What are the 5 stages of channel relationships?

A supply chain is only as strong as its weakest link, something that heavily relies on the forging of solid relationships. In fact, the Sales Benchmarking Index (SBI) published an article stating that more than 25 per cent of revenue is received through partnerships.

Let’s take a look at what makes or breaks a good channel alliances and how incentive programs can help.

Partnerships go through stages of development.

The five stages of partnerships

Business alliances are much like a romance between two people as they go through phases. Computer Market Research even categorised five distinct stages of them:

  1. The lovey-dovey stage: Life is seen through pink glasses and the channel partner’s capabilities seem endless as your strategies aligns perfectly. You believe you can take on the world together.
  2. Becoming a couple: You are getting to know each other better and encourage motivation through channel incentive programs. You avoid conflict and communication is on-point as you’re not certain as to the exact conduct of each other in charged situations.
  3. The trial for power: As visibility and transparency decreases, your confidence in your partner does too. Doubt about their integrity and other potential relationships creeps in.
  4. Commitment: You have learnt to handle conflict and recognise that it takes two to tango. You resolve issues around communication and both parties commit to each other as a team.
  5. Long-term happiness: After many years of collaboration, the friendship between the two of you has moved beyond the office, where you champion each other’s successes and offer advice when needed.

How to build a strong relationship

Ideally you want to be able to move towards the fifth stage, but building relationships requires an understanding why they can fail to begin with.

The SBI suggests that channel alliances fail when the value to the end user is ignored or forgotten. Whether it is technical support, face-to-face contact or simply ease of doing business, understanding why the channel partner’s role is important sets up success.

Going into direct competition with a channel partner’s work force, even if inadvertently, is another big red flag. It is important to remember that while they are independent businesses, you are servicing the same end-consumer.

Simultaneously, you don’t want to stay in a failing partnership too long, as it costs you both time and money. Understanding if or why your business is important for the channel partner will give a sense of whether or not commitment is realistic and how to motivate affiliates.

Before going into any relationship though, it is crucial to clearly set out expectations and requirements for the ideal partner. Quality over quantity rings true here, as fewer but more engaged channel collaborators are going to be more effective than a multiple of non-committed allies.

A partnership can break apart without the right incentives.

How do channel incentives help?

By having a strategic plan and regular meetings, issues can be addressed as soon as they arise and avoid conflict down the track. As such, it is essential to offer customised incentive programs to raise morale and build stronger partnerships. This will also serve as a complimentary route to align the big-picture goals of both parties.

The Harvard Business Review (HBR) further points out that creating personalised stimuli can provide more value to the partnership, which in turn fosters loyalty. It is therefore important to realise that each partner looks at value differently. This, inherently, calls for long-term approaches to leverage already existing assets to their full potential

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