue and predictable income
  • Marketplace model: Connecting buyers and sellers to facilitate transactions

During her tenure, Lopes has also come across business models to steer clear of. “ We see some business models that are over-resourced too early, and that have not been given a sufficient amount of time to prove out their strategy. I've seen a lot of organizations say they want to go to market through partners, but they don’t give enough time to explore. I think that's such a bad way to look at it,” Lopes says. “Partners need ample time to nurture relationships, and to actually get something substantial off the ground versus cutting corners and rushing for cheap revenue.” Here are some examples of business model fails to take in account:

  • Single transaction model: Relying on a one-time purchase for revenue
  • Ignoring market trends: Failing to adapt to changes in consumer behavior or technology

The importance of getting paid

Every payment structure will be different, however everyone needs to understand how they’re getting paid, when they're getting paid, and what they’re getting paid on. A well-designed payment structure can help attract and retain partners and customers. Lopes, who has been a part of many payment structure discussions, says, “I don't always assume that a payment structure will be one size fits all. There will always be exceptions to the rules and every distribution channel partner has a different priority. That being said, transparency is always important.” She goes on to explain, “Make sure you’re prioritizing options for things outside of commission payouts. Some partners value MDF commissionable payouts, and others prioritize money spent in joint go to market activities, or even perhaps event budget.”

Related: Here's How Automation Saves You Time and Money

Ramping up 2023: Inspiration to take into your partnerships this year

Lopes shares some additional advice: “Partnerships can never be one sided. It's important to remember that your partners are not just there to bring you new clients. Prioritize your partners and make sure they have what they need to understand your business model, to build a successful partnership. In these times, our industry is attempting to do less with more and it means a lot to partners when they see the effort you are putting in, to make both parties thrive in the channel.”

Leveraging the strengths of distribution channel partners and a channel partner program can achieve shared goals and successes that would not be possible alone. Keep these factors in mind, put in the work to understand your distribution channel partners business model and goals, and you are sure to stay well-positioned to drive distribution revenue in 2023.

Did you find this content helpful?
Everything That You Need to Know About the PartnerStack Network in 2024

Tap into the largest B2B network and find your next revenue-driving partner now.

The Definitive Guide to Easy Partner Payouts in B2B SaaS

Save time and skip the admin work.

Quiz: How Much Do You Know About Affiliate Programs?

Take this quiz to test how much you actually know about affiliate marketing.

Revenue-Focused Goals Following Partner Activation

Joint revenue has never felt so accessible.

Presented by partnerStack
SaaS Partnerships Awards 2023

Celebrating the best partnership leaders and programs in SaaS.

ROI Report
33% Faster Payback With PartnerStack Than The Average PRM

Read how analyst firm GTM Partners used G2 user review data to determine the time to ROI of partner technology.

APRIL 24, 2024 at 2pm et
Partnerships secrets: Cory Snyder teaches partner recruitment

In this webinar, Teamwork.com’s Cory Snyder spills the tea on how he’s growing his partner program in 2024.

Find the answers you need from experts

Data-driven insights from world-class ecosystem leaders.

Get exclusive data and insights from our Research Lab

Unlock ecosystem data from the PartnerStack network of more than 80,000 active partners. Ecosystem leaders like you can now benefit from focused research into their specific business needs.

“We weren’t leveraging the platform enough, we never had anyone dedicated to partnerships. There were no allocated resources”

"PartnerStack is the best ecosystem platform on the market. We've done a lot of research, and no other tool can bring together agencies, influencers, distributors, customer referrals, and affiliate partnerships all in one place."

WORD OF THE WEEK

Joint venture

noun
[joynt ven·chr]

A joint venture is a business collaboration between two parties on a project. Both parties will benefit from bringing their shared resources and knowledge, and neither party will take on the sole burden of the risk.

WORD OF THE WEEK

Buyer persona

noun
[bahy-er per-soh-nuh]

These depictions of target customers help to define your company's ideal target customers.

WORD OF THE WEEK

SaaS partner programs

noun
[sas pahrt-ner proh-grams]

SaaS (software-as-a-service) partner programs are a systematic way that software companies form mutually beneficial relationships with agencies, influencers, and other companies to drive business results.

Do you work in ecosystems?

Fill out this survey to help us better understand the world of partnership ecosystems. All data is anonymized.

Unlock limitless scale through PartnerStack

See how PartnerStack helps you optimize your partner programs to drive predictable revenue.

Free ecosystem advice

Sign up to get the latest tips on building your partner ecosystem.