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Channel Matters Blog > September 2013 > Should You Offer Partner Exclusivity?

Should You Offer Partner Exclusivity?

by Rich Blakeman
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The idea of offering exclusivity can cause heart palpitations in some channel strategists, and for good reason. Inherently, we understand the risks involved: what if they don’t meet their quota? Worse yet, what if they don’t even come close? While the risks are theoretically the same with a direct salesperson, we have more sway with direct sales since their livelihood usually depends on making their numbers. That’s not often the case when it comes to channel partners.
 
Despite the risks, my answer to the question of territory exclusivity is an unequivocal, “Maybe.”
 
I don’t usually recommend offering territory exclusivity to partners, but there are situations where it might make sense. Here are a few:
 
When specialized knowledge is required
You may have market niches that require a higher degree of expertise. For example, if you sell software designed for service businesses, you might have one reseller who has exclusive rights to doctor’s offices.
 
Two words of caution here. First, the reseller should have a demonstrated competence in the market. I’ve seen too many markets granted to a partner where the partner oversold their knowledge level. Second, make sure the exclusive arrangement is well understood by the entire channel and your direct sales force if you have a hybrid model. Depending on how your channel contracts are written, you may not be able to enforce exclusivity, but you can at least minimize the conflict by laying out the terms in your rules of engagement.
 
When volume isn’t necessarily a good thing
When you are releasing a new product to the market and looking for those early adopters who are willing to suffer a few glitches, offering temporary exclusivity to a highly competent partner may make sense. Note that this is temporary exclusivity and the terms of expiration, such as upon general release of the product, should be laid out. Also, the reason for having a highly competent partner is so they can help buffer the higher support requirements during the early days of the product. Make sure their contribution is defined so you don’t end up with a partner who simply passes all of the problems back to you.
 
 
When the market is hard to reach
Finally, there may be geographical territories that lend themselves to exclusivity. One channel strategist I know had a well thought out plan for Europe and North America, but no plans to enter South America. She was contacted by a organization in Brazil who was willing to handle all sales and support in-country including localization of the product. It was a complicated contract to work out, but in the end, offering exclusivity made perfect sense.
 
I’d like to hear from both channel strategists and channel resellers. What experiences have you had with exclusivity? Did they work out well, or were they a painful learning opportunity? Would you do it again?
 
 
 
Last modified on 10/24/2013 3:08:03 PM
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