6 Types of Channel Partners: When Each Is a Good Fit

Updated March 4, 2024
Published in Channel Management, Channel Success, Partner Relationships

Every leader has their own take on types of channel partners and how those partnerships should be run. For newcomers, these differing definitions can be confusing.

To give you a helping hand or just a refresher, we’ve tried to outline a fairly universal definition for six types of partners. And with the help of partnership pros, we explain which companies typically pursue them, and share the advantages and disadvantages of each.

But before we jump in, let’s review why engaging with different types of partners is worth your time.

The Who, What, and Why of 6 Common Types of Channel Partners

If you’ve already got a good thing going with your partner program, you might question adding another type of partner to your roster.

That’s fair. Doing so requires significant planning and effort.

But just because one type of partner brings you a lot of business now doesn’t mean they’ll do the same in the future. Expanding your portfolio to incorporate diverse types of partners minimizes your risk and brings new products, services, markets, and expertise to the table — which can improve relationships with existing customers and attract new ones.

As Kathleen Clarke, Director of Partner Management and Development at Inseego, puts it, “Having multipel types of channel partners is how you offer it all without building it all.”

Keep reading for a breakdown of six types of channel partners you can start thinking about adding today.

types of channel partners

1. Referral Partners

Referral partners are companies that send you potential customers and get paid a commission for the ones that convert.

Kathleen explains,“It’s like dating. You’re a lot more likely to connect with someone your friend introduced you to, and referred leads are a lot more willing to talk to your sales team when they have a good relationship with the company that’s referring them to you.”

Often, both parties sign a partner agreement that delineates how partners will be compensated for the deals they bring the other partner. Depending on the incentive, partner and prospect, referral partners can be more or less involved in the selling process. Sometimes referral partners will go as far as using their personal connection to the lead to give you strategic insight into their business and help you work through objections and close the deal.

Pros:

  • Quick to get up and running.
  • Don’t necessarily require a lot of training.
  • Can connect you to prospects you may not otherwise have been able to access.

Jake Atwood, Founder of The Channel Builder, adds, “Probably 90%+ of channel partnerships are referral-based. If you’re doing it right, referral partners feed your pipeline and keep in-flight deals moving forward.”

Cons:

  • They can easily go stale.

Referral partnerships may start with good momentum, but it’s hard to sustain high velocity. Ideal referral partners have the network and lead generation acumen to continually come up with quality referrals. Gaining the kind of success you’re looking for starts with recruiting the partners that fit your ideal partner profile (IPP).

Once you’ve got the right partners in place, you have to build deep trust by giving referral partners the resources they need and making referrals worth it. 

Jake says, “It’s helpful to remember that you need these partners more than they need you. So find a way to make it reciprocal. A good way to jumpstart these partnerships is to send them a referral first.”

Kathleen shares, “If you have a program with parity and equity, you become a direct extension of a partner’s revenue every time you accept a referral.”

Who should try these types of channel partners out: Teams with early-stage partner programs

2. Reseller Partners

Like referral partners, resellers source leads. But unlike referral partners, resellers close deals for you. You can think of them as a second sales team licensed to sell your product. Because they go the extra mile, they typically earn a much higher portion of closed deal annual contract value (ACV) than a referral partner would.

Pros:

  • Although you’re giving more money away, working with great resellers puts a portion of your revenue on autopilot. 
  • There are many flavors of reseller relationships to choose from, such as:
    • Value-Added Reseller (VARs), which offer wrap-around services, like implementation planning and execution, consulting, support and/or education. 
    • Original equipment manufacturers (OEMs), who sell your product bundled into specific parts or hardware.
    • Wholesalers, who buy goods from you and sell them to a reseller, who sells them to an end customer.
  • If you’re partnering with a VAR, you’re not just benefiting from a sale, you know that new customers will be implemented and integrated properly, which ultimately improves retention and upsell potential.

Cons:

  • Requires far more setup and training than referral partners.
  • Can result in customer satisfaction issues if a partner is poorly trained.

Trish Rilling, Founder of Grititude, says, “The motto of ‘if you build it, they will come’ doesn’t apply to partner programs. Reseller relationships are built on trust, and having a shared value prop and clear goals are necessary to ensure success for both parties.”

And it’s important to remember that even though they’re selling on your behalf, resellers aren’t your employees. They have other things on their plate. That means you need to figure out the most efficient way to deliver training and keep partners engaged.

Who should these types of channel partners out: Companies with a product that’s either easy to learn and demo or naturally lends itself to bundled services (that already exist). They need to be ready and willing to support resellers through education and marketing. 

3. Affiliate Partners

Affiliate partners promote your product or service to their audience. This audience either overlaps with yours or caters to a new persona you’d like to target. 

If you’ve ever heard a podcast ad or bought a product from Instagram, you’re probably familiar with the concept of affiliates. Affiliates typically have a large, dedicated following that trusts their recommendations. It’s no different in the B2B world.

Pros:

  • You get in front of a captive audience, which lowers your CAC and speeds up the deal cycle.
  • If done well, affiliates put a chunk of your revenue on autopilot.

Trevor Ewen, COO of QBench, also says affiliates can help greatly when your industry requires specialization and regulatory use cases, “For us, having all that expertise in-house will never make sense. Being able to point customers to a specialized affiliate is a must.”

Cons:

  • Expense. Affiliates know they’re getting your product in front of a big audience, and they charge accordingly. If they’ve got more than 20 – 30k followers, expect a monthly sponsorship fee.
  • Drop off. Affiliates are similar to referral partners in that you need to find a real motivator to get them to push your product.

There’s also a risk that your brand may become diluted. Khrystyna Polotninako, Head of Growth at Elai, warns, “The challenge lies in limited control over how our product is marketed,” she continues, “Best practices involve clear guidelines, transparent communication, and a thoughtful affiliate selection process. Our decision to focus on affiliate partnerships was driven by their cost-effectiveness, scalability, and alignment with our results-oriented growth strategy.”

Jake suggests going to market with smaller affiliates first who have a more high-touch relationship with their followers. To ensure ROI, setup your incentive structure to reward a high volume of high-quality leads.

Who should these types of channel partners out: Companies with products that have broad appeal and have budget to pay their affiliates well.

4. Distribution Partners

Distribution partners are enterprise companies that buy your product from you and resell it to their prospects and customers. These partners are more common in industries with physical products, like manufacturing, food and beverage, and healthcare devices. Some distribution partners provide extra services on top of conventional order fulfillment, like device setup and training. Because of the value they bring, they’re called Value-Added Distributors, VADs, for short.

Pros:

  • They amplify your brand. Their audience is huge — usually far bigger than affiliates.
  • They take on sourcing, procurement, payment, and all the liability that comes with it.
  • They have excellent marketing programs.

Kathleen uses distribution partners at Inseego because “They just have more reach and resources. They’ve got their own BD and PM teams and a whole other partner network. Their marketing programs are also superior. We can’t build out an engine like that ourselves.”

Cons:

  • You have to follow their process, which can be complex. How they’re marketing your product can be somewhat of a black box, so you could miss out on valuable insights.
  • Capturing the attention of large distribution partners and getting traction with them takes time and effort.
  • Some distribution partners require an upfront payment to join their network, so you have to be prepared to front that cost.

With distribution partners, you’re often the small fish. So don’t expect them to do the heavy lifting; you have to prove your value to them. Trish advises, “Get your product seeded in some medium to large-sized accounts first, then write case studies around those successes. Distribution partners want to see that you have a solid product they can bring more awareness to.”

She also recommends evangelizing your product throughout the distributor’s organization. Ask to host lunch and learns or happy hours to build visibility internally and externally, and have your back-end processes ready from the jump: “Set up processes to support the relationship: billing, returns, services and support, RAs, inventory. At the disty level, it’s more in-depth and a lot more time-consuming, there are a lot of moving parts.”

Who should try these types of channel partners out: Companies with a mature product that want to scale their revenue fast and aren’t intimidated by large companies and their sometimes-complicated processes.

5. Integration Partners (also known as Tech Partners)

Integration partners sell products or services that fully integrate with, or at least complement, your software or physical product.

For example, if you work at a CRM, your integration partners may be messaging apps, marketing automation software, ERPs, customer support tools, and enablement platforms. While your CRM may work just fine without those integrations, having solid connections to other tools helps your customers work far more efficiently, which ultimately boosts product adoption, customer satisfaction, and loyalty.

Pat Schirripa, CEO of People 2U, explains, “By integrating our SaaS solution with complementary platforms, we expanded our reach and provided added value to our customers. Plus, integration partnerships allowed us to tap into new markets and enhance our product offering, driving growth and customer satisfaction in the long run.”

Pros:

  • It’s relatively simple to craft a better-together story and bake your product or service into their offering.
  • It can lay the foundation for a strategic alliance (see next section).

Daria Arina, Managing Director at Linked Helper, is a big fan of software integrations. “They’re the way to go when your platform lacks some major features, but designing them makes no sense since there are established leaders in the market or because your customers use certain patterns or products as industry standards.

She cautions, “If you don’t offer integrations, sooner or later, the complexity of processes—jumping from your tool to other tools—will urge customers to look for alternatives.”

Cons:

  • Ramp up time and resources. You’ll have to work with internal product and engineering teams to make sure any software or physical integrations are built and maintained correctly.
  • Sourcing. It’s hard to find partners who are willing to put in the work of building an integration on their side.

A good way to start with integration partnerships is to talk to customers about what they really want to see in your tool. If you can’t get time with a customer, Trish says, “Product managers are a great resource. They can tell you if your product is lacking some features that internal teams just don’t have time to scope out and build. Take that feedback and go find partners who can fill that gap.”

Who should try these types of channel partners out: Companies that have gaps in their product that they know other companies can fill. For software companies specifically, beware that you need open, or at least flexible, APIs.

6. Strategic Alliances

Strategic alliances are a more dialed-up version of integration partners. They are prominently featured in your go-to-market strategy, and you’re featured in theirs. You co-market and co-sell. You have regular meetings with their partner managers to brainstorm new markets to go after and strategize on joint deals.

Kathleen says, “I think of strategic alliances as being part of a well-known organization, like NATO or an Olympic Committee. Companies tuck under their umbrella to gain more notoriety themselves and to give the organizations’ constituents a more comprehensive suite of services.”

Pros:

  • A strategic alliance with a big brand can give potential customers confidence in your solution.
  • You can go after other types of accounts and sometimes larger accounts because your joint solution has broader use cases.

Cons:

  • You need to understand your product and your partners’ products inside and out. If you don’t have a compelling joint value prop, you won’t be able to make a convincing case for a joint deal.
  • It’s a long-term commitment from both parties.

“Putting a partner’s logo on your website and getting your logo on their website does not make a strategic alliance,” Trish cautions, “Your joint solution has to be really helpful and intuitive to customers, and it will take time to get it co-marketed correctly. I see a lot of programs lose steam because they weren’t willing to wait.”

Who should try these types of channel partners out: Companies that have already developed close relationships with integration partners.

Grow Your Program With Multiple Types of Channel Partners

There are so many directions you can take your channel program, and exploring each of these types of partners can get you to where you need to go faster.

But you won’t know which partnerships are working and which ones aren’t without the help of a partner relationship management (PRM) tool. A PRM like Channeltivity automatically tracks partner behavior — from the trainings they’ve completed to the co-marketing materials they’ve downloaded, to the deals they register.

Combined with your RevOps data, these metrics paint a full picture of your partner health, helping you double down on the types of partners that actually move the needle.

Want to learn more? Book a demo with one of our Channeltivity experts today to see how the platform empowers growth — for you and your partners.

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