Misaligned goals, poor communication, change resistance, and ambiguous contracts often cause conflict between direct and channel partner sales. According to the multi-industry channel partner report, 38% of channel leaders state that addressing channel conflicts is a challenge their organizations face. This conflict can lead to poor sales, price wars, customer dissatisfaction, and low channel partner retention.
Who Can Be Involved in Channel Conflict?
The root cause of channel conflict can occur between:
- Direct sales and channel partner sales
- Different channel partners, and
- Competing products offered by channel partners
What Causes Channel Conflict?
Ambiguity in contracts and agreements
Most conflicts stem from not having a clear contract on expectations in how the organization and the partner will work together. Without a clearly outlined agreement between parties in a partnership, they often lead to stepping on each other's toes.
Misaligned partnership goals
When organizations have different partnership goals from that of the partners they've chosen to work with, there's conflict. Aligning your goals at the initial steps of the channel partner recruitment phase is crucial.
Poor communication and distrust
Trust keeps partnerships alive. And nothing erodes that trust if there's poor communication between the organization and the channel partner. Both parties need to have a strong and open two-way channel partner communication,
How to Manage and Prevent Conflicts in Channel Partnership
1. Establish a Deal Registration Process with a PRM
Partner Relationship Management (PRM) software helps keep your experience working with partners organized and relatively transparent. They can help remove the communication problems that often lead to channel conflict.
Imagine two partners approaching you for help closing a sale — and the deal happens to be the same lead. What do you do? Favor one partner over the other? Favoritism sets in and ruins trust and fairness. With a PRM, you can implement a deal registration process so that partners register deals. Then, you work with them according to who registered the deal first. It’s fair and transparent.
2. Practice Gratitude
Gratitude is the eagerness to show appreciation. Appreciate that partners, resellers, distributors, etc., are valuable additions to your organization and help drive indirect sales that contribute to your revenue. This means showing up with gratitude and willingness to cultivate a more vital relationship with your channel partners because it matters.
In a survey conducted by Xzito, we surveyed over 130 companies across 21 industries that go to market through channel partners. This multi-industry channel partner report highlights how the attitudes (Partner-Focused, Self-Focused, and Customer-Focused) toward channel partnerships and their business evolution can influence channel sales and marketing strategies. Channel managers with a "Partner-Focused" mindset had better success across all categories in the survey.
3. Set clear expectations with solid contracts
When writing up contracts and agreements, ensure you draw clear boundaries around all aspects of the relationship. For example, identify which specific products or geographical areas the channel partners is responsible for and your direct sales team. Specify a pricing structure to prevent your sales reps from undercutting partners. You can even offer exclusive deals tailored for your resellers.
4. Keep some products exclusive to your company
Think of specific products that go through your distribution partners and other products that are only available through your direct sales team. This significantly cuts down opportunities for conflict to occur. You can offer some products through your eCommerce channel and allow other products to go through your partners. That way, you wouldn’t undercut them in price and build a stronger brand.
Channel conflict is inevitable. However, with the right strategies in place, channel leaders who use the strategies in this article to address conflicts experience:
- Improved channel partner relationships
- Access to a wider share of the market and stronger mind share
- Rapid sales growth
- Overall better customer convenience
If you’d like to see more details about what we learned in the multi-industry channel partner report and learn what other channel leaders think, download the report here..