Pyramid vs. Diamond

Channel designation structures often follow a pyramid structure like the picture on the left. It makes sense that at the highest level of the structure there is more exclusivity...only the best of the best sit at the top of the pyramid. In this case, the Platinum partners make up only about 10% of the total channel population. Next is the Gold designation and finally, almost 60% of the designated partners fall into the Silver level. Companies that are just building their channel ecosystem should follow this structure, especially if they have limited geographic coverage. Unfortunately, too many companies stop here...with the pyramid. I think there is a better way.

One of the goals of channel management should be to move lower designated partners up the pyramid to higher designations. Isn't it better if your Silver partners increase their level of competency and capabilities to the Gold level. Of course it is...they become more invested and loyal as they move up the designation hierarchy and are better able to serve your mutual customers. If that is the case, however, and you want to maintain the pyramid structure, you will need to be constantly recruiting new partners at the lower levels. Again, this is fine if you are just building your channel ecosystem, but what about for an established channel structure? More recruitment means more channels, which very likely will cause channel conflict, over distribution, price erosion, and decreased channel satisfaction. Not good.

I think that over time the structure has to change to more of a diamond shape. The highest levels maintain their exclusivity, but there becomes a smaller number of designated partners at the lowest level because you are helping them move into the middle (Gold) tier. There is no need to over distribute and continue to recruit partners. The form simply takes the shape of a diamond. At this point, recruitment is reserved for replacing poor performance partners enabling you to manage channel conflict.

How you manage your structure will depend on where you are with your channel coverage model and the optimal number of partners you need to be successful. Don't get stuck in the pyramid, when a diamond may be all you need.