Newer software companies often launch with a direct sales model. As their products mature and they look to broaden their reach, they’ll often begin to build partnerships with third parties. The big conundrum most companies face is determining their readiness to make the shift to a channel-first sales model. Christina Walker, Global Director of Channel, Blancco, provides insight for companies that are sitting on the cusp of that decision.
Knowing when you’re ready
Before making the transition to a channel-first sales model, organisations should take a deeper look at their own objectives and ensure the partners they’ve selected are aligned on meeting these goals. Organisations should also set expectations within the business to realise that engaging a third party doesn’t mean that the organisation can take a back seat. On the contrary, this gives the organisation more room for innovation and improvement by listening to the channel’s feedback and working alongside it to deliver exceptional products, services, and technology solutions.
Check alignment before putting pen to paper
If the partner has thoroughly vetted an offering and is happy with the technology and its appeal to customers, it’s time to figure out how well the two organisations align. This requires openness about long-term strategies and short-term objectives, key corporate values, and vendor-channel partner relationship expectations. If the channel partner finds fundamental differences, there’s little point in moving forward. This step is as important as the technology if there’s any hope of building a truly symbiotic and lasting partnership.
Regular communication helps the partner feel it is a valued member of the team and a trusted adviser. Scheduling regular catch-ups where each shares company updates, including changes in procedures or management, technology roadmaps, and so on will be beneficial.
Regular communication can also keep a partnership from imploding. Understanding the organisation’s simmering worries and frustrations gives the channel partner an opportunity to proactively address any concerns. And listening to both negative and positive feedback from end customers allows organisations to make timely changes or improvements to their offerings.
What to expect from a channel-first sales model
Once you have established a good working relationship with your channel partners you will begin to see the rewards. Since your partners will be client-facing, regardless of a sell-through or sell-with approach, the organisation will be able to redistribute its focus and prioritise relationship building, engage senior leadership, quickly deliver technical expertise and train channel partners to provide deeper insight into product roadmaps. It’s also very simple to scale this approach and increase revenue by engaging more partners with wider reach and complementary technology stack or service offerings. Additionally, it also helps to greatly reduce conflict caused by end-user overlap with the vendor organisation and partner since organisations will be focused on working with the partner for the same end customers.
Inevitably, there will be challenges to this approach and even though the pros outweigh the cons, it’s essential for organisations to consider both aspects before deciding. When selling through channel partners, organisations are expected to share a margin of the sales or potentially lose direct touchpoints to the customer. Agreeing to a fair margin or buy price at the start of the business relationship is essential. Also, remembering how you can scale this opportunity to balance out the partner's profit margin and evaluating how much you’re saving on customer acquisition costs through this approach, will help while weighing up your options.