A common struggle I see with vendor channel programs is not knowing how many partners to have.  Sometimes channel partners and vendors complain about there being too many channel partners for a particular product and/or market.  The net result is there are several entities going after the same business.  Prices are driven down and margins take the hit.  Eveuntually, interest in selling the product or service dwindles as vendors and channels partners struggle to make money as a result of the lower product prices and margins.

On the other hands, there are plenty of examples of a vendor not having enough partners and missing market opportunities.  In these instances, the challenge is getting the product in front of enough customers that are target buyers.

How does a vendor know how many partner to engage?  Is there an optimal number?  The answers to these questions are not overly complex, but they are also not just standard numric answers.  Math is involved.

Calculating how many partners to have starts by knowing the market.  A vendor must first be clear about who or what will buy its products.  A well defined target market is the starting place to determine how many widgets can be sold.  It may even be necessary to segment the target market into submarkets and prioritize them.  However it is done, it is important to know how many potential consumers there are for a product.  This is independent of the partners that a vendor has.  Who actually sells that product is a question to be answered AFTER first studying who will buy the product.

Once the vendor is confident in its estimate of the market size, then it can look at routes to market.  It may decide for some markets that it will sell its product direct.  In other markets a channel may be leveraged.  There are many factors can and should go into that decision.  In the end, though, the vendor should have a good picture of how many sales opportunities exist for a target market where a channel is being used.  Armed with that data, the vendor can then begin to calculate how many (and what type) of partners it needs.

If this kind of approach is not used to identify how many partners are needed, it is likely the vendor will have either too many or too few partners.  What experience have you had with this caculation?

William Vanderbilt

WVanderbilt@InnovativeLearningChannels.com

+1 630 343 6261