Your partner channel strategy — your plan to move your product or service through the chain to the final customer via strategic partnerships — is a crucial element for any B2B company. But if you’re selling to government customers, the strategy and tactics can be somewhat unique to a typical channel model. And if you want to survive in the government market, it’s imperative that you develop a strong partnering strategy.
The purpose behind developing channel strategies
In the B2B world, you absolutely must develop channel strategies that are part of your overall go-to-market strategy. The goal is to identify the best ways to expose your products and services to potential customers who are the most likely to want or need what you’re selling.
While some products and services can be sold in a fairly straightforward fashion, more complex products and services require a more complex sales model to take advantage of every opportunity. For example, let’s say you sell a SaaS product that requires expertise to implement, maintain, and manage. In a case like this, you may need to create partnerships with value-added resellers (VARs) or systems integrators (SIs) to ensure that fulfillment component.
There are several potential distribution channels that vendors typically focus on — those are direct, indirect, and consumer sales. For our purposes today, we’re going to focus on indirect sales and explain how a partner program works in the federal market.
There are two types of common indirect sales distribution channels, plus a third option!
One-tier distribution is when the vendor sells to the channel partner. This is considered indirect sales, as there is often a VAR or SI acting as an intermediary between the vendor and end customer.
With two-tier distribution, the vendor sells directly to a distributor, and that distributor then sells the vendor’s products to their own network of VARs. These VARs then sell to the end customer.
While less common than the first two options, the practice of three-tier distribution still exists. One place you’ve likely noticed this practice before is in the alcohol industry, where laws require a producer to first sell to a wholesaler. Then, the wholesaler must sell to a retailer — finally, the retailer can sell to the end customer.
Developing a partner channel strategy
The VARs, SIs, distributors, consultants, OEMs, and others can often serve as excellent partners. A vendor who pursues these types of indirect sales channels should develop a partner channel strategy to not only manage these relationships but optimize sales opportunities.
Effective partner programs will typically include:
- Technical training
- Sales support
- Deal registration
- Marketing assets
- Partner portals
- Other perks such as joint business planning sessions, access to beta versions, etc.
While developing a partner channel strategy is a fairly common business practice, the catch is that when we’re talking about government end customers, there are some things that will need to be adjusted. Partnering in government is different — and to put it bluntly — government tends to go through existing primes due to long contract cycles and risk aversion.
What you need to do differently in government
When developing your government-specific partner channel strategy, here are the 3 main things you need to know:
1) Your deal registration might need to be tweaked. The person or company who closed the deal may not be the same as who took down the paper contract. The contracting officer might put the contract out differently than expected, so make sure to reward the hunters and not just the paper holders.
2) Account for two-tier (and sometimes three-tier) sell-through in your pricing structures. We covered all three above, but the one-tiered rarely happens in government contracts.
3) Small business set-asides are a must — think female-owned or veteran-owned — if you want to leverage opportunities. Ensure to include these and others in your book of partners and prioritize relationship-building long before you need anything.
Developing a partner channel strategy is crucial for the success of any B2B product or service, but it’s got to be tackled differently when the government is the customer. Incorporate these 3 expert tips into your government partner channel strategy and see the difference!
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