Looking to enter new markets? To increase sales? Grow your sales pipeline? No matter what your business goals are, a distribution marketing partnership could be the answer.
It's this kind of partnership that helped DataStax's pipeline grow by 140%. And the same kind of partnership that helped Microsoft's partners earn $8 billion in just two years.
And, yes, you guessed it, this is the same type of partnership that helped Google get more users in 19 countries by putting its name on Kit Kat wrappers. (Okay, you might not have guessed that one!)
Let's look at the different kinds of distribution marketing partnerships and what they can do for your business.
Distribution marketing is the process of making a product or service available to consumers who want to buy it. The product could be sold directly by the vendor (maybe by opening its own stores) or through distributors or agents.
- Direct sales channels: Without the help of middlemen, the company that makes the product sells it directly to the consumer. This could be done by selling their product online, in a store, door-to-door, or in a number of other ways.
- Indirect sales channels: The consumer doesn't buy the product directly from the company that made it. They might instead buy it from a wholesaler or a store. Often, there is more than one middleman. The product goes from the producer to the wholesaler, then to the retailer, and finally to the customer.
- Distribution, which is sometimes called "place," is one of the "four Ps" that make up the marketing mix. The other three are product, price, and promotion
I know what you're thinking: "Okay, I get the "distribution" part. But where does "marketing" come in?"
Well, the marketing mix is one of the most basic ideas in marketing. A company can't sell its product without making decisions about each of these parts. So, a strategy for getting the word out is a very important part of marketing.
Okay, so what's a distribution marketing partnership?
A distribution marketing partnership is a type of partner marketing in which one brand uses the distribution channels of another brand to market its own products and services.
Basically, it saves a lot of time, money, and effort for the main brand by letting it use the relationships that the secondary brand has already built.
There are five main types of marketing partnerships for distribution. And, as expected, they all overlap.
I'll try to tell them apart as best I can here.
1. Cross-promotion
Cross-promotion is also called cross-marketing. It is when customers of one product or service are told about a related product or service.
This can happen within the same brand, like when Oprah Winfrey talks about her books on her TV show to promote cross-media marketing.
Or when Amazon shows you other products that go with the one you just bought before you check out.
But when it comes to partnerships, cross-promotion usually means that the customers of one brand are told about the products of another brand.
So how do businesses help each other out?
This can happen in a lot of different ways, both online and off. Here are a few that you might have seen:
- Leaflet delivery: When a customer orders an item online and receives a brochure for another brand's service.
- Exit flyering: distributing flyers for similar events on the way out of a performance.
- E-shots: Send emails that promote other relevant brands to people on one brand's mailing list.
- In-store demonstrations: During which people in a store see a product demonstration promoted by another brand.
- Promoting another brand on your digital platform: For digital companies on their online platform, this is similar to in-store demonstrations.
- Cross-promoting on social media: The act of promoting one brand on another's social media channels, sometimes by reposting content from the partner brand.
A secondary brand's customers are often offered deals, coupons, vouchers, and promo codes by the main brand. This lets the secondary brand present the promotion as an exclusive offer instead of something that could be annoying or even spammy.
Giving these customers access to an exclusive offer is also likely to make the rate of conversion higher. With offline promotions, in particular, the use of discount codes makes it easier for the main brand to keep track of how well the promotion is working.
But why is cross-promotion so important to the marketing strategy of a brand?
Well, cross-promotion lets brands grow by using each other's customer bases. This works as long as the brands' target audiences are similar.
This can save them time, money, and resources, and it also has benefits similar to those of referrals.
Imagine that someone always buys a brand they know and love. Then, this brand sends them an ad for another brand that is similar.
By doing this, the secondary brand, which has already built trust with the customer, is essentially endorsing the primary brand.
This helps to build trust and quality in the primary brand's products much faster than the primary brand could do on its own.
Example:The department store Macy's shared the nonprofit group Special Books by Special Kids' video on their Facebook page as a way to promote both groups.
This is similar to content marketing partnerships because the cross-promotion in this case is based on content.
2. Bundling
Bundling is a common way to set prices that don't involve partnerships. This is when multiple products are combined into one offering.
This is a common way to sell software as a service (SaaS), and Microsoft's Office 365 suite is a great example of bundling. Customers of Microsoft can't pick and choose which products they want to pay for.
Instead, they pay a flat monthly fee to have all of the Office products, including the less popular Access, Outlook, and Publisher, as well as the more popular Word, Excel, and Powerpoint, installed on their desktops.
This is called "pure bundling" because these items can only be bought together. But you can also get mixed bundling, in which the products can be bought separately or as a set.
Usually, when you buy a bundle of products, the price is lower. This is done to get people to buy more than one product.
A bundling partnership works the same way. In this scenario, however, there is only one difference between the brands of the two products or services being bundled together.
Here are some possible solutions:
- Giveaways: Including the primary brand's product in the packaging of online delivery to give the product away for free.
- In-product promotion: Promotion within the product itself of the main brand. Y Combinator's users have access to discounts on WeWork facilities around the world, for example.
- Cross-brand offers: Promoting other brands' products through collaborative promotions, such as a 'buy one, get one free program, or providing free products from the primary brand when a certain amount is spent.
Brands can also decide whether to use hard or soft bundling. In a hard bundle, the products or services of each partner are sold together for a set price.
For example, you might see an offer that says something like, "Get six months of SportsVOD for free when you upgrade to the PhoneProvider Plus Package."
In a soft bundle, on the other hand, the customer still gets a discount for buying both products, but the discount and the products are not tied together.
So, you're more likely to see something like: "PhoneProvider Plus Package customers can watch SportsVOD for three months for the price of one month."
Bundling can be used in many different ways to help brands reach their goals.
First, it can be a great way to get people to use a product that isn't as well-known. Let's say you already know what you want to buy.
But when you look at the product page online, you see that you could get a whole other product for just a few pounds more. Doesn't it sound good?
Similar to bundling, offering a bundle can make a brand more appealing to people who aren't familiar with it.
Getting your product into the hands of new people is a great way to show off what you have to offer and get them to become regular customers.
On the other hand, bundling is a great opportunity not just for the main brand, but also for the company doing the promoting through their distribution channels.
Most importantly, it can be a great way for a business to get people to buy a certain product (perhaps one that needs some additional promotion). Or, a company could offer a bundle deal for a short time to boost sales during a particularly slow time.
Example:Digital bundling is shown by the fact that EE, a mobile network service, gives new users six months of free Apple Music.
The number of people who agreed to this proposal is 45% higher than what was expected. Plus, EE says that the brand's "net promoter score" has gone up by a huge four points.
Birchbox is another example of bundling quite differently. By combining products from several brands, this company creates a subscription box.
3. Reselling
Reselling is just what it sounds like in eCommerce. It's when someone buys a product and then raises the price and sells it to someone else.
Remember how I talked about indirect sales at the start of this guide? Well, resellers are the people or businesses that stand between the company that makes the product and the customer.
A reseller can take one of three main forms:
- Distributor: An individual who buys products from manufacturers and then sells them to retailers or wholesalers.
- Wholesaler: Wholesalers buy products from distributors and then resell them to retailers.
- Retailer: Retailers usually buy products from wholesalers and sell them directly to customers via a shop or online.
Customers can also be resellers if they buy something and then sell it for a higher price. For example, think of Gumtree or the Facebook marketplace. This is called "flipping" or "arbitrage."
Reselling is good for both the company that makes the item and the company that sells it. From the manufacturer's point of view, they don't have to do anything to market the product to the end customer, so they can focus on what they do best.
They also make more money when they sell a lot of items at once since resellers tend to buy in bulk and end customers tend to only buy one of each item.
From the reseller's point of view, they get to make money without having to design and then make a product, which can be stressful and expensive.
In this way, reseller partnerships have a lot in common with supply chain partnerships, which are a type of outsourcing where the main brand gives another company the job of making its product.
Often, a reseller will add more value to a product by putting their own name on it or putting it in their own packaging. This is where white labeling and reselling meet.
White labeling is when one company rebrands another's product to make it look like its own. This could be seen as both a product partnership and a licensing partnership.
It's likely you've heard of TK Maxx. In order to pass on some of the savings to customers, the store buys discounted or surplus items from top brands, vendors, and designers.
4. Co-Selling
When two sales teams collaborate, they create a more unified customer experience (or solution!) for the customer.
Co-selling generally falls into two categories:
- Co-selling in technology or integration partnerships: When two salespeople from different companies sell software to the same customer at the same time, co-selling happens most often. By selling both solutions together, they make the customer more interested in what they have to offer. This can kind of look like bundling.
- Co-selling in a channel partnership: Most of the time, this means that a sales rep from the vendor and a sales rep from the reseller work together to sell a product. The vendor knows the most about the product, but the reseller knows the most about the customer. Together, they can sell a better solution.
When two or more sales representatives from different companies work together, vendors can gain a better understanding of how their products are represented, as well as unlock new markets and improve sales.
There is some overlap between licensing agreements and reseller agreements in this case.
But there is one big difference: in a co-selling relationship, both partners need to work more closely together in the sales process and make sure that their strategies and messages for going to market are the same.
Co-selling works so well because of this extra level of participation. A study by Concur found that 77% of companies that have co-selling partnerships have seen their profits go up, either directly or indirectly, since they started using this model.
Example:By creating co-seller partner programs, Microsoft has taken co-selling to a whole new level. Microsoft didn't just partner with one or two other brands to co-sell its products.
Instead, it used its program to form 9,000 partnerships by the end of the program's first year and made $8 billion in partner revenue in the first two years, according to CRN.
OSIsoft is the only company that has worked with Microsoft in this way. Microsoft says that OSIsoft and Microsoft have won 12 times together through this program.
The plan lets Microsoft's sales team sell both its own products and partner solutions that are built on top of Microsoft technology. All of this starts with lead account mapping, which is the next thing we'll talk about.
HubSpot, a company that does inbound marketing, has almost 2,000 sales and co-selling partners. When they sell a complementary subscription service to an existing HubSpot customer, some of these partners get a cut of the money.
5. Lead Account Mapping
Partner companies work together to share their leads through lead account mapping. It's often the first step in a co-selling partnership because this is how companies figure out where their sales teams should put most of their efforts.
In lead account mapping, brands compare their list of customers or potential customers with their partner's list of customers.
This can be hard in and of itself since questions often come up about who gets the other brand's information and who does the cross-referencing. However, solutions like Crossbeam are designed to solve these kinds of problems.
When a match is made, the partners can choose to share more information about the leads with each other. Once this information has been shared, the partners can figure out how best to use the information they have to help both brands.
Most of the time, each brand will find three types of leads:
- Customers: Customers who have already purchased the product.
- Opportunities: Existing customers who can be converted to customers.
- Prospects: Customers who are still in the buyer's journey.
The partners can devise a strategy for how to make use of their mutual leads based on the overlap of these types of customers. This might be how it would look:
Partners can use each other's leads by making "warm" introductions for each other. A mutual contact introducing another company in a competitive market can turn a "cold" lead into a "warm" one, which makes it easier to convert.
Lead account mapping can also help partners figure out where they can focus their co-selling efforts on opportunities that benefit both of them.
Or, if they have a lot of the same customers, they may decide to build a way for their tech to work together to make things easier for their customers. You can do anything!
Example:Microsoft's co-seller partner program starts with lead account mapping to find qualified leads among Microsoft's customers or those of its partners.
The partner companies then share the lead so that they can pitch to the customer as a team. DataStax is an example of a company that has worked with Microsoft in this way.
According to Microsoft, DataStax grew its pipeline by 140% through a co-selling partnership.
A small technology company called Dialpad, which manages cloud-based communication, has also benefited from lead account mapping.
In just a few months, the brand found almost 85 new business opportunities and closed nearly $500,000 of joint deals thanks to Crossbeam.
Quick Links:So, whether you're interested in bundling or a cross-marketing partnership, it's clear that a distribution marketing partnership can open up a lot of doors for almost any brand.