This is the fourth in a series of articles based on Channel Fusion’s Channel Outcomes Research conducted in partnership with the University of Iowa Marketing Institute.
In today’s rapidly evolving business landscape, brands are constantly seeking new ways to expand their reach and increase revenue. For manufacturers who utilize channel partners to sell their products and services, this oftentimes involves collaborating with channel marketing companies to help deliver their channel program elements. However, despite the potential benefit of partnering with a third-party provider, a significant number of brands remain hesitant to work with channel marketing companies.
According to recent survey data included in the Channel Fusion Channel Outcomes Research conducted by the University of Iowa Marketing Institute, nearly 42 percent of brand decision makers cited return on investment (ROI) as their primary concern. Let’s explore the implications of this statistic and delve into why ROI takes center stage in the minds of brand decision makers when it comes to channel marketing.
The ROI Predicament
When decision makers were asked about their reluctance to collaborate with channel marketing service providers, the overwhelming response was that ROI was their main concern. This finding underscores the critical role ROI plays in shaping business strategies and partnerships. Let’s delve deeper into this dilemma by looking at these five points:
1. ROI as a Performance Indicator
Return on investment is a key performance indicator for any business initiative. Brands are acutely aware that every dollar invested should yield a return that justifies the expenditure. In the context of channel marketing, companies often allocate substantial resources to establish and maintain partnerships with channel marketing program providers. Therefore, it’s only natural for decision makers to demand a clear and substantial ROI.
2. The Challenge of Measuring ROI in Channel Marketing
While ROI is universally important, measuring it accurately in the context of channel marketing can be complex. Channel marketing initiatives often involve indirect efforts, making it challenging to attribute specific outcomes solely to channel marketing provider partnerships. Decision makers are understandably concerned about investing in a partnership without a clear understanding of how it will impact their bottom line.
3. Balancing Short-Term Gains and Long-Term Benefits
Another factor influencing decision makers’ hesitation regarding ROI is the balance between short-term gains and long-term benefits. Often, channel marketing efforts may not yield immediate results, and decision-makers must weigh the potential long-term benefits against the initial costs. This requires a careful evaluation of a channel partner company’s ability to deliver sustainable growth and profitability.
4. ROI in the Context of a Small Program
Apart from ROI concerns, respondents also expressed reservations about the size of their channel marketing program. For some, they perceive their program as being too small to outsource effectively. This indicates that decision-makers are not only focused on ROI but also on the scalability and suitability of channel marketing strategies for their specific circumstances.
5. Cost Considerations
In addition to ROI and program size, cost remains a significant factor influencing the decision to work with a channel marketing company. Decision makers are mindful of their budgets and must ensure that partnering with a channel marketing partner is cost-effective in the long run. The perceived value must justify the expense.
Implications of the ROI Focus
The fact that 42 percent of decision makers prioritize ROI when evaluating channel marketing service providers has profound implications for both businesses and the providers themselves. Here are four points to consider:
1. Providers Must Demonstrate Clear ROI
Channel marketing service providers need to recognize the central importance of ROI in the decision-making process of potential clients. To secure partnerships, providers must demonstrate their ability to deliver tangible, measurable results. This includes providing case studies, data-driven insights, and clear ROI projections.
2. Transparent Metrics and Analytics
To alleviate the ROI concerns of decision makers, providers should prioritize transparent metrics and analytics. Providing clients with a comprehensive view of how their investments translate into returns can build trust and confidence in the partnership.
3. Education and Communication
Decision makers may benefit from better education about the nuances of channel marketing and how ROI is measured in this context. Channel marketing service providers can play a crucial role in bridging this knowledge gap by offering informative resources and fostering open communication.
4. Tailored Solutions
Recognizing that not all businesses have the same resources or needs, providers should develop tailored solutions that cater to the specific goals and circumstances of their clients’ programs. By aligning strategies with the unique challenges and opportunities of each business, channel marketing providers can enhance the perceived value of their services.
Return on investment (ROI) has emerged as the primary concern for decision makers when evaluating the potential benefits of collaborating with channel marketing service providers. This emphasis on ROI underscores the critical role it plays in shaping business strategies and partnerships. While ROI is undoubtedly a vital metric, it is equally important for both decision makers and providers to approach channel marketing with a long-term perspective, considering scalability, cost, and the potential for sustainable growth. In this evolving landscape, the ability to balance short-term gains with long-term benefits will be crucial for making informed decisions that lead to successful partnerships and profitable outcomes.
About Channel Fusion
For more than 20 years, Channel Fusion has been delivering strategy, customer experience and return on investment outcomes for brands and their channel partners with a wide variety of solutions and industry expertise. We continue to invest in the overall ecosystem of our channel marketing offering to ensure our clients can provide their channel partners with an optimal customer experience to drive results. Our core technologies and connected platform are supported by a team of customer-centric “Fusers.” Let us know if you’d like to learn more about how we deliver desired outcomes for brands and their channel partners.