Updated: May 17
How is it that some companies seem to build a massive indirect channel, yet others barely get started…?
How is it that, despite knowing the development cycle is a long-term investment, some companies seem to harness the discipline and ability to put one tactical foot in front of the other and continually make strategic progress?
Internally and conceptually, everyone seems to get the value of an Indirect channel.
Over simplified, it is: someone else sells our product (for a lower cost of sale, shorter sales cycle, and greater reach); we do that over-and-over…and sales scale!
The concept is simple, in theory: people sell our stuff and we get rich, together!
That being the case, companies love their product and believe everyone must see the opportunity in it as clearly as they do.
However, the indirect channel, like every sales channel, is inattentive.
Partners have their own priorities and the opportunity to generate services revenue (or additional margin) isn’t always as compelling as we might believe it is.
The channel needs plenty of motivation to sell; or, it needs to be easy for them to sell.
Thus, it takes some effort to convince partners to sell/refer and perhaps some investment in tools to get partners up-to-speed, selling easily.
On the partner’s side, executives often get the benefit of a partnership; but the field...not so much!
Executives see the compelling value-proposition and additional services revenue that are to be had; but, at the field level, it is hard to get a rep’s attention.
Reps are coin-operated. They don’t naturally carve-out the time and effort necessary to get adequately acquainted with a new product and represent it effectively, especially if it is slightly complicated.
The common thread: there’s an overestimation of the simplicity and an underestimation of the investment necessary to build the Indirect Channel.
· Direct sales are faster - they offer a shorter and more known path to revenue.
· Indirect has a longer ramp-up - that means greater uncertainty and longer path to revenue.
So, even if Indirect scales better in the long run, companies (with all their competing priorities) too easily fall back to the known element of direct sales. They get around to Indirect: one-day, someday…maybe!
If no one ever plants the seed, the oak tree never grows.
Many times, partner programs are given lip service and languish perpetually underdeveloped as they wait for the right partner to come along. We want the result, but don’t put the shovel in the ground.
A small tree needs water.
Exceptionally, some companies know Indirect Channels take some level of investment. They allocate resources, even if moderately, to give indirect some dedicated attention.
Others seem to never get started. They leave partner development as a 2nd (or 3rd) task on someone’s already over-crowded plate. Unfortunate as it is…the channel fails to capitalize on potential.
Knowing that it takes effort, the reluctance to go “all in” may be justified.
Historically, a properly funded indirect team has meant allocating budget for a: Partner Program Manager, Marketing Manager, Inside Sales, Business Development, and Channel Manager.
Quickly, executives see that developing an Indirect Channel can consume $500K or more of budget, just in salary – on a bet with a longer lead time and often no proven success.
With competing priorities, indirect sounds nice - but more immediate needs can tend to win the day.
Realizing the tug between the potential of the channel and reality of expense; some companies forgo investment in the channel – reverting to direct sales.
However, it need not be like this. Indirect can be strategically developed, one tactical step at a time.
Certain vendors get started by outsourcing the business development and channel program development to contracted resources – services that can be turned on/off and scaled more easily, with less risk.
Companies do not need to invest the 500K which was historically required - they can commence their partner program easily with SaaS-based PRM tools that have a low cost and easy on/off business model.
Testing the waters.
As the analogy might go: rather than going all-in to build a swimming pool (i.e. full partner team) in the backyard, which may get used only a few times a year; some companies are getting a toe-in-the-water by joining a “club” (i.e. contracting resources), where they can access the pool.
Contracting SaaS and consulting resources comes at a fraction of the cost, with a lot less risk.
If you want to get started with your channel program by making a strategic decision to allocate the base minimum of tactical resources necessary to help it succeed, see about contracting with some of the services available from Dynamic Channels to get your program a dedicated “toe-in-the-water”.
Get your channel started by putting one tactical foot in front of the other.