Channel Sales: The 3 Key Attributes You Need to Know to Scale Your Business

Here’s what to consider when approaching partners & resellers to help you sell more product.

By Jaimin Patel, Ascanio Guarini, and Isaac Madan

There are many factors that play a key role in picking the right indirect routes to market (aka partner strategy, channel selling) for a company looking to scale their revenue beyond direct sales.

As quick primer, direct selling is when a company sells their product directly to their customer, e.g. when you go to to buy a new iPhone, Apple sells direct. Channel selling is when a company sells their product through a third party, e.g. when you go to 7-Eleven to buy a Coke, Coca-Cola is selling through one of their retail channels. Startups do this too — for example, SaaS companies like Box have a Channel Partner program where they share revenue with referrers. For an overview of indirect sales, read our prior post on the topic here.

 This post discusses three factor that provide a solid starting point when assessing if you’re ready for channel sales and how to maximize success in your approach. The following attributes are where I have seen the best success for companies when they are evaluating how to grow their business through indirect routes:

  1. Product maturity
  2. Partner enablement
  3. Organizational alignment and support

Product Maturity

Company leadership can assess the maturity of their product by engaging their pre-sales and professional services teams. These teams are on the frontline, working with end-users, selling the value proposition, and pushing deployment of the product. The pre-sales teams (i.e. technical people that accompany sales reps on sales calls — they help sell the technical capabilities of the product) will outline any challenges that are faced with product stability during the sales cycle. The professional services teams (i.e. more technical people that are brought in after the sale to implement the products after the customer has purchased) will produce in-depth insight into what it takes to make the product do what the company states it is capable off. These teams will tend to provide a true reality of the technical maturity of the product.

Here is an example of a simple attribute-feedback framework company leadership can use to gauge product maturity from their pre-sales and services teams:

  • Technical Knowledge Requirements — Gather insight on the level of technical knowledge that is required by the sales team to position the value of the product.
  • Product Demo — Gather insight from the pre-sales team on requirements for doing a successful product demo. What are the challenges that they face when setting up and doing the product demo? Are there specific requirements (technical or otherwise) that enable a success demo?
  • Competitive Positioning — Is there strong competitive analysis and differentiation for the product or do many pre-sales teams have to create their own?
  • Proof of Concept (POC) Evaluation — Gather from the pre-sales and post-sales teams insight about the POC process and ease of deployment and execution.

The challenges your teams face provide insight into what external partners will have to deal with while working with your product. Assessing your product’s complexity will highlight gaps that need to be filled prior to engaging your initial channel partners.

Partner Enablement

Next, company leadership should engage with sales teams (direct sales and pre-sales) on internal frictions that are experienced during the selling process and the sales cycle. If a company’s own teams are having to put artifacts together (e.g. customer powerpoints, customer win examples, competitive analysis, value proposition, etc..) then potential partners outside of the company will have a harder time supporting your products.

This is the enablement piece — how frictionless your sales process to potential new partners. If partners have to spend a lot of time building enablement for their own organizations, that will make your entry into the partner business that much more challenging. However, as we will discuss in subsequent posts, there are creative ways to augment this gap based on the route that is selected.

Here is an example of a simple attribute-feedback framework company leadership can use to assess the current state of their sales process relative to the frictions it would cause for new partners from their pre-sales and services teams:

  • Defined Value Proposition — Do your own teams, direct and inside sales, have the necessary material to define and articulate the value prop for your product? Are there well defined artifacts to support them when doing presentations in front of customers?
  • Sales Presentations — Assess from your sales teams the quality of the material they have to support sales calls.
  • Competitive Analysis Documents — Asses from your sales teams the quality of and value of the competitive analysis material.
  • Customer Win Examples — Assess the material that is available for your sales teams as it relates to customer wins. These will be important for partners to see and understand when it comes to their own enablement.

Enablement is a key driver for success and many company believe that they have to create new material for partners but the reality is all they need to do is adjust their existing material in support of partners. A key partner (or two) can help define the required material for them to be successful.

Organizational Alignment and Support

Finally, it is important that the company is aligned from top down on the value of partners. Too often leadership may want to develop a partner strategy, but middle and lower-level teams are not aligned, and see the strategy as a deterioration of the company’s profitability. Middle and lower-level teams may not see the added-value to the sales and distribution process that partners can provide. This lack of alignment creates the one challenge that is the hardest to overcome: the so-called “channel conflict.”

The best approach to achieve organizational alignment on the partner strategy is to instill the value of partners and the selected route to the growth of the business. To do this, leadership needs to highlight partner wins and successes at every opportunity. As the company starts to see success with partners, more teams will want to engage with partners and the focus will move away from the initial margin loss to the company’s overall profitability.

Here is an example of a simple attribute-feedback framework company leadership can use to assess the current state of their organization’s overall alignment toward partnership strategy:

  • Compensation Structure — (Is it Partner Friendly?) — Company leadership should work with their finance teams to analyze if there are any conflicts between direct sales and partner sales. There are many ways to set up a good partner model and not have conflicts between direct sales and partners.
  • Sales Segmentation — Defined Lines between Direct Sales and Partner Sales — This is one of the models used to minimize partner conflicts. This is where companies will segment their go to market by deal size, market, named accounts, etc. in order to minimize the conflicts.
  • Deal Protection for Partners — It is critical that management have measures in place to protect deals that are owned and managed through partners. Without this protection partners will not share insight about their pipelines and activities in fear that direct sales will take the deals directly.
  • Partner GTM Support Across Sales and Product Teams — Insure that the company’s internal product release processes incorporate the steps required to support partners. If the product release processes only address direct sales the effort to take products through partners will be far more complicated due to lack of margins for partners.

The organizational elements are the most challenging for companies when entering indirect routes to market because it deals with adapting their “sales culture” to include sales teams that are outside the company. But getting this right creates the momentum to scale their business.

Conclusions and Next Steps

It is important for company leadership to gauge the current state of affairs on the three key attributes discussed in this post. However, as we discussed in our first post, there are many routes to choose from, each of which may be better or worse for companies at different states along the three dimensions of product maturity, partner enablement, and organizational alignment. We’ll discuss some of these in more depth in the next posts.

By Jaimin Patel, Ascanio Guarini, and Isaac Madan. Isaac is an investor at Venrock (email).

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