Types of channel partners
- Resellers buy your product and resell it to customers, usually at a discount off list price.
- Value-added resellers resell and add services such as setup, customization or training.
- Distributors buy in volume and supply many resellers, often across a region.
- Managed service providers include your product in an ongoing service they run for clients.
- Referral partners introduce customers and your team sells.
- Agency partners recommend and implement your product for their clients.
How channel partners are paid
The main split is between partners who bill the customer and partners who do not. Resellers, distributors and many MSPs bill the customer and keep a margin. Referral and agency partners leave billing to you and earn a referral fee or revenue share. Many programs use partner tiering to pay more to partners who sell more or complete certification.
Why companies build a channel
Channel partners reach customers your own team cannot reach efficiently: small businesses in a specific region, buyers who prefer to purchase through a trusted provider, or industries where a partner already has the relationships. A channel can grow revenue without adding headcount at the same rate.
The trade-off is control. The more of the sale a partner owns, the less you see of the customer. That is why channel programs rely on deal registration, rules of engagement and a partner portal to keep visibility and prevent channel conflict.
Example
Lumen Health sells clinic scheduling software and builds a channel with three types of partners. Northgate IT, an MSP, resells it to clinics it already supports at a 20% discount. Cobalt Consulting, a healthcare advisory firm, refers clinics and earns 15% of first-year revenue. Brightline Agency, which builds clinic websites, registers deals it sells itself.
In one quarter, the channel brings Lumen 18 new clinics: 9 through Northgate, 5 referred by Cobalt and 4 registered by Brightline.