The most frequently asked question I hear from vendors is:
What do I need to do to be successful in the channel?
First, some background on what has shaped my perspective. I spent eight years at CDW, with exposure to channel programs from vendors of all sizes. I then started 3Eye, where our focus is on vendors who fall into one of these two categories:
1. “Emerging” – what I define as new or relatively new to selling through indirect channels
2. “Mid-market” – what I define as less than ~$50M in annual channel revenue.
Disclaimer: I’m not going to go into detail on the pros and cons of selling through the channel in this post, rather I’m just going to focus on the characteristics demonstrated by successful emerging and mid-market vendors. For now, if you’re interested in a brief read on the pros and cons of the channel, check out this write-up and stay tuned to this blog a future posting on the topic.
Whether you are selling hardware, software, or cloud services, you need a critical mass of customers who have already bought your product. You’ll need some customers to go on record stating that your product helped them achieve a better business outcome. Before you engage with the channel, you’ll also need a well-defined sales process that is clear and straightforward….and you must be able to translate it into something your channel can easily digest and repeat.
According to CompTIA, “Estimates suggest that 65-75% of IT products and services sold to businesses in the United States are delivered through or influenced by the indirect channel…Channel-influenced sales then equate to $350-400 billion of IT product and service sales in the United States.”
If you focus on the customer experience, many customers prefer to purchase through a channel partner. There is often less friction for your customers to buy through a channel partner, perhaps due to contracts, supplier consolidation, the difficulty of new vendor setup, pricing, or relationships. The channel helps you meet your customers where they are.
With that said, channel partners are not market makers. They are best viewed as demand amplifiers. You have to be able to generate demand that your channel partners can fulfill. Channel partners want to work with established technologies that have defined markets. Many vendors think they don’t need to market through partners, but they are mistaken. You’re going to have to invest in through-partner marketing and demand gen activities. Which leads nicely to my next point…
Like any go-to-market, selling through the channel takes time and money. Signing up resellers is the easy part (and signing up resellers is no small feat). Activating those resellers takes time, money, and a focused strategy. In addition to margin for your channel, you’ll need to invest in programs, to-partner and through-partner marketing, content development, and staffing. If you want to check out our approach, here’s a page that shows how we funnel programs to our partner community.
This should be obvious. However, there are a lot of ambitious sales and business development execs who try to build their own partner networks without executive buy-in. Your executive leadership needs to be aligned with your channel strategy, plain and simple.
Companies that are serious about succeeding in the channel take the time to get their sales compensation plan aligned to a pro-channel model. This is often referred to as “comp neutral” when your sales rep is paid the same commission no matter which channel the deal is sold through. Many channel leaders even create a “channel uplift” where their sales force is paid a higher commission for partner sales.
Some companies transition to a 100% channel model, where all sales flow through their partner network. The bottom line: if you compensate your sales reps more for deals they take direct, it will add a lot of friction to your channel engagement, and often create conflict between your channel and your direct sellers. Your channel partners have a long memory – the perception that you compete with them is a very tough one to overcome. Take the time to plan your sales compensation model now, with the channel in mind.
Just like the 50/50 raffle at the Friday night ballgame, you must be present to win. You have to engage with your partner network. Capturing mindshare is an ongoing battle. Like Woody Allen said, 80% of success is showing up. Of course, aligning with your channel partners’ strategies, bringing the right enablement tools and knowing how to engage across the organization all helps too. But it starts with being around.
In Summary
These strategies have been used by channel leaders both large and small to grow their business. Channel success, while not easy, is not a mystery – embracing these concepts will increase your probability of success.
I hope you found some helpful advice and/or inspiration! I’ll be back with another post soon.
References
CompTIA. (2016, October). 5th Annual State of the Channel. Retrieved from CompTIA: https://www.comptia.org/resources/5th-annual-state-of-the-channel