Channel partners can be incredibly beneficial. When partnerships are formed with other vendors, businesses will be able to offer better and stronger products and services, as well as a better overall customer experience. However, sometimes channel partnerships can run into conflicts and disruptions by other dealers who are selling products and services directly to the consumers. As a result, multiple channel conflicts will arise. If we are faced with channel conflicts, what will do we to address them?
When an organization has a good channel, it will open multiple sales opportunities. This could involve the resellers earning a percentage of the sales or partners incorporating our software into theirs. Regardless of the direction they choose to take, this can result in increased sales for the entire sales team. Is there anything that could go wrong? Well, the resellers can find out about the other or they could go after the same customers. Also, a strategic partner could eventually reduce the price to be lower than yours.
A partner that is effective will have many reasons to talk about the product or service. They can do so because of the opportunity to gain a commission or they can do so because they feel it could help them sell their other products or services in a more effective manner. Channel conflict is one of the most important things to avoid, but it can also be an easy trap to fall into. There are several ways to avoid channel conflicts when it comes to channel partners and an internal sales team. Here are some things to consider:
Adjust Your Pricing Structure
When pricing is consistent, we will be able to minimize competition based on pricing. When competition exists due to pricing, it can have an impact on horizontally and vertically. Every channel wants to find the best way to gain customers. If one channel makes the decision to use a certain pricing structure to gain a customer, the other channel will make the same decision. To maintain channel equality, it's encouraged to make sure that pricing structure is consistent.
Change The Way You Compensate
One of the things to do if one wants to make an adjustment to compensation is to compensate the internal sales representatives in a way that will not make a difference to the commissions they earn in each sales channel. Businesses should even consider offering extra incentives for those who make a sale through channel sales. If a method will allow compensation to both channels, it will limit conflict and encourage the channels to work as a team. Looking to maximize compensation can be an effective solution to eliminating channel conflict.
If one sells through fewer channel participants, a discernment of exclusiveness is created and it will motivate channel partners to make an investment. When products and services are excessively distributed, a channel partner may not lead with that product or service because that product or service will not give the customer the impression of uniqueness. Products and services that are distributed excessively may also suffer price dissolution because this is the foundation on which the competition will be held between channel partners.
In the end, customers will make decisions on how they want to use products and services. Companies that choose one channel over the other, disregarding the buying experience of customers, could miss out on several great opportunities. A provider's opportunities can be greatly maximized by using multiple channels and taking steps to minimize conflicts.