Jul 19, 2018 | edocr |
GO -TO -M AR KE T GUIDE TO CHANNEL SALES & MARKETING Tips & tricks to building powerful partnerships The Complete Guide to Channel Sales & Marketing Success is never a solitary achievement, particularly in the software industry. From design and development to deployment and distribution, software companies tap into a wide spectrum of skill sets and networks in order to bring their visions to life by putting their products into the hands of end users. Traditional software companies use many different channel marketing tactics to expand their reach and reduce acquisition costs. They create market leverage through sales-focused channels like affiliates and dedicated resellers as well as technical channel partners like system integrators. But, for two reasons, these kinds of partnerships are not usually a good fit for today's business-to-business SaaS software company: They are typically easy to find (online accessibility), deploy (no installation or integration required), and use. By their nature, SaaS products aren't front-loaded to deliver quick financial gain. With a SaaS product, resellers have to either settle for a fraction of the revenue they would receive from a perpetual license vendor, or get a cut of subsequent annual SaaS subscription fees. The first option is not appealing to the channel partner, and the second isn't smart business for the SaaS vendor. SaaS solutions don't generally require an intermediary. The SaaS licensing model isn't designed to deliver substantial up-front revenue to the channel partner. The Complete Guide to Channel Sales & Marketing The service provider, or VAR, derives the lion's share of their revenue not from a sales commission, but from the related services they bill directly to the customer. While still technically a channel strategy, this kind of partnership requires an entirely different mindset and tactical approach. It is a long-term play, not a quick fix. Success requires a fair amount of due diligence as well as a healthy serving of startup agility. Champions of the channel must be able to inspire a company-wide paradigm shift that considers the channel as an integral part of the organization instead of an expendable third-party. It's not an easy road, but SaaS companies that are getting it right are reaping benefits beyond what was possible with the old channel model. Through more deeply collaborative partnerships, smart business-to-business SaaS companies are gaining a market advantage with stronger acquisition and retention. In addition, the VAR channel provides critical insights that positively influence everything from product development to positioning. Welcome to a new kind of channel ecosystem. Value-added resellers (VARs) are channel partners who deliver the business process and services your end customers need to successfully implement your software solution. The Complete Guide to Channel Sales & Marketing Table of Contents About This Guide ..............................................................................................................................1 Chapter 1: The Channel Mindset - Everything Starts Here .....................................................................2 Misconceptions: Common (and Dangerous) Assumptions about Channel Marketing .................4 5 Steps to Developing the Right Mindset ...........................................................................7 The Channel Mindset: Quick Recap ..................................................................................12 Chapter 2: Crafting Your Channel Strategy .........................................................................................13 Will Channel Sales Work for Your SaaS Company? ..............................................................14 Bootstrapping vs. Detailed Planning Which Is Better? ....................................................16 The Process: 4 Phases of Defining Your Channel Strategy ...................................................20 Important Questions, Elements, and Challenges to Consider ...............................................24 Goal Setting ...................................................................................................................25 Company Infrastructure ...................................................................................................27 Program Structure & Assets .............................................................................................28 Channel Compensation and Sales Conflict ........................................................................30 Crafting Your Channel Strategy: Quick Recap ....................................................................32 The Complete Guide to Channel Sales & Marketing Chapter 3: Building Your Channel Team ............................................................................................33 3 Characteristics of Successful Channel Teams .................................................................34 Example Team Scenarios .................................................................................................37 Chapter 4: Executing Your Plan ........................................................................................................39 Research: Finding the Right Partners ...............................................................................40 Recruitment: Getting Partners Onboard ............................................................................42 HubSpot's 4 Steps to Recruiting Channel Partners ............................................................42 Enablement: Helping Partners Succeed ............................................................................44 Measuring and Optimizing Channel Performance ...............................................................45 Conclusion .....................................................................................................................................50 Appendix .......................................................................................................................................51 About the Experts ...........................................................................................................51 Sample SaaS VAR Channel Programs ...............................................................................52 1 The Complete Guide to Channel Sales & Marketing About This Guide We produced this guide to help expansion-stage business-to-business SaaS companies better understand their channel marketing opportunities. Whether you're just starting to think about a channel strategy or looking for ways to optimize your existing program, this guide was designed to provide clarity around the big hurdles often encountered when developing a channel strategy: Can channel partnerships work for SaaS? Is it right for my SaaS company? How do I develop the right mindset and strategy to make channel partnerships successful? What's involved in building a successful program? How do I know if my program is working? We have tapped into seven industry experts, people who are in the trenches running their own SaaS channel programs as well as advisors and thought leaders, who bring a broad perspective to the conversation. Based on our own experience and the real world insights gleaned from our conversations with these experts, we're going to walk you through the high-level concepts that will help you succeed in SaaS channel marketing: Cultivating the Right Mindset for Channel Success Crafting Your Channel Strategy Building Your Team Executing Your Plan Measuring and Optimizing Your Program Building a stable and profitable SaaS channel program is a complex undertaking that requires patience, vision, and expert coordination of resources and leadership. But we hope that by the time you've finished this guide you will be excited by the potential of growing your business through smart partnerships with value-added resellers and equipped to develop your own channel program. The Complete Guide to Channel Sales & Marketing Chapter 1: The Channel Mindset - Everything Starts Here We hear the word "ecosystem" thrown around a lot in business circles, but what does it really mean? Traditional channel marketing often refers to an "ecosystem" as the more-or-less one-sided relationship that exists between large, established technology behemoths like Microsoft, IBM, and Apple and their network of "partners." The problem with this scenario is that the vendor sitting at the center of this supposed ecosystem holds almost all the influence and can effectively hold its partners hostage. This imbalance of power is not the hallmark of a true ecosystem. In nature, an ecosystem is a collection of organisms functioning together within a specific environment. A stable ecosystem is one in which these organisms engage in symbiotic relationships that promote mutual sustainability and growth. It's less all-for- one, more all-for-all. A SaaS ecosystem takes a similar, collaborative approach to survival in the marketplace. 3 The Complete Guide to Channel Sales & Marketing You have to start with the right company culture. Developing your channel strategy and partnerships is not about you. You can't design a successful ecosystem around the needs of only one party. Instead, you need to embrace a philosophy of asking what you can do for others for your partners and, ultimately, for the customers you both serve. This is a philosophy that you need to adopt across your entire organization, top to bottom and across all functions. Your channel program will have substantial influence on your entire go-to-market and growth strategy. Channel marketing is not an isolated effort. At least, not when it's successful. Done right, your channel program will not only provide opportunities to reach new and expanded audiences, it will provide you with valuable insights about your customer's actual needs. The visibility your partners provide into day-to-day usage will inform your product development roadmap and open up avenues for additional collaborations. In the following pages, we're going to look at five steps that will help you cultivate the right mindset within your organization: Be Clear and Honest About Your "Why" (Really) Understand Your Partners Establish Shared Goals Educate All Your Audiences Commit 100% to Eliminating Conflict But first, let's dispel some common misconceptions that can sabotage your channel marketing plans. 4 The Complete Guide to Channel Sales & Marketing Misconceptions: Common (and Dangerous) Assumptions about Channel Marketing Sometimes, what you don't know can hurt you. And almost always, assumptions come back to bite you. To help you avoid embarrassing (and potentially costly) channel missteps, here are five of the most commonly held misconceptions about channel marketing. Your sales pitch can be one-size-fits-all. "The notion that you can message to a partner the same way you would an end customer is flawed," says startup consultant Alex Nasson. In fact, the buyer's journey for partnership is often different. Although the basic value proposition will certainly apply, the level of diligence and investigation performed by a potential business partner when evaluating a vendor is much deeper than that of a typical customer. "In addition to being assured that you have great customers and products, channel partners must also feel confident you truly understand their business," explains Nasson. "Plan to offer program types that accommodate different engagement models (Refer, Resell, OEM, Tech, etc.) to ensure proper business alignment as well as to support future business growth." In short, to earn the interest of prospective partners, you have to adapt your pitch to match their perspective. How does your solution fit into their world? How does it make their lives and their customers' lives easier? You can turn the channel on with a flip of the switch. Nasson also cautions against assuming that a channel program offers an "instant on" for additional customer opportunities and revenues. "People often assume the channel will be up, running, and producing revenue within six months," he says. "You may see early deals and market traction, but twelve to eighteen months is a more realistic expectation to achieve real channel performance. This can be influenced by many factors including target markets, complexity of offering, and business partner alignment." 12-18 months is a realistic expectation to start achieving real channel results. 5 The Complete Guide to Channel Sales & Marketing Nasson recommends developing what he calls an "institutional patience" at the executive level around defining the time-to-value for a new channel initiative. "This is not just executing a simple transaction or closing a deal," he says. "This is building both a competency and a solutions practice inside an existing business that has competing goals and priorities." On a related note, software companies often assume that it's easier and less expensive to sell through the channel than to sell direct. [N]Squared Advisory founder Firas Raouf explains why it's so challenging for early stage software companies to build indirect sales channels, "Imagine how hard it is to build your own, dedicated sales team. Now imagine getting someone else's sales team to sell your product just as well." You and your channel partners have the same priorities. Matrix Partners General Partner David Skok agrees that channel sales usually take a long time to get off the ground. The reason for this is that a reseller has a different set of priorities than you. As a startup, you have a great sense of urgency and total focus. They are usually focused on other products and deals that are paying the bills. It usually takes a lot to convince them that they will get a good return on time invested in your product." It's imperative that you look at your partnership as much from your partner's perspective as from your own. Remember that the relationship has to be mutually beneficial to work. Your partners will create additional demand. Skok is adamant about dispelling the myth that channel partners create automatic demand. "They usually prefer to sell products for which demand already exists," he explains. "This means you should expect to continue creating demand using your own marketing efforts. Ideally you should be in a position to feed your partners leads, or better still deals that are close to done in the early days." Even while you are tapping into a channel strategy to grow your own business, you need to keep in mind that part of your job as the vendor is to help your partners grow their businesses. "Imagine how hard it is to build your own, dedicated sales team. Now imagine getting someone else's sales team to sell your product just as well." Firas Raouf, [N]Squared Advisory founder The Complete Guide to Channel Sales & Marketing 6 You can set it and forget it, and channel will still work. On a related note, Skok often needs to remind software companies about the level of on-going support and program maintenance required to ensure a strong and successful channel relationship. "You need to continuously educate your partners about how to sell, handle objections, and differentiate your product from the competition," he says. "This requires work by your channel sales team, but it also requires backup support from a channel marketing team who will create the appropriate training materials, programs, tests, etc." Keeping your channel partners engaged and helping to ensure their success (and, by extension, your success) requires a perpetual process of education, communication, and general support. "You need to continuously educate your partners about how to sell, handle objections, and differentiate your product from the competition." David Skok, Matrix Partners General Partner The themes running through these words of caution are ones the experts return to again and again: Channel marketing is not a quick fix, it can't focus solely on your needs, the word "partner" is one you have to stand by in action as well as word. Creating a successful channel marketing program relies as much, if not more, on your relationship skills as it does on your product's features and benefits. This is the crux of the mindset you must develop. 7 The Complete Guide to Channel Sales & Marketing 5 Steps to Developing the Right Mindset 1. Be Clear and Honest About Your Motivations Whether you are pitching a channel program to your internal team, or engaging in initial conversations with a potential partner, clarity and transparency are a must. "People will be patient if you are direct, forthcoming and honest. Be as clear and as detailed as possible about your intentions, strategy, program status, expectations, and goals," says Alex Nasson. "Even if things are not fully baked, people will listen if you can show that your true intent is to build something meaningful together." Optimizely Director of Partnerships Dan Glazer agrees, "The most important thing we've learned is that it's critical to be very transparent about everything we're doing and why. It pays to be vocal about what's working, and what's not." Defining and sharing the "why" behind your initiative is the first step in cultivating the right mindset for channel marketing. This is the foundation upon which your entire channel program will be built. If you cannot identify and understand the context and motivations driving your pursuit of the channel, you will not be able to articulate your larger vision to internal stakeholders or external partners. Unfortunately, in advising many companies who are beginning to develop a channel program, Nasson often comes up against a fundamental lack of communication, understanding, and internal clarity about the specific reasons a company wants to develop a channel. To overcome this ambiguity, Nasson recommends a series of frank and in-depth conversations with all the relevant parties. "This is how you discover the real drivers and motivations," he explains. "You might hear from a person with a higher-level perspective that channel is a defensive land grab strategy. Someone else might tell you that marketing is struggling and they need the channel to generate more awareness. And, someone else might say that the primary expectation is that channel will drive more leads into the funnel. Fast. These are all nuances of a larger conversation that needs to be aligned before proceeding." "The most important thing we've learned is that it's critical to be very transparent about everything we're doing and why. It pays to be vocal about what's working, and what's not." 8 The Complete Guide to Channel Sales & Marketing The process of clearly defining your motivations and expectations forces you to ask some hard questions, or, as one of Nasson's Texas-based clients put it, "throw the snake on the table." Even if the conversations become uncomfortable, it is crucial to push forward, reach clarity, and commit to a plan. Otherwise, you not only jeopardize your initial efforts and investment, but also your potential partnerships and growth through the channel. 2. Understand and Respect Your Partners "On the spectrum between employee and customer, you should really think of your partners more like employees," says HubSpot VP Sales Peter Caputa. "They may not have an ID badge, but you should be sharing information with them, looking out for their best interests, and being continually invested in helping them develop and grow. Most channel programs miss this. Most channel programs seem to ask their partners, 'What have you done for me lately?'" Caputa's words capture one of the top themes echoed over and over by the experts: Don't treat your partners like second-class citizens. Firas Raouf emphasizes the importance of not only understanding your partners' business model, but also their motivations, "You need to understand how their business model influences their affinity to be part of your program so you can articulate what's in it for them." When you're able to clearly convey a program value that makes sense in the context of your partner's real-world business model, they will instinctively know that you "get" them and are "on their side." This is important. Many SaaS companies forget there is a vast difference between their business circumstances and their channel partners' circumstances. Alex Nasson refers to this as "a tale of two companies." The gist of this story is that while the SaaS company is typically a VC-backed startup that is focused on technology, the "On the spectrum between employee and customer, you should really think of your partners more like employees. They may not have an ID badge, but you should be sharing information with them, looking out for their best interests, and being continually invested in helping them develop and grow." Peter Caputa, HubSpot VP Sales 9 The Complete Guide to Channel Sales & Marketing partner is often a self-funded small business that derives most of its revenue from professional services. "It's the difference between spending your own money and spending someone else's money," Nasson points out. "There's a big difference in terms of risk. If the partnership fails, the VC-backed startup will likely live on without much concern; but the small business will feel a much bigger impact if things go wrong, potentially souring valuable and long-held client relationships." Nasson also points out the importance of acknowledging and respecting a VAR's relationship with clients. "The average lifespan of a vendor software rep is about twelve to eighteen months," Nasson says. "According to IPED, an independent channel research and consulting firm, the typical VAR has a tenured client relationship of six to nine years. They have much more skin in the game." With this in mind, it's easier to understand the importance of being able to prove to prospective partners that you are looking to build a long-term business relationship with them. One with a clear plan and business opportunity along with shared risks and upsides a true partnership. 3. Align Your Goals For any partnership to work, both parties must be working toward the same end. The software vendor/VAR relationship is no exception. Peter Caputa explains how HubSpot's channel program focuses on the business goals of the VAR partners as a means of meeting HubSpot's goals, "A channel program is usually designed to generate incremental sales. The SaaS company typically sees the partner simply as a source of additional clients and creates partner materials focused on how a partner can position and sell the SaaS product. A better approach is to think about what you, as the SaaS company, can build into your program to help your partners grow and succeed in their businesses." In HubSpot's case, this means providing partners and potential partners with hundreds of hours of sales training materials that have nothing to do with selling Hubspot's platform and everything to do with how partners can sell their own services to customers. Alex Nasson agrees that a focus on common goals is a core component of any successful channel program. When he's working with a SaaS company, his ultimate goal is to help stakeholders realize that their true focus shouldn't be an internally-defined goal like a land grab or demand generation. Instead, they need to focus on delivering "long-term value and customer success." In the context of a channel marketing initiative, this means your strategy must include not only your software product and value The average tenure of a vendor software rep is 12-18 months. The typical value-added reseller (VAR) has a tenured client relationship of 6-9 years. 10 The Complete Guide to Channel Sales & Marketing proposition, but also the critical role value-added resellers play in helping your mutual customers attain success and experience business value through the continued use of that software. Caputa goes so far as to say that if a potential partner is unable to keep the customer front-and-center, it may be an indicator that the partnership will fail. "When prospective partners ask about commissions, lead sharing, or white labeling in the first conversation, it's a pretty good sign that the relationship isn't going to work," Caputa says. "All of these things are benefits for partners, not customers." HubSpot's program is actually designed to reward partners specifically for helping customers succeed with HubSpot's software. "We're all rewarded when our mutual customers are successful," Caputa says. 4. Educate Your Allies and Your Skeptics "The first time I presented the idea of a channel program, I got a lot of really basic questions from people inside the company who didn't fully understand the concept or the implications," says Dan Glazer. Glazer is not alone in his experience. SaaS are often ill informed about the true nature of channel partnerships in the context of a SaaS business. Even if they have a general sense of how the channel model works, they may be less familiar with the particular approach that makes sense for SaaS companies. "A lot of people just don't 'get' why you have a channel," Glazer says. Educating your audience internal teammates and stakeholders as well as external partner prospects is critical to the success of your channel program. Along with being honest about your motivations and aligning your goals, you have to be able to help people allies and skeptics alike understand exactly how the channel model will work for everyone involved. Clear and consistent communication is key. Educating the extended team helps you gain access to the human and other resources you need to implement an initiative as complex as channel marketing. You need to work hard to engage the skeptics, educating them about the process and the potential so that they eventually become supporters. The same rules apply to your potential partners. They may be even less familiar with basic channel concepts and how that model is best adapted for SaaS companies. They may have many unspoken questions about the logistics of partnering with you and the pros and cons of a recurring revenue model. People aren't always quick to point out what they don't know or understand. It's your job, as a champion of channel marketing, to help them get their heads around how a channel program will fit into and benefit their business. 11 The Complete Guide to Channel Sales & Marketing By educating people about the mechanics and mindset of a successful SaaS channel program you can eliminate roadblocks, increase confidence, and improve the chances of having people invest philosophically and literally in your channel program. 5. Commit 100% to Eliminating Channel Conflict One of the most common points of failure for channel programs is unanticipated and unmitigated channel conflict. Channel conflict arises when the SaaS vendor competes directly with their channel partners for the same business. "Channel conflict is the most important thing to avoid, and one of the easiest traps to fall into," says David Skok. "At worst, it's the result of greed within the vendor company. Though they say they want to work with the channel, when they run across a juicy deal, they don't want to give it to the partners." Unfortunately, when a partner gets burnt by this kind of deal stealing, their motivation to put effort into their own deals is greatly diminished. Why should they work hard for a deal that their so-called partner might steal through price undercutting or some other unfair tactic? Skok recommends that SaaS companies only adopt a channel sales model if they are willing to commit 100% by either avoiding direct orders all together, or establishing some very clear rules about how potential conflicts are handled. "You have to define very clear rules of the road so people know how to behave when a conflict arises," Skok says. HubSpot, like many other SaaS companies with channel programs, uses a lead registration system to help ensure that there is only one sales process for each lead. "Currently, partners can register up to 500 active leads," explains Peter Caputa. "Registration lasts for twelve months, and they can re-register a lead if it's still active after that period." Whether you use a lead registration system, regulated pricing, split territories, or some other mechanism to reduce and manage channel conflict, Skok reminds SaaS companies to take a long view when it comes to balancing direct and indirect sales, "You can use one deal to get a partner excited about your product, and then hopefully they will go back to their customer database and bring you two or three or more additional customers. Think of that first deal as an investment in creating a strong channel relationship that will deliver exponentially more value in the long run." "You have to define very clear rules of the road so people know how to behave when a conflict arises." David Skok, Matrix Partners General Partner 12 The Complete Guide to Channel Sales & Marketing The Channel Mindset: Quick Recap Be Clear and Honest About Your Motivations Make sure that everyone internal and external is open and transparent about what's at stake and what's expected of each player. This process can be challenging. It might open up some bigger questions. But getting clarity at this stage is crucial to creating the sense of trust that supports a successful channel program. Understand and Respect Your Partners Never, ever think of or treat your partners as second-class citizens. You should consider them more as teammates than as hybrid customers or an expendable, third- party resource. Always keep their perspective and priorities (which are very different from yours) in mind when making decisions that affect their success. Align Your Goals Build your channel program around your mutual customer's success. That should be the driving force behind everything you do. Think about what you can do for your channel partners. What kind of resources and support can you provide to help them succeed so that they can help your end customers succeed? Educate Your Allies and Your Skeptics Don't assume that either the people inside your company or potential partners outside your company already have a strong grasp of the ideas associated with a SaaS/VAR channel program. Know that you may need to provide examples, clarify concepts, explain strategies, and dispel myths. Be a channel champion, but also be a teacher. Commit 100% to Eliminating Channel Conflict Show your partners that you mean what you say. Demonstrate your commitment to their success by providing support that exceeds their expectations and by ensuring that they are never at risk of losing a deal to your direct sales team. Earn their trust. Quick Recap The Complete Guide to Channel Sales & Marketing Chapter 2: Crafting Your Channel Strategy There's no question even the simplest channel program has a lot of moving parts. Designing a strategy that encompasses and coordinates all these elements is no small task, but with the right framework in place you can ensure that your plan is as solid as possible. In this chapter, we're going to look at some key questions and provide an overview of a four-part process for developing a successful strategy. Keep in mind that, since a winning strategy must sit on a strong foundation, everything we're going to cover should be couched in cultivating the right mindset and building a strong, cross-functional team. The following section addresses: Whether the channel is a good fit for your particular situation The comparative values of bootstrapping channel vs. doing in-depth planning The four phases of crafting a strong channel strategy The key questions you need to ask in order to define your strategy An overview of compensation and channel conflict 14 The Complete Guide to Channel Sales & Marketing Will Channel Sales Work for Your SaaS Company? The first question to be addressed is how to determine whether or not a channel program makes sense for your particular SaaS company. While each scenario must be assessed individually and not all criteria must be met in each situation, there are certain cases when a channel sales model or mixed sales model are a more natural fit. Your product requires a lot of training, installation, and support. Once trained, channel partners can help get customers up and running, freeing your internal resources to focus on additional sales or other, big picture tasks. Your sales process is fairly straightforward. Resellers will not usually be able to sell your product quite as well as you do, so complicated sales will typically be less effective via an indirect sales process. Your product is in a stable state. Frequent changes to your software, whether related to adding features or fixing bugs, necessitate expensive and time-consuming partner training. It's best to hold off on engaging partners until your product is stable enough to minimize these kinds of updates. Your software supports a function that your customers outsource. As we've established, the VAR channel model is the most appropriate for SaaS companies. Many of the most successful SaaS channel programs are built on partnerships with service providers who already fill a functional role supported by your software. 15 The Complete Guide to Channel Sales & Marketing You have a solid sales model. David Skok stresses the importance of figuring out your sales model internally before trying to teach channel partners how to replicate that model. Making your first sales directly (or possibly in association with a partner), he says, will help you better understand important nuances about messaging, the market, and the sales process. Your company has built at least $20 million in revenue. Firas Raouf sets this revenue benchmark as a good indicator that an expansion-stage software company has built up enough brand equity and scale to effectively drive revenue for a partner channel. In addition to these product and company attributes, Skok emphasizes the benefit of finding a ready-made channel rather than thinking you can create a new channel to meet your needs. "You will have a significant uphill slog to create a channel from scratch," he says. "Larger, more established companies have the time and funding needed to pull it off, but if you're a startup, it's a deal breaker." This is another reason why Skok, along with other SaaS experts, recommend the VAR approach to channel. He cites Hubspot, Xero, and Namely as examples of SaaS companies who have developed successful niche partnerships specific to their product's business function. 16 The Complete Guide to Channel Sales & Marketing Bootstrapping vs. Detailed Planning Which Is Better? This is something of a trick question. The truth is, your SaaS channel program will probably employ equal parts in-depth research and design plus on-the-fly maneuvers to adapt to whatever curve balls reality throws your way. However your channel program develops, the process will likely demonstrate the value of certain attributes and capabilities. The Value of Listening "Build your program around reality," says Pantheon Business Development Manager Halid Ibrahimovic, "not preconceived notions." While he encourages SaaS companies to develop a hypothesis about what they think will work best in the channel, he warns against putting too much stock in your initial assumptions. Peter Caputa echoes the suggestion to go direct to the source. "Talk to people," he says. "Find out what they are struggling with and how you can help them." He recommends interviewing your customers and potential partners in order to get a clear idea of what would help them build their respective businesses. While it's always important to listen to your audience, Alex Nasson points out that your most intense listening and learning will take place during program development. "There's a big difference between channel development and channel execution," he explains. "During development, you have to focus on listening and confirming in order to fully understand audience needs and wants. When you execute, you are using what you have learned to provide clear, aligned solutions that scale with greater velocity than your competition's." 17 The Complete Guide to Channel Sales & Marketing The Value of Due Diligence "I have never been ill-served by doing in-depth research prior to launching a channel program. The goal is to be as crisp, polished, professional and aligned as possible when you go to market," says Nasson. "You also need to be prepared to put serious time into checking up on your potential partners. You can trust that anyone serious about building a business with you will also be evaluating you with a critical eye. The scrutiny goes both ways. If they aren't impressed with what they see, they may never tell you exactly why. Often you just won't hear back from them. Using research to learn about your partner prospects and their business needs upfront will help you best understand how to approach and overcome potential objections and manage overall partnership risks." While your initial channel program doesn't need to have all the bells and whistles, there are some core elements that you should nail down up front. "There are some basics you need to have in place before you can have real conversations with partners," Ibrahimovic explains. "At the minimum, you need a stable product, formal outline of the program, and an initial contractual framework." Caputa notes that the depth of due diligence required is in part related to the maturity of your business. "If you're doing $50 million in revenue, there are a lot of things you can break," he says. Caputa has seen some of HubSpot's competitors launch substandard channel programs with disastrous effect. "One competitor took a very old-school, least-common-denominator approach with a product that wasn't quite there yet," he explains. "Their partners are now coming over to HubSpot." Dan Glazer offers the reminder to think through the big questions early in the process. "As soon as you start to see wins, you should make the push for additional due diligence and resources," he says. "Otherwise you run the risk of missing the opportunity if you have people in the field making it up as they go along. If you haven't stayed on top of things, the program might scale more quickly than you expected, and then your infrastructure breaks." "I have never been ill-served by doing in-depth research prior to launching a channel program. The goal is to be as crisp, polished, professional and aligned as possible when you go to market." Alex Nasson, startup consultant 18 The Complete Guide to Channel Sales & Marketing The Value of Agility While being prepared and doing your homework is key, at the other end of the spectrum, the ability to adapt quickly is always a critical skill for any startup. While he advocates for having the basics in place, Ibrahimovic also believes in retaining agility. "Don't over-engineer your program or over-invest in the infrastructure," he says. "Create as you go along so you can build based on your partners' actual needs. You won't really know what those are until you start working with them." Nasson agrees, but with a caveat. "The market changes constantly and you must evolve with it or risk becoming less relevant to your partner," he says. "However, you've got to have some clarity at the executive and program levels before you send out two reps and a PowerPoint deck." It's important to establish and maintain an effective balance between the foundational support required to sustain your program and the agility required to grow it. Many successful SaaS channel programs launch with just one person behind the wheel. That was Glazer's experience at Optimizely. "We started out with just my time and a goal to hit a certain quota," he says. "To begin with, we didn't have anything formal. We launched with a MVP (minimum viable product) that was focused on a really clear and concise statement of value for our partners and our customers." 19 The Complete Guide to Channel Sales & Marketing The Value of Experimentation Finally, in true startup entrepreneurial spirit, experts agree that trial and error plays an important role in defining and optimizing any channel program. "In the early days, it requires experimentation to figure out what's going on," says David Skok. "Pick a small number of partners and commit to seeing if you can make them successful and learn what's required to get them off the ground." "The channel engagement process is in a constant state of iteration," says Nasson. "The partner lifecycle is ongoing: strategy, planning, execution; recruitment, enablement, marketing, sales; feedback, adjustment and implementation." Experimentation is a natural part of the process making changes based on key learnings so that you're continually improving the program and its value to business partners. Real world experience has taught the experts we spoke with that while it's never a bad idea to invest some time in upfront research and planning, it's equally valuable to get out there and start doing some actual tests with initial partners. In other words, craft your best-laid plans, but don't treat them as though they are written in stone. Like most everything else in a startup, success depends on combining best first efforts with flexibility and a company-wide capacity for smart iteration. 20 The Complete Guide to Channel Sales & Marketing The Process: 4 Phases of Defining Your Channel Strategy When crafting your channel strategy, it's a good idea to consider the end-to-end process. Because channel programs have so many moving parts and involve so many additional players, thinking things all the way through (to the best of your ability based on the information at hand) is especially important. The basic process for defining a solid channel strategy includes four phases: As with any endeavor, investing time and effort in some upfront exploration and fact-finding will help you put your best plan forward and minimize missteps and resource waste. Although developing a channel program is part smart planning and part agile bootstrapping, it's to your advantage to take the time to ask the important questions, engage the right people, and test as much as you can prior to a full-scale launch. Unlike internal initiatives, a channel program involves exposure to external partners who may not be as forgiving as you'd like if things don't go as planned. While some bumps are to be expected, it's better to have at least considered the various issues beforehand so that you're able to address them more quickly and capably if they should arise once you've jumped out of the gate. Foundational Discovery Operational Alignment Executional Excellence Collaborative Evolution 21 The Complete Guide to Channel Sales & Marketing 1. Foundational Discovery At the highest level of strategy, you need to address the big picture questions and concepts related to your organization's overall vision for and mindset around channel marketing: What are your end goals? What's 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? It's in these initial conversations with your internal team that you will start to uncover your expectations and motivations as well as any potential roadblocks or potential complications. For this part of the process to be effective, you need to ensure that all the right stakeholders are fully engaged and have weighed in. As Alex Nasson puts it, "This is not a spectator sport. These are real and critical strategy initiatives." Nasson also stresses that, if it's done properly, this phase of strategy development will often raise some eyebrows and ruffle some executive feathers as ideas are challenged and perspectives refined. "There's a vulnerability and openness that's needed to achieve true alignment and interlock across an executive team," he explains. Dan Glazer cautions against overlooking details at this stage. "You really need to think about the consequences," he says. "Everything about the channel happens at scale which will compound any mistakes. It's imperative that everyone is clear about who's bringing what to the table, understands the associated value, and has clear expectations about their respective roles." Nasson agrees that a big part of this phase of the process is getting to the truth about what people really expect and to build a sense of cohesion and trust within the planning team. "You need to frontload the process. Be explicit and detailed, not implicit and general in your discussions. If you can't get clarity and buy-in to create a supportive mindset and realistic expectations within the leadership team, it's not worth the risk of pursuing channel development." "If you can't get clarity and buy-in to create a supportive mindset and realistic expectations within the leadership team, it's not worth the risk of pursuing channel development." Alex Nasson, startup consultant 22 The Complete Guide to Channel Sales & Marketing 2. Operational Alignment Once you have consensus around the big picture concepts and ideals associated with your vision, it's time to get down to brass tacks about what it's going to take to bring that vision to life resources, skill sets, organizational adjustments. "You need to carefully consider the cross-functional alignment and operational- readiness of each team supporting the channel," says Alex Nasson. You need to be sure they really get what's required to achieve the defined goal. This upfront reconnaissance needs to involve every department within your organization product development, sales, marketing, legal, finance, professional services, etc. any group that will affect or be affected by the addition of channel partners to your ecosystem. Pete Caputa relates taking a similar approach with the HubSpot channel program. "To be successful long-term, we also needed to develop strategies that addressed the challenges of onboarding, training, coaching, and incentivizing our resellers." While he further admits that it wasn't always the smoothest experience, there's no question that being proactive about working through all these operational considerations saved Caputa and his team many headaches and missteps. At the same time you're assessing your internal capability to support a channel program, you should also start to assess your potential partners' ability to engage at a level that will make the program a success. Operational alignment needs to be in place not just within your organization, but also across your entire channel ecosystem. Though you will not have control over external factors, it's smart to know which questions to ask. 3. Tactical Excellence Though tactical execution comes after you've put your strategic plan into action, it makes sense to think proactively during strategy development about how you can ensure smooth delivery of your channel program. While things may change after launch, there's no harm in planning ahead and trying to anticipate as many of the potential pitfalls as possible. Your review of operational alignment will uncover, to a certain degree, whether your organization is prepared to integrate the channel from a structural and resource standpoint, but you may need to dig a little deeper to gain confidence in your team's actual ability to execute. 23 The Complete Guide to Channel Sales & Marketing For instance, establishing operational alignment provides high-level, cross-functional buy-in, but you'll need to get more tactical to establish the specific process protocols that will guard against miscommunications and oversights. Alex Nasson recounted a situation where a head-of business-development proudly announced sealing a big deal with a top-tier client turned reseller only to learn, too late, that his efforts created major channel conflict casting the company in a very bad light with their existing channel partners. You need to be prepared for all possible contingencies. Taking the time to walk through all the foreseeable scenarios helps you develop the detailed communication and engagement protocols that will make sure everyone who needs to be looped in is looped in and there is absolute clarity about both overarching goals and individual roles in the pursuit of those goals. In addition to facilitating an effective channel strategy, part of developing executional excellence has to do with helping your team adopt a culture of accountability. "It's so important to establish trust and to be accountable to your channel partners," Nasson says. "It means extending the idea of 'know-like-trust' across the entire experience the pitch, the sale, and the after sale. It's about acknowledging the partners so they feel less alone, not leaving them out on a limb or blaming them for a faulty implementation." When Nasson talks about executional excellence, it's not just about what's getting done, but how it gets done. "When a partner is questioning the expertise or value of a vendor, it's critically important to be clear about exactly how you are driving partner success," he says. "It's not always possible for
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