Blockchain in the Channel

With mainstream awareness of blockchain-based products and services increasing thanks to cryptocurrencies like Bitcoin, there’s a lot of buzz about the decentralized technology but very little understanding of what it is and its potential as a disruptive force.

I have been spending some time thinking about what blockchain-based channel tools could mean for brands and their channel partners. All relationships require trust to be successful. And transactions of any kind between two parties require trust, but it’s not always easy, especially given the ups and downs of typical business relationships.

According to Mike Orcutt writing for the MIT Technology Review, “the whole point of using a blockchain is to let people—in particular, people who don’t trust one another—share valuable data in a secure, tamper proof way.”

Blockchain-based systems are potential game-changers for indirect channels. They offer the potential for transparent, trusted and accountable partnerships. But they don’t exist yet, so for now, it’s interesting to consider the possibilities.

What is Blockchain?

Wikipedia describes blockchain as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.”

Today, any interaction between a person and a company or any interaction between a company and another company is recorded as a transaction in some system. For example, we use HubSpot to power our website. HubSpot tracks the activity of every person who visits our website and creates a log of their movements even though we don’t know who they are. Once visitors submit a form on our website (to subscribe to our blog or to request an eBook), thereby identifying themselves, HubSpot creates a contact record in the database and attaches the log of all their previous actions to that person.

In today’s world of centralized systems, we (the website owner) are the only ones who have access to that information. The website visitor can’t see what information we’ve collected about them. Some people may not care about what information is collected and stored about them, but one of the central issues in the European Union’s General Data Protection Regulation (GDPR) is the ability for any citizen of the EU to be able to request a record of what information has been collected and stored about them.

In a blockchain-based system, the transactions, whatever those interactions might be, sit in a decentralized ledger that is shared, transparent and immutable. In other words, if you were the website visitor I referred to in my example, you would have the same record of your visits to my website that I do. You’d know what information was collected including any data you shared explicitly through web forms as well as any record of pages viewed. And because HubSpot also automates marketing, a record of any future emails sent to you and your responses to those emails would also be recorded in the transaction log of the blockchain. You wouldn’t need to make a GDPR request for your data. You’d already have it. Transparency of data builds trust within the relationship.

Blockchain and the Channel

Today, brands record and store a great deal of information about their channel partners. Partner program information, profiles on executives, sales data, deal registration and incentives information, market development funds (MDF) earnings and utilization and marketing activity results and much, much more is collected and stored across a host of systems. Partners get exposure to some of that information when they log in to the brand’s partner portal. But any evaluation criteria that determines partner program level or metrics that influence incentives and MDF allocation or other information that brands use to evaluate or reward channel partners are typically kept hidden from the partner.

A blockchain-based channel program offers new opportunities to make information and business between brands and channel partners more efficient and transparent. Thinking about the potential role of blockchain-based systems and the potential for the channel is very early, never mind building these systems and engaging partners. For now, it’s interesting to consider some common scenarios that could use more trust and transparency:

  • PRM – A blockchain-based partner relationship management (PRM) platform of the future will share all the information that brands keep about partners so that both sides of the relationship have a copy of the data, and more importantly, understand how success is measured, and benefits are earned. For example, a partner will see how close they are to achieving the gold level of the partner program because the criteria and their achievement will be shared and transparent. This transparency will lead to less wonder about how to level up to greater benefits and lead to more action to achieve results.
  • Rapid Enrollment – Onboarding a new channel partner can be cumbersome and expensive for the brand and the channel partner. For a one-time deal involving a new brand, the channel partner might not even make the effort to enroll in a partner program. If you’ve ever found a product you want online but went and bought it on instead, because your profile and payment information is already on, you can likely relate. In a blockchain-enabled ecosystem, a partner’s company information, financials, credit, etc. would be stored in a profile attached to their digital wallet. A partner could join a brand’s partner program with a couple of clicks to enroll in a smart contract stored in the blockchain. For new “born-in-the-cloud” channel partners who engage in a more transactional, rather than relationship-oriented manner, this is likely the approach they would prefer.
  • Through-Partner Marketing – While marketing automation in the blockchain has the potential for transparency as mentioned previously in the HubSpot example, the through-partner marketing use case offers brands greater visibility into results generated from partners. Through-partner marketing involves marketing content created by the brand, customized by channel partners and shared with customers and prospects. Brands spend a significant amount of resources creating campaign content and many offer tools to automate the customization and sharing of content. Being able to track end-to-end campaign results is often challenging because information is scattered, and in some cases, brands require partners to track and report results manually. With campaign activity being recorded in the blockchain, activities can be tracked, leads can be followed and return on investment calculated.
  • Incentives – Similar to program enrollment, incentives like rebates and spiffs can be agreed to in the form of smart contracts stored in the blockchain. “When specific conditions are met, like reaching a revenue milestone, incentives are paid without the delays that are typical in these programs,” suggests Jeremy Epstein, marketing faculty member for the Blockchain Research Institute and CEO of Never Stop Marketing, an agency focused on marketing for blockchain startups. You could even create multi-vendor incentives that combine performance criteria and financial benefits from multiple brands, like a joint Microsoft and HP incentive for selling laptops and software. Clear program rules and fast payouts that are secured and automated by the blockchain lead to increased trust and higher partner satisfaction.
  • MDF – Supporting a partner with MDF in a blockchain world allows brands to commit funds for a specific campaign or purpose and know that the funds won’t pay out unless they’re used as intended. For Epstein, this possibility addresses one of the greatest unknowns with MDF. “When I worked for Microsoft and offered MDF to partners to hold an event, I was never 100% sure that all of the funds given were being used for the event. Maybe some went to the event, but the rest could have been used for other activities that I had not agreed to. But if I made an MDF commitment to a partner in a smart contract, secured by the blockchain, I could create conditions that must be met, like working with a specific agency or buying specific services, for the funds to pay out,” said Epstein.
  • Training and Certification For technical, sales, marketing and other training courses, as well as the certification tests channel partners are often required to pass to achieve partner status, each brand holds this information within a wide variety of systems. Even for one brand, they may keep training records in one system and use a third-party for certifications. Partners often struggle to keep track of the training and certifications completed by their staff. Writing this information to the company’s digital wallet in the blockchain would give the channel partner and the brands they partner with a more accessible and accurate source of data. Certifications, and their authenticity could be used more effectively in making the case to a prospect that one partner is better suited to a project than another. Customers would feel more confident in using training and certifications in their vendor selections.
  • Customer Reviews – Another area that would benefit customers, partners and brands is the online review. Whether it’s Yelp, Amazon or some other site, we’ve all seen examples of unbelievable reviews of products and services. Being able to trust reviews because transactions recorded in the blockchain have verified authenticity provides immeasurable value to all parties involved. Brands are often asked by prospective customers to recommend channel partners, particularly to provide services around the implementation of the company’s products. Up until now, brands typically recommend the same partners repeatedly, based on relationships and familiarity. Having authentic customer reviews allows other channel partners to break through and become noticed for their excellent work.

Transparency and convenience are often the biggest challenges we see brands facing with their channel programs. Whether it’s lack of visibility into partner communications or general lack of collaboration on a program, these issues may start out small and seem minor, but can quickly snowball and result in lost time and revenue.

Blockchain-based systems may be in their infancy, but their applications in addressing these challenges are clear if introduced to the channel proactively. Have any questions for how your channel programs can be improved? Check out our book, “Marketing Multiplied: A Real-World Guide to Channel Marketing for Beginners, Practitioners, and Executives.”  

Mike Moore is VP of Channel Strategy at Averetek and co-author of “Marketing Multiplied: A real-world guide to Channel Marketing for beginners, practitioners, and executives.” For more information, please visit