The world of B2B sales is a complex environment, and the path software takes to get from company to end user doesn’t always follow a simple straight line. For many startups, navigating this ecosystem effectively means developing symbiotic relationships with channel partners who can help them access new audiences and better position current customers for long-term success.
When these channel partnerships work, they can be the lifeblood that fuels your business’s growth. Companies like HubSpot, Optimizely, Intronis, and Pantheon all leverage the channel to great success. That said, the channel clearly isn’t for everyone. In fact, investor Mark Suster argues that 80% of startups fail the channel test.
How can you tell whether investing in the channel makes sense for you? Start off by answering the questions below.
Part 1: Initial Qualifying Questions
1) What is your company’s annual revenue? If it’s below $20 million you might want to consider holding off until you’ve proven you have the product/market fit, brand equity, and repeatable processes necessary to drive revenue for a channel partner.
2) Is your product in a stable state? If not, pump the brakes. Frequent changes to your software will require training/re-training for your partners, which is expensive and time-consuming on their end. If there’s a more stable competing option available, they’ll take it.
3) Do your customers work with service providers (such as agencies or systems integrators) to implement and/or take full advantage of your solution? If so, those could make great potential channel partners.
4) Do you have a complex sales process? Keep in mind that if it’s difficult and/or extremely time consuming for your own sales team to sell your product, it’s only going to be more difficult for someone else.
5) Is your sales process proven and repeatable? Before further complicating things with a new channel partner, you would be better served nailing down your own sales model first.
6) Are you okay with waiting 12-18 months to start seeing real results from the channel? Channel partnerships aren’t something you should rush, and no program gets cranking with the flip of a switch. It takes time and commitment, and you need internal and external stakeholders to be okay with that.
7) Are you prepared to conduct due diligence to make sure potential partners are the right fit? Before striking any deal you need to have a clear grasp of a partner’s goals, business model, target market, and priorities -- and make sure they are in alignment with yours.
8) Is your entire leadership team on board? Launching a channel program isn’t an isolated effort. It can impact and require cross-functional support from Sales, Product, Marketing, Legal, Finance, and other departments. Leadership needs to be aware of what is required and fully committed to the program’s success.
Part 2: Strategic Questions
Once you’ve determined that launching a channel program could be a good idea, you’ll need to turn your attention to establishing your big picture goals and requirements. At the highest level, you need to address four questions to iron out your organization’s overall vision for channel marketing:
What are your end goals?
What is the definition of success?
Who are your best potential partners and how can you support them?
Who has to be engaged internally and externally to take things to the next level?
By discussing these questions with your internal team you will start to uncover your expectations and motivations as well as any potential roadblocks or potential complications that stand in the way of a successful channel program.
Part 3: Infrastructure Questions
The next step is to assess your organization’s ability to integrate and maintain a channel program. This means taking a hard look at the people, processes, and systems that underlie the work you do in order to determine if they will be able to support your vision for channel sales and marketing.
The following are examples of the kinds of questions you should explore as part of this process:
People: Organizational Structure
How are functional roles defined within your organization?
What role does each functional group play in direct sales activities?
What are the big picture and day-to-day priorities of each group?
What role will each play in channel sales activities?
How well versed is each group about the channel concept, mindset, and logistics?
What is the reporting structure and how will the integration of channel complement or change it?
How can you best engage company leadership in your channel initiative?
How can you promote the inclusion of channel leadership in company-wide planning?
Processes: Protocols and Standards
Where and when do key cross-functional interactions take place?
What are the primary methods of intercompany communication?
What are the most effective methods of intercompany communication?
What is your current direct sales process? Who is involved? Where are the bottlenecks? What kinds of conflicts arise?
How agile is your organization around making and implementing decisions? What is the process for presenting and facilitating those kinds of conversations?
Systems: Tools and Technology
What tools and technology are currently in use for direct sales?
How can those systems be adapted for channel sales?
What types of systems do you see comparable channel programs using?
What additional systems do you want/need in place for channel (a partner portal, for instance, or specific solutions to help you manage partner relationships, training, lead registration, incentives, etc.)?
What integration/interoperability issues can you anticipate within internal systems and/or with partner systems?
Having answers to these questions will help to ensure you’ve given all the various risks, upsides, and requirements of establishing a channel program the proper consideration. Every company’s situation is unique, so it’s crucial to invest the time and effort into determining your own needs and goals up front.
Need a visual aid? This flowchart is a handy tool for navigating the considerations of implementing a channel sales model.
Click to enlarge:
As with any significant investment, you tend to get what you put in when it comes to channel partnerships, and the most successful ones are built on a strong foundation of planning, commitment, and ongoing maintenance and support. Like anything in a startup, it’s hard work, but done right it can certainly pay off.
For more guidance on leveraging channel partnerships download our latest eBook guide. It’s an actionable playbook that will help you craft a complete channel strategy, recruit the right partners, and turn your program into a sustainable, scalable machine.
Originally published Mar 17, 2015 9:30:00 AM, updated February 01 2017