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Third-party channels remain an integral part of high performing go-to-customer models

Alexander Group brought together a team of marketing and sales leaders from the Life Sciences and Analytical Instruments industry to discuss how companies are partnering with third-party channels – distributors, resellers, agents and others – as they execute their go-to-customer strategy. The group described the channel as an important means to enable growth and access markets. They shared learnings about getting the most out of the investment. Most interestingly they reflected on how the pandemic took partnerships to the next level and paved the way for deeper future collaboration.

The Role of the Channel

The group agreed that the role of the channel is largely unchanged. Channels enable access to diverse geographic and customer markets. The channel helps manufacturers stay close to the market as buying patterns and value drivers change. They are much closer to the customer and help vendors remain agile.

The channel provides supply chain and logistic services. They bring administrative and payment value, including currency conversion. Additionally, the channel simplifies buying for customers – serving as a single point of contact, enabling sourcing and easing the transaction process.

Interestingly the group shared that the role of the channel has not changed even with advancements in digital capabilities. As companies have stood up their own e-commerce plays and improved their ability to access buyers through digital marketing and advanced virtual sales roles, they remain committed to the channel as part of an omnichannel strategy. One participant described digital as table stakes. Customers expect direct digital channels as part of the early stage buying process. Partners are a critical part of “the last 20-yards.” Customers expect the supplier and channel to work together to help customers discriminate between the last several attributes of purchasing options.

Getting the Most Out of the Channel

The group described productive channel relationships as rooted in strategy, consistently and proactively managed, and highly communicative. Manufacturers who get channels right have a sound understanding of customer needs and their product portfolio dynamics. They are explicit and thoughtful when scoping their channel play. Recruiting and signing up partners to deliver near-term results without a long-term plan and the appropriate governance is the path to conflict and margin erosion.

The team discussed how product portfolio guides the channel play. They shared that if the product is a new and novel technology or highly technical, the market will need to be developed and a direct model is a better fit. If the offering is well understood and customers value what the channel brings to bear, then an indirect model is likely needed. The decision on when and how to leverage the channel will differ by geography, customer segment and product.

Participants counseled the group to “embrace the relationship” with the channel. Each partner has their own needs and value drivers. The channel is looking for manufacturers that demonstrate sustained commitment. Embracing the relationship begins with selecting the partners in each market who the manufacturer will invest in.

COVID-19 and Next Level Collaboration

During the session, the group shared examples of the pandemic yielding more intimate channel relationships. These relationships allowed both parties to do more for customers than what they might have been able to do independently. Data was shared, teams worked together to monitor the supply chain and ensure the right customers got the right stock. Suppliers provided access to virtual resources including virtual specialists for demos and technical support, as well as training and other marketing enablements. Financial terms were relaxed to support small, regional partners during challenging times. Collaboration differed based on how the pandemic was impacting a region. Manufacturers leveraged governance frameworks to ensure the right levels of support were offered depending on how deeply the pandemic was impacting a country or region.

For More Insights

Alexander Group executive roundtables provide peer insights from leading organizations that help you navigate your path of emerging developments. Contact an Alexander Group Life Sciences and Analytical Instruments practice leader to participate in research and register for other upcoming virtual roundtables.

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