Channel Sales & The Fledgling Software Start-Up

Channel Sales appear to be the best option for scaling, immediately after a product launch–right? Well, my friends, it depends on your industry and your product. Are you selling customer-facing CMS software or fire-proof bricks? Does it matter?

For the fledgling technology enterprise, the enthusiasm around getting your product out, in front of as many customers as possible, can sometimes lead to an over-reliance on a distributor’s sales network. It’s tempting to hand over the reins of the sales process to a more senior sales engine, a player that has experience selling “very similar” products. In the beginning stages of a product launch, a start-up organization should collect as much customer data as possible to evaluate possible pivots and iterations before scaling the business model.  Practicing this go-to-market homework will assist the company in arming and aiming their Business Development folks, and provide the necessary foundation for future growth.

Unless you’re getting feedback from your customers, how are you going to be able to pivot and adapt to the market’s demands? Are sales reps inside a large distributor going to have the product knowledge, confidence and incentive to evangelize your software solution, let alone provide you with meaningful customer feedback at the end of the day?

The function of a successful Channel Sales campaign can provide a more efficient, cost-effective way to enter a new market. These strategic partnerships work best when there is already proof of sales—people just darn can’t get enough of your product! Additionally, Sales reps inside “Acme Distributors Inc” need to feel comfortable espousing your value proposition (which can become increasingly complex, the larger the sale. e.g. the ERP market versus the SEO world)

If you sell light bulbs, partnering with the largest distributor of lamps is a better fit than partnering with Mega Corp, which sells everything from batteries to windshield wipers. Finding a good fit when seeking out a Channel partner will decrease the likelihood of your Channel partner becoming your best customer–instead of the real customer, your end-user!

Channel relationships can be a terrific tool in the long-run for helping you scale your business. However, in the short-run, these partnerships should not replace the crucial and eye-opening process your Biz Dev and Project Managers must go through, as they are exposed to pain points and market conditions, while completing the customer discovery phase.

If you pursue a Channel strategy, come to the table with your marketing collateral, value proposition and proof of sales clearly laid out. Additionally, hire a Channel Manager whose sole role is to monitor the efficacy of your partnership e.g. what’s working and what needs fixing: are the right incentives in place?

Scaling a product will take time and effort from both in-house reps and outside distributors. With an aligned strategy and regular communication, a long-term, fruitful partnership can be forged.  At the end of the day, Channel partners provide your most viable exit opportunity (often acquiring the organization which originally hired them). These relationships must be carefully sought out and continuously nurtured.