Lower Cost Channels

By Karen Fischer                                                         February 16, 2010

Have you started considering adding channels to your business model, but you currently do not have the ability to add more staff to handle managing those channels or have the money to create programs needed for a full blown channel program?   There are 2 very low cost channels that you can add utilizing your current staff which might give you a boost in sales with very little investment.  They are Affiliate and Affinity Channel Programs.  Affiliate programs are sometimes referred to as Referral programs as well.  The term Affiliate became more used with the onset of online programs, but both are created based on the same premise.

Affiliate / Referral  Channel Program

An Affiliate Channel Program is a low cost channel in order to help you obtain leads for your direct channel or even for your indirect channel depending on your margin and partner discount structure.  The premise is to provide a commission to the affiliate/referring company for bringing a lead forward.

In many cases an Affiliate Partner is a company that could become a sales agent or reseller down the road, but is not ready to make the investment.  They also might be someone is an aligned business who comes across potential customers for your product or service enough to recognize the need, but selling your product or service may not be their core competency.  Other candidates for Affiliate Programs are consultants who are in your industry that have access to your potential customer pool but want to remain as vendor neutral as possible, so would refer you a lead, but would never be willing to actually sell your product or service.

Once you choose your target market, you then need to determine what compensation you plan to offer in way of commission to the partner.  Industry standard is from five to ten percent depending on the partner involvement.  Five percent is usually for providing a qualified lead and ten percent is if the partner is instrumental in the sale by having a close relationship that help drives the sale. 

You then need to set up a process for tracking the leads.  Determine how long you will allow the lead to remain active and how and when they will be paid the commission.  If there is a recurring revenue model in place, you might determine you will only pay 6 months or if a multi-year contract, only for the first year.

In some cases loyalty and reward programs can also be used in conjunction with this type of program.

Affinity Channel Program

If you have product or service targeted at particular groups or verticals, an Affinity Program might be another good low cost channel for you.  Across Canada there are thousands of associations that are looking for companies to offer special promotions to their members.  For example, say you had a product that was focused on the legal vertical.  The Canadian and Provincial Bar Associations are an excellent target.

First you need to create a product or service package that is a good fit for the particular group you are targeting.  This product or service package needs to either have special pricing for the association that is different from market pricing or a discount off standard pricing that is offered only to that particular group.

The association will market your product or service in their communications to their members and on their websites. They also have small events that you can participate in as well where you can present or demo your product.  In some cases this is free of charge, and in others you might pay at most a few hundred dollars to participate in an event that you have a captive audience. Think about how nice it would be to not have to spend time sending out invitations to an event that you have already spent thousands of dollars to participate.

 Over time, I will provide other information and tools on these and other channel programs to help you grow your business.