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  • Larry Gregory

Channel Strategy 101

Recruiting channel partners helps reach new markets and expand sales but what kinds of partners are the right fit for you as an enterprise software provider?


VARs

Your first reaction might to be to seek out an IT reseller. These are typically large businesses and you’ll be fighting for attention versus established vendors with a larger “share of wallet” and therefore garner most of the VAR attention. It is possible to break in and establish a meaningful partnership but your solution needs to be a clear, financially meaningful complement to their existing solutions to avoid becoming “catalog fodder”.

ISVs

Other software vendors may represent attractive partnership if you add value to their offering. ISVs (particularly cloud, ERP, and CRM vendors) are familiar with partnership and define partner programs designed to be as “self-serve” as possible. If you are comfortable providing the required product integration and are okay not having a “strategic” partner relationship out of the gate, this can be a worthwhile effort. Co-selling is typically through vendor marketplaces and co-marketing consists of directory listings and co-branded materials (the software vendor wants you to carry their product messaging with your customer message).

SIs

IT Systems Integrators (SIs) are typically familiar with partnering with software providers and are increasingly moving toward providing their own repeatable, cloud hosted solutions based on project IP and ISV solutions. Shifting from 100% integrator to cloud Managed Service Providers affords a higher margin and recurring revenues. To be considered for partnership, your solution must align with their functional expertise and services offerings. They won’t change their business to accommodate a shiny new technology. The partnering process is more ad-hoc with SIs. They have less formalized partner programs and partner agreements are negotiated one-off. Co-selling with SIs requires more account management and support, particularly to get the first couple clients. Co-marketing takes the form of traditional outbound marketing campaigns.

Management Consultants and Agencies

Management Consultants (plus agencies, accountants, and other professional services firms) are typically uncomfortable with reselling software due to their need to appear objective and unbiased to clients. Your software solution must be relevant to their core consulting services to break through that objection. Ideally your solution is technology they can leverage during client engagements and then hand off as a deliverable (enabling the consultant to deliver the ISV solution in context of the engagement). Focus initial co-selling on testing interest with existing clients on a limited scale and keep your joint marketing expectations low.

Conclusions

The complexity (required customization) and industry-specific nature (general purpose vs. specialized use case) of your product will determine which of the above partner types will be most attractive. If you are breaking into a new territory, I recommend starting with small to medium-sized firms (who are more nimble). Create solid channel strategy and a polished partner value proposition before beginning your recruiting process. Approach the effort in phases so you can learn and adjust based on the receptivity of each target partner community.

Related articles:

  1. 4 Easy Steps to Channel DevelopmentExpanding To International MarketsPartner Capacity PlanningChannel ManagementRecruiting Technology Partners

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