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What Channel Partners are doing that we can't ?












Channel partner is not a new phenomenon, some call them brokers or agents, while others as sales partners or channel partners.

Here channel partner essentially means an organization that facilities real estate developer to sell real estate and gets a percentage share in exchange, a brokerage.


Channel partner term is relatively new and has hit the high with advent of internet property listing portals. Initially it was believed that the property listing portals would cannibalize the real estate broking business and initially they did try to do it but due to few known and other unknown reasons, it did not continue that path of removing the middle man between Builder Developer and the Buyer.


Reasons for this are partly because real estate companies were not concerned if they had to pay a brokerage or not (generally) also from portals point of view the cost of customer acquisition sky rocketed in last five years as rates or google ads, facebook ads and search results costed more and more, making them more conscious about not wasting the leads or enquires that where generated, so most portals ,themselves became channel partners and created business model around the brokerage model instead of listing model and that worked in the market where builders developers were accommodative of the brokerage rather than investing in the marketing team, which to an extent was wise.


Coming to current Channel Partner Economics, what i found interesting and logical was channel partners are rather rugged and flexible hunters and they work in packs and also they are ok with  pack members join ,leave or join again or work out side their umbrella, they are intensely focus on one thing, “todays sales’.


Second thing is the team members  are  highly incentivized and low salary, so only aspirational and motivated souls work their best years of life and get to their financial goals. 


Third , for them customer acquisition cost is substantially low as compared to a developer because the cost of one lead is say 1000 Rs a developer has to pay full 1000Rs for it and the lead is either converted or not, so actual customer acquisition cost in more and variable to a developer.

 So a project of 500 hundred flats need say 10000 leads and if you as developer are paying 1000Rs per lead in effect your 10000000 Rs (1cr) will be divided across  200 booking conversions  (online leads) that is your customer acquisition goes to some where around 50000Rs per client.

Now this apparently looks easy math but in reality the conversion varies erratically mostly dependent on the sellers drive and passion.


On the other side the channel partner try to bring that figure form 200/10000 lead conversation ration to say 2000/10000 which is where the Channel partners are making the money.


Now is it sustainable? Is it a good business model ? That is not what  i am worried about at this point of time. What i am really worried about is longer term market scenario where channel partners are not concerned with brand and services of builders and developers they are selling themselves to clients on the basis of only - Rates and may be more options, other than that the channel partners that offer any thing more is out of their pocket.


So in long term this might hamper or effect the buyers mentality and they may grow insensitive to the branding and services that a developer offers and just compare purely based on final cost of flat.




Lets ask some questions like 


Are the Channel partners selling PMAY projects or low cost projects?


Are they selling a builders project or they selling flats ?

 

Does it matter which builder developer they are selling ?


and what are they talking to clients at large?


At the risk of generalizing the channel partner business will grow and expand by and large but will it be in some way harming good old client-builder interaction and relationship is what we all should study.



Having said that there are some good channel partners and as in every business there are some spoilers. So to choose our channel partners wisely is what we can do.


Advit Dixit.

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