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Pros and Cons of using Channel Partners for Coworking

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Should you use channel partners to drive membership to your coworking space?

The short answer is: maybe.

The longer answer is that it depends on what your needs are, what your goals are, your local market and how much value the channel partner can bring to your workspace.

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What is a Channel Partner for a Coworking Space?

Channels are service providers with online capabilities to resell your workspace memberships. Some channel providers are marketplaces, where your space or services are sold to end-users online. The marketplace provider takes care of the transaction and pays you an agreed upon discounted price. An example of a comprehensive marketplace is Liquidspace, with a mission to list all kinds of workspaces.

“Value added resellers,” also invoice the end-users and pay you an agreed upon wholesale rate but augment your local service with a service of their own, such as corporate account services, concierge services, touchdown access to a nationwide or international network, or business answering services. They tend to be more discriminatory than generic marketplaces, to give their end-users a pre-selection of workspaces and services with a consistent experience. Example of value-added resellers include CloudVO and DaVinci Virtual.

Other channels are merely marketing channels to whom you pay a referral fee. Examples of these marketing channels include Croissant, Deskpass, Deskshare, PivotDesk and many other startups trying to make it in the workspace industry.

Here are the pros and cons of working with channel partners for your coworking space, as well as insights into which ones you should choose in your market and for your particular workspace.

Pros of Using Channel Partners for Your Coworking Space

1.  Online marketing: Channel partners can provide value due to their focus on online marketing. By working with channel partners, you reap the benefits of their online reach and marketing efforts.

2.   Expand market reach: Using channels expands your market reach, and often funnels people from outside of the area better than a local space operator may be able to do.

3.   Establish a local presence: If a particular channel is going to be active in your area, you might as well list with them. Otherwise, they will drive leads to your competition.

4.   Effective lead generation: Day passes are often well marketed by channel partners and can work as great lead generators for membership in your coworking space.


Cons of Using Channel Partners for Your Coworking Space

1.  You pay a commission: Web brokerage firms and other simple lead generation channels typically receive a 10% commission on a full time membership. This is not expensive, really, so it’s a minor con. Note: If the commission of the channel partner is less than 10%, don’t even bother with it as it might be a waste of time. No channel can make money on a commission less than 10%.

2.  You give a discount: Marketplaces and Value Added Resellers will take care of collection and often embed your space offering in a much broader service offering. For that, they typically request a discounted price (wholesale price) of 25% to 35% off your published retail price. It is definitely worth it if they bring you business you would have been unlikely to access otherwise, and you should set your published retail price in such manner that can accommodate that discount.

3.  Day pass use doesn’t generate much initial revenue: Some channel partners will keep 50% or more of a day pass revenue. Don’t worry about this. The value of using channel partners for day passes is lead generation.

4.  You may be the one bringing value: Your location is a very valuable asset. Listing with a non-established channel startup will bring them more value (in terms of expanding their network) than it will bring you. You may find that it brings you no, or very few, leads. Given the myriad of startups in the channel business, limit your listings to a few well-recognized names.

5.  You may drive up cost per click marketing: Listing with a channel partner may encourage them to advertise in your local market. That, in turn, may raise the cost per click and create competition to your own search engine marketing (SEM) efforts. Focus more on channels that are more likely to bring people from outside of your area, unless you don’t intend to have a pay-per-click presence on Google.

Pros and Cons Of Using Channel Partners Blog may increase your pay per click

There are pros and cons to working with channel partners for your coworking space. They can be a source for valuable leads, and the cons are relatively few. Just choose your channel partners wisely and make sure they’re bringing value to your workspace and not the other way around.

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