What is Channel Marketing? A Beginner’s Guide

Simone Morgan Last updated on: November 27, 2024

Many businesses can benefit from expanding their visibility and customer base. And channel marketing can help you achieve both of these goals. 

Channel marketing is a marketing strategy for getting your product or service in front of more eyes and potential customers by using the help of like-minded businesses. 

In this guide, we’ll answer important questions about channel marketing and teach you how to start your own channel marketing campaign.

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What is channel marketing?

Channel marketing is a marketing and sales strategy that involves having third-party businesses sell your product or service. These businesses generally assume the responsibility of advertising and marketing themselves. 

For example, if you sell an email marketing product, you might work with a channel partner that sells IT solutions to enterprise-level businesses. The channel partner would resell your email marketing product as one of the products they integrate into their solution. 

An example of channel marketing for physical products could be a clothing manufacturer selling their products to a retail clothing store, which then sells the products to their customers.

Some channel partners can whitelabel your products before reselling, and others may sell as is – it depends on the type of channel marketing partnership.

As you can see, channel marketing is a strategy that uses the reach and expertise of intermediate channels to get your products or services in front of the right customers—hence the name channel marketing.

Channel marketing vs. marketing channels

While these two phrases may look similar, they are not interchangeable. 

A marketing channel (or sales channel) is a platform or portal through which you promote your business. Examples of marketing channels include social media, email marketing, and organic SEO. As mentioned before, channel marketing is the practice of partnering with other businesses to sell your products to their customers.

You often use marketing channels in your channel marketing efforts. But channel marketing should be considered an entire area of marketing on its own.

Benefits of channel marketing

There are many benefits to using channel marketing as a sales strategy, and it’s an effective method for getting your products out there. Some advantages include:

• Increasing your customer reach: Teaming up with good channel partners means your product reaches a customer base you couldn’t access before.
• Cost-effective selling: Allowing your channel partners to resell your products to their customers means you can profit from sales while spending little to no money on marketing, advertising, and promotion.
• Increasing brand recognition: Partnering with a reputable channel partner can help spread the word about your business in an otherwise crowded marketplace.
• Getting valuable customer insights: Increasing your customer reach means you get access to a broader range of customer experience and preferences data.
• Increased credibility and customer trust: Associating with a trusted brand partner helps build credibility for your own brand, leading to increased sales and brand recognition.

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Types of channel marketing partners and relationships

When you use channel marketing, you and your partner can decide how you want to implement your strategy and define your partner’s role. The types of partners and relationships vary depending on business models and preferences.

Common types of channel marketing partners

Below are examples of the different types of partners you can recruit into a channel marketing strategy.

• Resellers: A reseller is another business or individual that buys your product or service (possibly in bulk) and then resells it to consumers, often under their own brand name. Resellers are usually responsible for managing their own pricing and accounts.
• Affiliates: An affiliate partner promotes your product or service to their audience and refers them to your products via a custom referral link to your site. Affiliates usually earn a commission for each sale made through the affiliate link. Affiliate partnerships typically involve a business and a content creator or subject matter expert with a large audience.
• Consultants: A consultant works directly with your customers to help them use your service more effectively and, like affiliate partners, often earns commission to promote your business.
• Retailers: These are established businesses (usually brick-and-mortar) that buy your products and resell them to their customers as is—no white labeling. If you produce clothing, for example, a channel marketing partner would be a clothing store that puts your product on its shelves.
• Distributors: Distributors buy your products with the intent to sell them to other businesses, who will then sell them to customers.

Common types of channel marketing relationships

There are four main types of channel marketing relationships, which can relate to partners like resellers, affiliates, consultants, distributors, and others. Many businesses use multiple-channel marketing relationships to sell products and increase revenue. They are:

1. Manufacturer to customer: The manufacturer produces and sells the goods directly to the end consumer.
2. Manufacturer to retailer to customer: The manufacturer sells the produced goods to a retailer, who sells them to their customers.
3. Manufacturer to wholesaler to customer: The manufacturer sells their goods to a wholesale seller who then sells them to customers at a reduced price.
4. Manufacturer to distributor to reseller to customer: The manufacturer sells its goods to a distributor, who sells them to like-minded businesses. The businesses that buy the goods then sell them to their customers.

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How to start a successful channel marketing program

When you begin to build a channel marketing strategy, these are the foundational steps you need to take to ensure a successful launch.

1. Choose the best channel marketing model for your business

Determine the channel marketing relationship type best for your business model and revenue goals. 

Each channel marketing relationship type has advantages and disadvantages, so it’s essential to create a clear vision and marketing strategy that leaves no stone unturned. 

At this point, you also want to outline a goal for your channel marketing efforts, preferably realistic and easy to analyze, such as a revenue goal.

2. Identify potential channel partners

After determining how you want to use channel marketing to achieve your goals, you want to list potential businesses that could become your partners. There are two main questions you want to answer when evaluating the best fit, namely:

1. What’s in it for them?
2. What’s in it for you?

Generally, the benefits for you as the product or service producer would be business growth, brand trust, and increased customer reach. 

However, it’s important to consider how the potential partner can benefit from a channel marketing agreement. Things that could be beneficial to them might include:

• A discount on your product or service
• Commissions for affiliate sales
• More traffic to their website

How to choose your channel marketing partners

Choosing the right partner is critical to developing a successful strategy. 

You need to consider factors such as employee count, annual revenue, niche target market, and their current marketing strategies. If those align with your goals, they are most likely a great fit. 

Other factors to consider include whether the potential partner has similar goals, can adapt to change, and has a proven track record of growth and motivation.

3. Develop your channel marketing pitch

After you’ve done research on your potential partner, spend some time creating a pitch that outlines why partnering with your business is a good decision. 

You want to make it clear that while the partnership greatly benefits your business, it can also help them achieve any goals they may have. Get specific where you can, and preferably create tailor-made pitches for potential partners.

4. Create an agreement that works for both parties

When your partners agree to a channel marketing plan, the next step is to write an agreement that is as detailed as possible. 

Make sure to include crucial details, such as: 

• The scope of the partnership agreement 
• The time frame of how long you’d like the partnership to be in effect 
• Access to customer data, etc. 

Ensure that both parties agree on the terms of the partnership. Understand that you’ll likely go back and forth a few times before finding an agreement that works for everyone. When you’ve both agreed and signed, your partnership can begin!

5. Check in regularly with your new partner

After you’ve started your channel marketing program, it’s important to ensure that your goals are being met throughout the implementation timeline. 

Conduct regular audits on the channel partnership’s performance and how close you are to achieving your goals. If possible, schedule regular meetings with your partner to discuss growth, swap ideas, exchange data, and update agreement details if necessary.

Optional: Hire a channel marketing manager

Getting one or multiple channel marketing programs off the ground could take time away from your team’s other vital duties. 

In this case, you may want to consider hiring or promoting a dedicated channel marketing manager to do the legwork of developing channel marketing programs, finding and contacting potential partners, and maintaining relationships with partners, among other channel marketing duties. 

Level up your channel marketing with an easy-to-use, intuitive CRM

We hope this guide helped you understand the ins and outs of channel marketing and how to create your own channel marketing program. 

Keeping track of channel marketing contacts is much easier with an intuitive customer relationship management (CRM) platform. Dedicated pipelines and automation tools can ensure you never forget when to follow up or touch base as needed. Plus, advanced reporting helps you understand precisely how your channel marketing partnerships are helping your business grow.

With Nutshell, you get all these features and more. Try us for 14 days free (no card required) to elevate your partner and customer relationships, ultimately boosting your business growth.

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