ZINFI Technologies, Inc.

It’s hard to get a true picture of how your channel partners feels about you as a vendor just by sending out a survey. As we discussed in a previous post, most requests for feedback yield responses from only the top-performing channel partners. But the ones you really need to know most about are those who are selling little or nothing at all of what you have to offer. The upside of converting just a few of these into high performance partners will be huge. The path to breakthrough lies in understanding what prevents channel partners from committing to a relationship with a vendor, starting with those who have dropped your solutions completely.

Getting to these channel partners takes time-intensive, though high ROI work. On behalf of many large companies, we have reached out personally thousands of channel partners world wide to ask the most important question: Why did you stop reselling for us? The results of our research showed that the top reasons for dropping a vendor were, in order of importance, poor technical support, lack of lead flow, and inadequate sales assistance. Fixing these problems will go a long way towards building bridges with disaffected channel partners, but paying attention to the following five areas will secure your position as a highly relevant vendor with a loyal and engaged channel.

* Special Pricing - One of the biggest hurdles for channel partners worldwide is special pricing. The larger the deal, the more resellers need to be able to offer special pricing because the buyer wants to know and show to management that the price was unbeatable. We have often seen channel partners lose deals to competitors because of overly complex special pricing processes. Delay and uncertainty about pricing will drive the end customer – who after too long a sales process is usually feeling that their requests are not being heard – to dump the original vendor and go with someone else. It is critical to make sure you have put in place a complete and transparent process for special pricing, beyond the list price. This is less the case with SMB transactions, but is critical for complex and large deployments.

* Marketing Funds & Programs – Once you have convinced the partner base that you are there for them through world-class technical support, lead distribution, sales assistance and special pricing, the next essential is helping the channel partners to drive leads on their own - although don’t expect them to become digital marketers overnight!

We have repeatedly seen that the vendors who are most successful in encouraging channel partners to market on their own are those who take a pragmatic, multi-quarter approach to building out their demand generation programs across horizontal products that sell in the highest volumes across all market segments, and then (only then) add specific, targeted vertical campaigns. This approach also calls for a state-of-the-art partner relationship management platform, which not only include a set of tools to train the partner on various aspects of the solutions, but also a set of do-it-yourself marketing campaigns running on a fully integrated marketing automation platform.

* Ease of Doing Business - We hear this again and again from channel partners. Most partners feel there are too many hoops and obstacles to go through to be able to sell a vendor’s products. Challenges ranging from technical certification, demo purchase requirements, license key issues, availability of technical and sales support and accessibility of sales tools all make it far from easy for a partner to form a relationship with and stay on board with vendors.

While vendors may want to try to remove all these hurdles at once, the more realistic way forward for a successful ch...

Whether you are at an early stage of building your channel partner network or already have a mature network, the one question that you should never stop asking is – do I really matter to my channel partner? This is probably the most important question for a channel organization seeking to be and remain truly relevant to their partners. It is certainly implied (so we won’t discuss here further) that you have a competitive product or solution for your partner base to resell and make margins on and potentially attach services on top of your products and solutions, but that’s only the foundation of your relationship with your channel partners. The question is how do you stay in the game and build your relationship forward?In any relationship, you can’t bask in the status quo forever. You need to keep bringing more to the table to stay relevant and interesting, and this applies particularly to the IT channel. If your organization doesn’t constantly update the ways it helps channel partners stay competitive, agile and relevant to their customer base, then it’s time to take a serious look at your partner relationship management programs and processes. So, how can you find out how genuinely relevant you are to your entire partner base? For a start, companies commonly tend to ask – or more formally survey – their channel partners to find out how they’re doing, and that’s where the disconnect starts. Guess who tends to respond? Those are the top tier channel partners, who offer more and want more from their vendors and, maybe, a few disgruntled channel partners who have a specific point to make. This leaves the voice of the majority of your partner base completely unheard; this is where opportunity is lost. We have surveyed thousands of resellers world wide on behalf of numerous vendor clients. Countless times, we’ve asked channel partners what is important to them and what elements of a vendor program they consider crucial to re-establishing and continuing a relationship with a vendor – assuming that the vendor remains potentially relevant to their business. From our research, we have identified eight core success factors, some organizational or pragmatic and some less tangible, but all key to ensuring you stay relevant to your partner base. In this article, we’ll talk about the three requests that are constantly top of channel partners’ wish lists.* High Quality Technical support– Above all and no matter what else you do for your channel partners, the number one item is, always, is how good is your technical support? Whether pre-sales or post-sales, your expert support is essential to enable channel partners to troubleshoot technical issues from a complex deployment to application integration, and come across as knowledgeable, dependable and reliable to their customers. This is critical in order for the partner to be able to grow the relationship with their customer base. Vendors don’t always remember that channel partners don’t work for you; they work for their customers. So, if you help them to win with their customers, you’re off to a great start.A word about offshoring: Far too many companies view technical support as a cost, and end up offshoring support to cut expenses. This is possibly one of the biggest mistakes they can make. Certainly the offshore talent pool is growing, skill levels are, on the whole, on the rise, and outsourced support companies can certainly help you expand the support you offer. But – and this is a really big but – you need to be systematic and scientific in figuring out how not to let deficiencies in language, communication or even technical knowledge get in the way of high quality and speedy support. We hear again and again that partner satisfaction levels drop...

Whether you are at an early stage of building your channel partner network or already have a mature network, the one question that you should never stop asking is – do I really matter to my channel partner? This is probably the most important question for a channel organization seeking to be and remain truly relevant to their partners. It is certainly implied (so we won’t discuss here further) that you have a competitive product or solution for your partner base to resell and make margins on and potentially attach services on top of your products and solutions, but that’s only the foundation of your relationship with your channel partners. The question is how do you stay in the game and build your relationship forward?In any relationship, you can’t bask in the status quo forever. You need to keep bringing more to the table to stay relevant and interesting, and this applies particularly to the IT channel. If your organization doesn’t constantly update the ways it helps channel partners stay competitive, agile and relevant to their customer base, then it’s time to take a serious look at your partner relationship management programs and processes. So, how can you find out how genuinely relevant you are to your entire partner base? For a start, companies commonly tend to ask – or more formally survey – their channel partners to find out how they’re doing, and that’s where the disconnect starts. Guess who tends to respond? Those are the top tier channel partners, who offer more and want more from their vendors and, maybe, a few disgruntled channel partners who have a specific point to make. This leaves the voice of the majority of your partner base completely unheard; this is where opportunity is lost. We have surveyed thousands of resellers world wide on behalf of numerous vendor clients. Countless times, we’ve asked channel partners what is important to them and what elements of a vendor program they consider crucial to re-establishing and continuing a relationship with a vendor – assuming that the vendor remains potentially relevant to their business. From our research, we have identified eight core success factors, some organizational or pragmatic and some less tangible, but all key to ensuring you stay relevant to your partner base. In this article, we’ll talk about the three requests that are constantly top of channel partners’ wish lists.* High Quality Technical support– Above all and no matter what else you do for your channel partners, the number one item is, always, is how good is your technical support? Whether pre-sales or post-sales, your expert support is essential to enable channel partners to troubleshoot technical issues from a complex deployment to application integration, and come across as knowledgeable, dependable and reliable to their customers. This is critical in order for the partner to be able to grow the relationship with their customer base. Vendors don’t always remember that channel partners don’t work for you; they work for their customers. So, if you help them to win with their customers, you’re off to a great start.A word about offshoring: Far too many companies view technical support as a cost, and end up offshoring support to cut expenses. This is possibly one of the biggest mistakes they can make. Certainly the offshore talent pool is growing, skill levels are, on the whole, on the rise, and outsourced support companies can certainly help you expand the support you offer. But – and this is a really big but – you need to be systematic and scientific in figuring out how not to let deficiencies in language, communication or even technical knowledge get in the way of high quality and speedy support. We hear again and again that partner satisfaction levels drop...

Whether you are at an early stage of building your channel partner network or already have a mature network, the one question that you should never stop asking is - do I really matter to my channel partner? This is probably the most important question for a channel organization seeking to be and remain truly relevant to their partners. It is certainly implied (so we won't discuss here further) that you have a competitive product or solution for your partner base to resell and make margins on and potentially attach services on top of your products and solutions, but that's only the foundation of your relationship with your channel partners. The question is how do you stay in the game and build your relationship forward?

In any relationship, you can’t bask in the status quo forever. You need to keep bringing more to the table to stay relevant and interesting, and this applies particularly to the IT channel. If your organization doesn’t constantly update the ways it helps channel partners stay competitive, agile and relevant to their customer base, then it’s time to take a serious look at your partner relationship management programs and processes. So, how can you find out how genuinely relevant you are to your entire partner base? For a start, companies commonly tend to ask - or more formally survey - their channel partners to find out how they’re doing, and that’s where the disconnect starts. Guess who tends to respond? Those are the top tier channel partners, who offer more and want more from their vendors and, maybe, a few disgruntled channel partners who have a specific point to make. This leaves the voice of the majority of your partner base completely unheard; this is where opportunity is lost. We have surveyed thousands of resellers world wide on behalf of numerous vendor clients. Countless times, we’ve asked channel partners what is important to them and what elements of a vendor program they consider crucial to re-establishing and continuing a relationship with a vendor – assuming that the vendor remains potentially relevant to their business. From our research, we have identified eight core success factors, some organizational or pragmatic and some less tangible, but all key to ensuring you stay relevant to your partner base. In this article, we’ll talk about the three requests that are constantly top of channel partners’ wish lists.

* High Quality Technical support- Above all and no matter what else you do for your channel partners, the number one item is, always, is how good is your technical support? Whether pre-sales or post-sales, your expert support is essential to enable channel partners to troubleshoot technical issues from a complex deployment to application integration, and come across as knowledgeable, dependable and reliable to their customers. This is critical in order for the partner to be able to grow the relationship with their customer base. Vendors don’t always remember that channel partners don’t work for you; they work for their customers. So, if you help them to win with their customers, you’re off to a great start.

A word about offshoring: Far too many companies view technical support as a cost, and end up offshoring support to cut expenses. This is possibly one of the biggest mistakes they can make. Certainly the offshore talent pool is growing, skill levels are, on the whole, on the rise, and outsourced support companies can certainly help you expand the support you offer. But – and this is a really big but - you need to be systematic and scientific in figuring out how not to let deficiencies in language, communication or even technical knowledge get in the way of high quality and speedy support. We hear again and again that partner satisfaction levels drop exponentially when a vendor shifts their support overseas.

Whether you are at an early stage of building your channel partner network or already have a mature network, the one question that you should never stop asking is - do I really matter to my channel partner? This is probably the most important question for a channel organization seeking to be and remain truly relevant to their partners. It is certainly implied (so we won't discuss here further) that you have a competitive product or solution for your partner base to resell and make margins on and potentially attach services on top of your products and solutions, but that's only the foundation of your relationship with your channel partners. The question is how do you stay in the game and build your relationship forward?

In any relationship, you can’t bask in the status quo forever. You need to keep bringing more to the table to stay relevant and interesting, and this applies particularly to the IT channel. If your organization doesn’t constantly update the ways it helps channel partners stay competitive, agile and relevant to their customer base, then it’s time to take a serious look at your partner relationship management programs and processes. So, how can you find out how genuinely relevant you are to your entire partner base? For a start, companies commonly tend to ask - or more formally survey - their channel partners to find out how they’re doing, and that’s where the disconnect starts. Guess who tends to respond? Those are the top tier channel partners, who offer more and want more from their vendors and, maybe, a few disgruntled channel partners who have a specific point to make. This leaves the voice of the majority of your partner base completely unheard; this is where opportunity is lost. We have surveyed thousands of resellers world wide on behalf of numerous vendor clients. Countless times, we’ve asked channel partners what is important to them and what elements of a vendor program they consider crucial to re-establishing and continuing a relationship with a vendor – assuming that the vendor remains potentially relevant to their business. From our research, we have identified eight core success factors, some organizational or pragmatic and some less tangible, but all key to ensuring you stay relevant to your partner base. In this article, we’ll talk about the three requests that are constantly top of channel partners’ wish lists.

* High Quality Technical support- Above all and no matter what else you do for your channel partners, the number one item is, always, is how good is your technical support? Whether pre-sales or post-sales, your expert support is essential to enable channel partners to troubleshoot technical issues from a complex deployment to application integration, and come across as knowledgeable, dependable and reliable to their customers. This is critical in order for the partner to be able to grow the relationship with their customer base. Vendors don’t always remember that channel partners don’t work for you; they work for their customers. So, if you help them to win with their customers, you’re off to a great start.

A word about offshoring: Far too many companies view technical support as a cost, and end up offshoring support to cut expenses. This is possibly one of the biggest mistakes they can make. Certainly the offshore talent pool is growing, skill levels are, on the whole, on the rise, and outsourced support companies can certainly help you expand the support you offer. But – and this is a really big but - you need to be systematic and scientific in figuring out how not to let deficiencies in language, communication or even technical knowledge get in the way of high quality and speedy support. We hear again and again that partner satisfaction levels drop exponentia...

When new opportunities beckon, many companies are tempted to jump in too early, and try to boost new product sales by building a massive channel partner network rather than examining whether the channel is equipped to deliver on expectations. Very often, in fact, a more discriminating approach yields better results. In a previous post, we discussed the necessity for channel-driven companies to balance their hopes for new products with an understanding of the economic and margin goals, the growth opportunity, the partner value proposition and their ability to ensure partner differentiation as the product matures.

In the next stage of launch preparation, the focus needs to be on how to equip the channel for long-term success. There are five key checkpoints for this phase.

How will you help partners to develop? - Developing a channel partner network takes time, and few organizations are equipped or ready to wait out the time for their network to mature. More frequently, we see major changes rather than incremental adjustments to a long-term plan. As a result, many vendors suffer significant partner attrition. New partners may join with fanfare and enthusiasm, but without proper nurturing and strategic development, over time they become disgruntled and abandon the program because they feel that they are valued for fulfillment only, while the organization has no skin in the game to help the partners develop. In fact several successful ecosystems exist today, where a strategic channel partner development approach that focuses on a smaller number of partners, helping them create business plans to develop their competencies over a multi-quarter cycle really pays off. Once a partner has made investments across the sales, marketing and technical training functions, they are highly unlikely to abandon that investment by switching to another vendor simply because the cost of switching is too high. Therefore, partner development not only engenders loyalty, but also much higher long-term return than over-distribution through an underdeveloped organization. Though challenging, focus pays well, when done well.

Direct or channel sales? - Once you have the entire foundational framework for your channel partner network in place, you will need to decide what you sell via the channel partner network and what you sell direct. In the early days it’s usually simple to fix on one. However, as an organization grows and introduces higher value and more complex products, at times it makes sense to sell direct. The moment this happens, partners start looking at their vendors with skeptical eyes. So, you need to be very clear about how you are going to deal with this scenario when or if you do decide to sell directly to certain products or certain segments - like the federal government or major enterprise. If you do go directly, you will need to determine how you will segregate deals from a partner - and who, ultimately, wins? We have seen repeatedly that the deal registration programs that allow a partner to close rather than an internal sales team always end up with a higher partner satisfaction rate. This is a discussion that needs to happen sooner than later, and when it comes to the channel the better way is always early conflict and early resolution. Don’t wait for things to blow up - address this upfront and head on when you are launching a new product or solution.

How do you reward high performing partners - Most companies offer some sort of partner reward program, financial or incentive-based, like President’s Club or Partner Council Membership, or a combination thereof. However, clarity about how to reward different functions within an organization is critical to building the loyalty of the entire partner base. If you offer sales rewards, but no marketing or technical rewards, then there’s little incentive to engage with you in other dimensions. It follows that resisting the temptation to offer multiple, product-based promotions in favor of integrated reward promotions across multiple functions will always be more effective in creating comprehensive pull through from the partner side.

How do you nurture the most promising ‘B’ players? - Just like corporate employees, a portion of your channel partners’ staffwill be high performing. But it is also important to have a clear channel partner development strategy about how to take the ‘B’ players and convert the most promising into 'A' players. If you want to increase sales, it is much more realistic to focus nurturing a few partners rather than further recruitment of new partners into your channel. If you already have geographical coverage through your channel partner network, focusing on a few high potential players will result in much faster return. One of the ways to bring partners to a different level is to create specific management objectives for your channel partner management team and give them goals of growing revenue and competencies (technical, sales and marketing) across your mid-tier, modestly performing partners. You will also need to prune out some of your channel partners that are not meeting your performance targets by having candid conversations. Candor is always powerful in the channel - it saves a lot of time and aggravation down the road.

Is your time frame realistic? - We all know that it takes one to two years for any company to build a product and service, yet many vendors expect to build a network of resellers selling new products successfully – virtually overnight. This is not realistic. It takes anywhere from six to twelve months to build initial sales out motion, and it may take another year to reap the benefit from the first year of investment. Just like product development, channel partner development requires significant upfront investment. Without conscious effort and significant investment, channel development can do more harm than good, if partners are left unsupported across their functions. So, when the time comes for you to engage in building a network, consider the first year of effort as a pure investment before you can start calling your network of resellers a profitable venture. Yes, there are exceptions, but that’s rarely the case. Realistic planning and keeping your eyes on a longer-term horizon are key to creating a successful channel partner network development program.

These are complex questions and requirements, most of which require longer term planning and thinking, but this is precisely why channel partner network development must be seen as a strategic initiative with a multi-year horizon. You need a clear business plan, which should start with conducting comprehensive channel partner surveys, profiling and financial analysis; after that, development of a successful channel partner network can begin. With the right foundation, you can build a thriving program that will be the envy of your competition and that no one could duplicate overnight. That’s where long-term success will come: from a group of loyal, highly capable and high performing channel partners.

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When new opportunities beckon, many companies are tempted to jump in too early, and try to boost new product sales by building a massive channel partner network rather than examining whether the channel is equipped to deliver on expectations. Very often, in fact, a more discriminating approach yields better results. In a previous post, we discussed the necessity for channel-driven companies to balance their hopes for new products with an understanding of the economic and margin goals, the growth opportunity, the partner value proposition and their ability to ensure partner differentiation as the product matures.

In the next stage of launch preparation, the focus needs to be on how to equip the channel for long-term success. There are five key checkpoints for this phase.

* How will you help partners to develop? - Developing a channel partner network takes time, and few organizations are equipped or ready to wait out the time for their network to mature. More frequently, we see major changes rather than incremental adjustments to a long-term plan. As a result, many vendors suffer significant partner attrition. New partners may join with fanfare and enthusiasm, but without proper nurturing and strategic development, over time they become disgruntled and abandon the program because they feel that they are valued for fulfillment only, while the organization has no skin in the game to help the partners develop. In fact several successful ecosystems exist today, where a strategic channel partner development approach that focuses on a smaller number of partners, helping them create business plans to develop their competencies over a multi-quarter cycle really pays off. Once a partner has made investments across the sales, marketing and technical training functions, they are highly unlikely to abandon that investment by switching to another vendor simply because the cost of switching is too high. Therefore, partner development not only engenders loyalty, but also much higher long-term return than over-distribution through an underdeveloped organization. Though challenging, focus pays well, when done well.

* Direct or channel sales? - Once you have the entire foundational framework for your channel partner network in place, you will need to decide what you sell via the channel partner network and what you sell direct. In the early days it’s usually simple to fix on one. However, as an organization grows and introduces higher value and more complex products, at times it makes sense to sell direct. The moment this happens, partners start looking at their vendors with skeptical eyes. So, you need to be very clear about how you are going to deal with this scenario when or if you do decide to sell directly to certain products or certain segments - like the federal government or major enterprise. If you do go directly, you will need to determine how you will segregate deals from a partner - and who, ultimately, wins? We have seen repeatedly that the deal registration programs that allow a partner to close rather than an internal sales team always end up with a higher partner satisfaction rate. This is a discussion that needs to happen sooner than later, and when it comes to the channel the better way is always early conflict and early resolution. Don’t wait for things to blow up - address this upfront and head on when you are launching a new product or solution.

* How do you reward high performing partners - Most companies offer some sort of partner reward program, financial or incentive-based, like President’s Club or Partner Council Membership, or a combination thereof. However,

When you are starting up a high growth business or launching a product line, it is always tempting to try to boost sales by building a large channel partner network, on the premise that the bigger the channel, the more zillions of your products and services they can sell.  In our experience, however, many businesses attempting this model struggle to provide a sufficiently strong business proposition for multiple channel partners to carry their products and services. Furthermore, they very often end up creating channel conflict by building direct sales motions in their efforts to improve results.Over many years, we have observed vendors’ successful and unsuccessful sales approaches for hundreds of product lines, business models and go-to-market strategies.  We’ve seen mistakes and great strategies, and excellent programs launched too soon or too late.  Based on our research, I believe that vendors need to answer five key questions before investing in building out a channel.* Do you have a clear economic model? – Whether you are planning to build a new channel partner network or redesign your existing one, it is vital to be clear about the economic proposition for partners. If you have decided on a two tier channel, i.e., selling through a distribution network to a group of resellers, then you have to take into account 5 – 10% margin sharing with the distributor, and anywhere between 10 – 50% revenue sharing with your channel partners. If you have been in the channel for a while but are looking to change things up, then you may have to rethink your legacy margin structure. In the end it all comes down to money.In addition to your margin structure, you need to be realistic about how complex your solution is and whether a new partner can sell it with relative ease or would have to make a lot of investments such as getting their employees trained and certified, or buying equipment. So you will also have to think about how you will enable your partners to get through the initial ramp up investment phase in order to sell your solutions. An all-too-common mistake is to focus too much on run rate business, but ignore the support needed to get a partner up and running financially.* Are you selling ice creams or ice cream cones? – A typical Ice cream shop sells between three to five types of cones, but fifteen to twenty types of ice cream and a dozen or so toppings. Customers buy ice cream first, and put it on a cone and then put sprinkles on. They don’t go there to buy cones or sprinkles, but the add-ons add up. Middleware, switches, servers, and so on are perfect examples of add-on sales in the technology space. So, it’s important for you to know whether you are providing a partner with a primary product or secondary, or add-on product. The sales motions are very different for primary as opposed to secondary products. It’s often the case that partners have more choices for secondary product than for primary. In the face of stronger competition, you may have to fight harder (and pay more) to find takers to resell a secondary product through a channel partner network.* Is there an installed base growth opportunity? – If your products and solutions require upgrades, add-ons and renewals then your partners have good reason to stay in touch with their customer base and drive land-and-expand sales. Many software products today are sold via the software-as-a-service (SaaS) model, and may even require deeper, workflow-driven customization. In these scenarios, the partners have the opportunity to provide first of all a base set of modules, but then over a period of time add more application modules or other extras. In larger scale hardware deployments, normally the first deployment starts at the end user’s corpo...

When you are starting up a high growth business or launching a product line, it is always tempting to try to boost sales by building a large channel partner network, on the premise that the bigger the channel, the more zillions of your products and services they can sell.  In our experience, however, many businesses attempting this model struggle to provide a sufficiently strong business proposition for multiple channel partners to carry their products and services. Furthermore, they very often end up creating channel conflict by building direct sales motions in their efforts to improve results.Over many years, we have observed vendors’ successful and unsuccessful sales approaches for hundreds of product lines, business models and go-to-market strategies.  We’ve seen mistakes and great strategies, and excellent programs launched too soon or too late.  Based on our research, I believe that vendors need to answer five key questions before investing in building out a channel.* Do you have a clear economic model? – Whether you are planning to build a new channel partner network or redesign your existing one, it is vital to be clear about the economic proposition for partners. If you have decided on a two tier channel, i.e., selling through a distribution network to a group of resellers, then you have to take into account 5 – 10% margin sharing with the distributor, and anywhere between 10 – 50% revenue sharing with your channel partners. If you have been in the channel for a while but are looking to change things up, then you may have to rethink your legacy margin structure. In the end it all comes down to money.In addition to your margin structure, you need to be realistic about how complex your solution is and whether a new partner can sell it with relative ease or would have to make a lot of investments such as getting their employees trained and certified, or buying equipment. So you will also have to think about how you will enable your partners to get through the initial ramp up investment phase in order to sell your solutions. An all-too-common mistake is to focus too much on run rate business, but ignore the support needed to get a partner up and running financially.* Are you selling ice creams or ice cream cones? – A typical Ice cream shop sells between three to five types of cones, but fifteen to twenty types of ice cream and a dozen or so toppings. Customers buy ice cream first, and put it on a cone and then put sprinkles on. They don’t go there to buy cones or sprinkles, but the add-ons add up. Middleware, switches, servers, and so on are perfect examples of add-on sales in the technology space. So, it’s important for you to know whether you are providing a partner with a primary product or secondary, or add-on product. The sales motions are very different for primary as opposed to secondary products. It’s often the case that partners have more choices for secondary product than for primary. In the face of stronger competition, you may have to fight harder (and pay more) to find takers to resell a secondary product through a channel partner network.* Is there an installed base growth opportunity? – If your products and solutions require upgrades, add-ons and renewals then your partners have good reason to stay in touch with their customer base and drive land-and-expand sales. Many software products today are sold via the software-as-a-service (SaaS) model, and may even require deeper, workflow-driven customization. In these scenarios, the partners have the opportunity to provide first of all a base set of modules, but then over a period of time add more application modules or other extras. In larger scale hardware deployments, normally the first deployment starts at the end user’s corpo...

When you are starting up a high growth business or launching a product line, it is always tempting to try to boost sales by building a large channel partner network, on the premise that the bigger the channel, the more zillions of your products and services they can sell.  In our experience, however, many businesses attempting this model struggle to provide a sufficiently strong business proposition for multiple channel partners to carry their products and services. Furthermore, they very often end up creating channel conflict by building direct sales motions in their efforts to improve results.

Over many years, we have observed vendors’ successful and unsuccessful sales approaches for hundreds of product lines, business models and go-to-market strategies.  We’ve seen mistakes and great strategies, and excellent programs launched too soon or too late.  Based on our research, I believe that vendors need to answer five key questions before investing in building out a channel.

* Do you have a clear economic model? - Whether you are planning to build a new channel partner network or redesign your existing one, it is vital to be clear about the economic proposition for partners. If you have decided on a two tier channel, i.e., selling through a distribution network to a group of resellers, then you have to take into account 5 - 10% margin sharing with the distributor, and anywhere between 10 - 50% revenue sharing with your channel partners. If you have been in the channel for a while but are looking to change things up, then you may have to rethink your legacy margin structure. In the end it all comes down to money.

In addition to your margin structure, you need to be realistic about how complex your solution is and whether a new partner can sell it with relative ease or would have to make a lot of investments such as getting their employees trained and certified, or buying equipment. So you will also have to think about how you will enable your partners to get through the initial ramp up investment phase in order to sell your solutions. An all-too-common mistake is to focus too much on run rate business, but ignore the support needed to get a partner up and running financially.

* Are you selling ice creams or ice cream cones? - A typical Ice cream shop sells between three to five types of cones, but fifteen to twenty types of ice cream and a dozen or so toppings. Customers buy ice cream first, and put it on a cone and then put sprinkles on. They don’t go there to buy cones or sprinkles, but the add-ons add up. Middleware, switches, servers, and so on are perfect examples of add-on sales in the technology space. So, it’s important for you to know whether you are providing a partner with a primary product or secondary, or add-on product. The sales motions are very different for primary as opposed to secondary products. It’s often the case that partners have more choices for secondary product than for primary. In the face of stronger competition, you may have to fight harder (and pay more) to find takers to resell a secondary product through a channel partner network.

* Is there an installed base growth opportunity? - If your products and solutions require upgrades, add-ons and renewals then your partners have good reason to stay in touch with their customer base and drive land-and-expand sales. Many software products today are sold via the software-as-a-service (SaaS) model, and may even require deeper, workflow-driven customization. In these scenarios, the partners have the opportunity to provide first of all a base set of modules, but then over a period of time add more application modules or other extras. In larger scale hardware deployments, normally the first deployment starts at the end user’s corporate head...