I have been looking into Channel Marketing and Partnerships in general recently and how they can help companies grow. The key thing here is that they can only help if the strategy and execution is done right.
Let’s remember that Channel Marketing’s ultimate goal is to optimize the potential of each channel. This can be successfully applied to software as a service companies for example. In this scenario, the goal is to first get a single partner to become interested in your offering, and eventually, they will be excited enough to bring X additional customers to you, from their own customer database.
The best examples of Saas companies that have been able to do it right would be Xero, Hubspot (40% of their business comes from VAR’s) and Solidworks (grew from 135 to 400 million USD), and if you asked them, they would probably tell you that they have made some mistakes along the way.
The good news is perhaps that because these companies have gone through the initial discovery and implementation phases; that companies that wish to develop a channel strategy can take a page from some of their lessons and best practices.
So what is the difference between a Channel Partner and a Value Added Reseller?
Channel Partners or Value Added Resellers (VAR’s) are able to help your company with sales, because they are going to be acting as an extension of your sales team. They will ideally already have clients of their own and if the incentives and motivation are done right, then they will sell your product to their own clients.
Channel Partner: Think big companies like IBM, Sales Force or Microsoft. These companies hold all of the power and the relationship though beneficial is one sided.
VAR: The value added reseller normally is a smaller company (SMB) that already works with the types of clients that you want to serve, but has a close relationship to them. They also usually sell more than one product or service. Think Accountants and Bookkeepers who have their clients use Xero or Agencies that recommend and have their clients use Hubspot.
What Must You Know Before You Start?
Both of these partners are going to have to be motivated to sell your product and that is where the Channel Strategy needs to be well defined and needs to be executed in the right way since:
- Your product is competing with many other products for attention.
- Your partners are not going to be the ones creating the demand (you have to do that)
- Your partner’s goals may not be aligned with yours
- Your direct sales team may compete with your partners
- Your company might step over partners to close a deal
What To Think About Before You Develop Your Program?
- Explore: Spend the right amount of time researching and knowing your company’s strengths and weaknesses when it comes to partners and product. Talk to your customers, to your sales teams, to your partners, to your customer service staff. See how you can make the process of selling as easy as possible, because it will be these partners who will eventually be dictating the success of your program.
- Design: Once you have the insights that you need and you have discovered the problem that you will be solving for your partners, you can start to put the plan together. You need to make sure you take into consideration the partners and if they are a good fit, if their goals are similar to yours, if they are motivated, is the compensation model sufficient and well structured, if the changes to the product include them and also if you’re going to be able to support them. You will also need to hire and train the staff that is going to be on your Channel Sales /Coaching /Education team.
- Deploy: You will need to deploy before your plan is ready and complete, especially if you are a SaaS startup, since you don’t have lot’s of time to sit and wait. However, to deploy is not to go full scale and all out. You will need to test your Design and see if it actually works in the real world. I would recommend that you set up to meet with your new VAR and go on a sales call with them. You need to understand how they pitch your product and how their clients can potentially react to it. This is where you are really going to learn and where you will start to understand what a successful VAR looks like and what a non successful one needs more help with.
- Launch: Once you have been able to prove that your plan is working, then you will be able to launch the program. Don’t forget that you will need to develop all the educational materials, resources and support that your partners will need to succeed. That is why the person in charge of Channels is not only going to be good at sales, but needs to understand Marketing, Strategy and other areas of the company that will all be affected or influenced by the channel.
- Iterate: The channel is going to need a lot of care, because it is going to evolve and change and you need to be there every step of the way. Even successful companies like SolidWorks would say that after many years they are still working at it.
If you get most of this right, you are still going to probably have to wait over a year to see the results that you want from the program, because you are building an entire ecosystem and processes that need to be proven and need to be tested.
All in all, channel partnerships may prove to be quite complex, but with the right approach, the risks can be minimized—and the benefits, optimized.
Hope this helps some Saas companies with their initial ideas on Channel Marketing. I am still looking at more examples and more strategies/tactics and may share those in a new post.