Learning to Love the Channel

Resellers

When to use resellers: The easy method is applying a market maturity test. If you’re selling a product in a known category, resellers are great. Conversely, resellers aren’t a great fit if you’re undertaking category creation. Here’s why: While many businesses rely on resellers as trusted advisors, resellers are largely outsourced procurement departments. They manage the tasks associated with finding the best products according to their clients’ budgets and use case requirements. For example, your customer prospect requests an analytics tool to which the reseller recommends a product from this category. If your competitors’ products or those that are closely complementary transact through these channels, then you should give resellers serious consideration. If the market does not currently conceive a category for your product, then stick to direct sales until the market matures.

Systems Integrators (SIs)

When to engage SIs: If the word “deployment” describes how your customers might get started with your product, you should consider bringing in a partner. One exception is if access to your internal tooling or systems is necessary for customers to get started. If you’re building a SaaS business — where negative retention defines the success of your business — you want to double-down on strategies that ensure your customers successfully adopt your product.

Technology Partners

When to partner with other technology companies: Other than ensuring the criteria above are in place, think hard about the ROI. If the cost of a partnership is a press release and some shared marketing (webinars, email campaigns, joint landing pages), then the input costs are low for some of the perceived “better together” benefits. On the other hand, if the partnership requires engineering work or dedicated headcount, then carefully weigh the costs against the potential upside. “Upside” has many versions: increased product usage, better customer engagement, improved retention, incremental revenue, etc.

Marketplaces (Technology Partners Part 2)

When to integrate to an ISV marketplace: You drive considerably more consumption of their products and you’re able to invest human capital. These partnerships require considerable inputs to fully realize upside, including training their sales teams, developing relationships with product and BD leaders, and building the connections to their provisioning and billing systems.

OEM (Original Equipment Manufacturer)

When to pursue OEM partnerships: If you’re early in your startup journey, these types of partnerships are likely a distraction as they can dilute focus from succeeding with your core business. The best approach is to be thorough in evaluating these opportunities and to see them as potential product lines rather than partnerships. If an OEM partnership requires new product development, you should request R&D dollars (industry term = Non-recurring Engineering dollars or NRE) from your partner and avoid exclusivity agreements or granting co-ownership of intellectual property.

Channel Market Fit

Wrapping up

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