Channel Recruitment: Recruit New Partners or Develop Old Ones?

This is one of the most polemic problems that many companies fail to ask themselves. Though it is true that channel recruitment is very important process that must be continued, there is a question of whether that is enough. Experts experienced in many types of businesses are sure that the recruitment should just be the first step.

Basically, what happens is that companies try to recruit more and more distributors because it is a much easier process. There is also a kind of hoarding mentality at work in this kind of business trend. So many vendors spend so many resources in ongoing, nonstop recruiting because they are afraid that if they don’t, the best partners out there will already be indoctrinated by the competing companies. Studies show that more than fifty percent of technology industry vendors go for recruiting, thirty percent are focusing on just staying put with their current channel network, while only twenty plus percent have strategies that give their old distributors the opportunity for climbing up the channel program tier hierarchy.

There are also studies that support the trend report saying that companies prefer recruiting new partners to partner development. According to Pareto’s Law, vendors are likely to gain more than eighty percent sales through twenty percent of their channels. However, what we are seeing now in the technology industry is that up to ninety plus percent of sales of the vendor is coming from just five percent of the channel network. This lopsided ratio shows that either the gold tier partners are big companies that are superb at selling the vendor’s products or services exclusively and that they only constitute five percent of the channel network.

The rest of the network’s bulk might be inefficient, small time sellers that are not focused on selling the vendor’s product. Either that or vendors are just not providing enough partner development opportunities since there are inefficient or insufficient programs. If there are not enough incentives, programs, and partner relationship management in place, then it will really result to bad underdeveloped channels.

It might be that the problems are just that the vendors are not focusing on development which is the second step to channel recruitment. If more gold tier partners are created, then a vendor will be able to increase sales revenues without having to accumulate more non performing channels that are really nothing more than a waste of resource. Development and empowerment through better programs and relationship management is the key to create more sales. Of course if a vendor is not able to get enough information from their channels, then they would not be able to create such programs and incentives that would help them develop their partner relationships.

The key to creating these successful programs for partner development is focusing on getting information. With such a strategy at the heart of development and even the recruiting activities of the vendor, retention and strong productive relationships will be much easier to attain. This will prevent the wasted channel recruitment activities that are also a drain to the vendor’s resources.