It was a major blow. One of the largest US agricultural manufacturers had just lost one of their top-performing dealer groups to a competitor. The dealers had strong sales numbers. The margin structure worked. The product line was solid. But when the head of the dealer group explained their decision to switch, he didn’t mention any of those things. Instead, he talked about feeling like a number, constant program changes without their input, and fighting for basic support. “They never really understood what we needed to succeed,” he said. “They knew our sales numbers, but they didn’t know our business.”
In the world of distributed sales (what we call “B2B2X”), this story plays out across industries with alarming frequency. From automotive to technology, manufacturing to agriculture, companies are investing more than ever in channel programs while seeing declining partner satisfaction and loyalty.
The Partner Paradox
Channel partners want more than just access to your logo. Digital transformation has changed how manufacturers work with their dealer networks, but the basic human needs that drive these business relationships stay the same. Partners on both sides of the equation thrive when they have the freedom to run their businesses, clear paths to grow their expertise, and shared goals they believe in.
Yet most OEM dealer development managers are focused on optimizing sales programs and complex incentive structures. Psychologist Daniel Pink demonstrated that traditional reward systems (carrot-and-stick approaches) work well for basic mechanical tasks, but for higher level and organizational thinking, people are motivated by different things.
The Three Pillars of Partner Psychology
Autonomy: Freedom Within a Framework
Partners need more than independence—they need true empowerment. This means having meaningful control over how they serve their markets while operating within brand and compliance guidelines. The most successful channel relationships balance structure with flexibility, giving partners clear boundaries but
significant freedom within them.
I was talking to a marketing leader who was trying to operate within a restrictive co-op program. He lamented, “We’re one of [the OEM’s] largest partners, and we can’t get them to pay attention to the campaigns we want to run. All we get is Canva templates!”
The disappointing reality was they didn’t need more investment. They needed collaboration to help push the OEM brand forward in their area, building awareness and growing the customer base.
Even without updating business rules, collaboration and co-innovation are opportunities for forward-thinking businesses to lean into and connect more deeply with their channels. Partners who feel trusted to make decisions about their business consistently outperform those who feel micromanaged, even when the underlying programs are similar.
Ask yourself: are you collaborating actively with your best and most active channel partners to help them build your business?
Mastery: Creating Paths to Excellence
Partners invest heavily in building their businesses and expertise—it’s one of the reasons their customers look to them first. Access to local experts who can help implement solutions is one of the reasons the distributed/VAR model exists in the first place. But understanding a product’s features doesn’t make someone an expert.
Partners need clear paths to develop new capabilities and recognition for their investments. Smart manufacturers create structured progression paths that acknowledge and reward growing expertise that goes beyond product knowledge.
Ask yourself: how might your partner relationships change if you:
- Invested in capability development beyond product training?
- Recognized programs that celebrate and reward expertise, not just sales?
- Outlined clear progression paths with meaningful benefits?
- Shared opportunities to influence product and program development?
Those benefits extend in obvious ways to your customers, of course. They’re looking for expert product knowledge and integration, and leaning in here builds it faster in your channel partners through appropriate rewards and recognition.
Purpose: Alignment Beyond Revenue
The strongest channel relationships are built on shared vision and values. If you want to be more than a part of a shared floor plan, partners need to see how their business goals align with yours. This alignment creates resilience during challenging times and motivation beyond financial incentives.
In our work last year with a major international office supply manufacturer, distributors across markets shared the same thing over and over: we should be seen as more than a sales channel. “The right story is [we are an] integrator rather than a procurement arm.” said one sales leader. “That is an enterprise belief that I think we all share.”
Successful purpose alignment is driven by:
- Shared long-term vision for market development
- Cultural compatibility in customer approach
- Mutual commitment to industry leadership
- Collaborative innovation opportunities
Ask yourself: do your channel partners understand your role in the market, and can you articulate their goals?
Breaking the Transaction Trap
The traditional focus on sales targets and incentive programs creates a transactional mindset that undermines long-term partnership. While financial rewards matter, they don’t build loyalty or drive innovation.
The key is building trust through consistent support beyond sales situations, transparent communication, and a genuine investment in partner success beyond immediate revenue. But building this trust in today’s environment requires manufacturers to address a new challenge: how do you maintain strong relationships in an increasingly digital world?
Digital Transformation’s Impact
The rise of digital tools hasn’t just changed how dealers operate—it’s fundamentally shifted their expectations of manufacturer partnerships. A leading RV manufacturer learned this lesson the hard way when they rolled out a new dealer portal. The technology was cutting-edge, but dealer adoption languished. When they investigated why, the answer was telling: “The portal gave [the channel partner] data and tools, but we lost our direct line to product managers.”
It’s a critical truth about modern channel relationships: success requires a delicate balance between digital efficiency and human connection. Especially in a moment where the AI-frenzy is driving huge investment in technology and infrastructure, it’s important to remember the most effective dealer development teams aren’t those with the most advanced technology, but those who use digital tools to enhance rather than replace relationship-driven partnerships.
Think about that RV OE and their shiny new dealer portal, its 24/7 access to training, inventory management, and warranty processing—all tools that remove human interaction in favor of more streamlined processes. How could you leverage technology without disconnecting people?
Imagine integrating video conferencing for complex technical support, allowing dealers to show problems in real-time to master technicians. Or adding collaborative planning tools that let territory managers and dealers work together on market development. Most importantly, consider what it would look like if the time saved through automation was used to instead have more strategic discussions with their dealers.
Successful manufacturers follow a clear pattern:
- They automate the transactional and focus on the strategic. Routine tasks like order processing, warranty claims, and basic training move to digital platforms, freeing up time for meaningful discussions about business development and market opportunities.
- They use data to enhance as well as evaluate relationships. Instead of just tracking dealer performance metrics, they analyze data to identify where dealers might need additional support or where opportunities for collaboration might exist.
- They maintain high-touch approaches for high-stakes situations. While digital tools handle day-to-day operations smoothly, complex issues still get personal attention. Strategy sessions, conflict resolution, and major business decisions happen face-to-face or through direct communication.
Digital transformation doesn’t need to replace traditional relationship management—it should enhance it. When manufacturers get this balance right, they create a powerful combination of efficiency and engagement that strengthens channel partnerships rather than diluting them.
Creating Sustainable Competitive Advantage
When manufacturers truly embrace psychological partnership, they create advantages that competitors struggle to replicate. This was powerfully demonstrated through the supply chain disruptions of the last several years. While many manufacturers saw their dealers hedge their bets by taking on competing brands, those who had invested in stronger partnerships found their dealers more willing to weather challenges together.
The difference lies in how these relationships perform under stress. Strong psychological partnerships create resilience through:
Shared Problem-Solving: When challenges arise, close partners naturally collaborate on solutions rather than pointing fingers. We’ve seen OEs and dealers develop creative inventory sharing arrangements that helped the entire network better serve customers despite shortages.
Accelerated Innovation: Dealers who feel psychologically invested in the partnership are more likely to embrace new initiatives and provide valuable market feedback. An outdoor recreation technology manufacturer found their most engaged dealers became natural beta testers for new service technologies, providing crucial real-world insights that improved final implementations.
Enhanced Market Intelligence: Partners who trust each other share deeper, more nuanced market insights. These aren’t just sales reports, but rich information about emerging customer needs, competitive dynamics, and market opportunities. This intelligence becomes a powerful competitive advantage when it informs product development and market strategy.
Better Partnerships are Possible
The future of channel partnerships lies not in better programs or higher incentives but in stronger relationships built on understanding and responding to partner needs. In an era of rapid digital transformation and market uncertainty, manufacturers who master this approach will separate themselves from their competitors and build the most resilient and profitable networks.
The technology and tools may evolve, but the fundamental human need for autonomy, mastery, and shared purpose remains constant. Those who recognize and respond to these needs will find their partners aren’t just selling products—they’re investing in a shared future.
