No man is an island – nor is a business. No business can thrive alone – all need interaction with other organisations, as suppliers, partners and channels.
In this article, the next in my Growth Metrics series, I’m going to be looking specifically at Channels and Partnerships as a key strategic driver for growth.
If you’ve read some of the earlier articles in the series, you may remember that in “The business of building and building a business”, I likened building a business to building a house, and in particular, compared channels to the windows. Channels are our business’ windows out to the market – they bring in the outside world i.e. customers.
For example, many of us will eat a bowl of Kellogg’s cereal for breakfast, but we don’t buy it directly from Kellogg’s – we buy it from Coles or Woolworths. In other words, from Kellogg’s’ channel.
Channels introduce a business to its potential market, and provide security for the deal flow for an organisation. All businesses need channels – without channels, a business may experience anxiety, not sure where the next deal is coming from. With the right channels, a business is calmer and can be more confident in its expansion activities.
Channels are not just physical - LinkedIn, Facebook and other social media are channels in the sense that they are a platform from which to market the product and that, just like traditional channels, there are rules and best practices in order to get the best from them.
The value offered by a channel is measured by how close it can get an organisation to its target market. Channels are therefore constantly looking for ways to get closer to clients, and have often invested heavily in data, as well as in real estate - physical or digital.
Building a successful channel infrastructure
In working with a wide range of businesses, I have been able to identify five common elements in those that drive a truly successful channel strategy:
1) A good match in beliefs, culture and scale between the supplier and the channel
2) An alignment of requirements i.e. each has what the other is looking for. The supplier enhances the channel’s portfolio and the channel has access to the right market for the supplier.
3) The channel is very close to the target market of the supplier – knows them well, understands how they buy, what motivates them and how to reach them. The better they know them, the better the channel.
4) The product supplier has a product ecosystem (see my article "Building a Product Ecosystem" that makes it easy for the channel to on-board onto their platform and gives them a broad range of clients.
5) The right structures and processes are in place to manage the commercial relationship smoothly
By ensuring they have these elements in their channel implementation, businesses maximise the value they drive from the channel and avoid spending time on channels that will never bear fruit.
There is no ‘one size fits all’ with channels. A good channel can be large or small. It could be a single person who is a good word of mouth referral - all the way up to national or international giants like Coles or Amazon.
Channels shouldn’t be confused with marketing – Kellogg’s still markets its own brand. They are all too aware that channels supply multiple brands and products and will not choose one over the other.
So it is up to Kellogg’s to build a market that trusts their brand and looks specifically for it through the distributor. Kellogg’s know it is their responsibility to tell the market about new products and drive demand – demand that is fulfilled through the supermarket channel. They also know that without a strong brand, the channel will not put their product on its shelves. Demand for supermarket shelf space is high, and Woolworths and Coles are going to give it to those products they see generating the highest demand.
In today’s world, many organisations have added a direct client relationship component to their business, enabled in most cases by their internet presence.
Channels are an invaluable growth strategy for a successful business – the conduit between the product and its customers, generating sales and delivering security of deal flow. With strategic thinking and careful alignment, channels are a valuable asset for growth and success.
The stronger the channel, the stronger the business.