In today’s highly competitive technology environment, the key to success is to differentiate your company with the products and services you sell and the relationships you build.
MSPs, CSPs, VARs and other IT service providers are differentiating themselves by developing their own solutions and adding an ISV component to their existing business. But, since many of these companies are not able to quickly scale sales for their new solution, they are including the development of an indirect reseller channel into their go-to-market plan.
A channel partner program enables new ISVs as well as established IT vendors to go to market more quickly with a team of professionals who are already knowledgeable and well equipped to help make the new vendor’s solution a success.
Your goal is to build a channel partner program that is appealing, uncomplicated, and a win-win for both you and your channel partners. Identifying, recruiting, onboarding, and supporting your ideal partners will enable you to penetrate the market more quickly and establish a significant competitive advantage.
In part 1 of our Channel Sales Roadmap, we uncovered how a comprehensive channel strategy can drive sustainable growth. In part 2, we discussed internal channel preparedness. In this third installment of our Channel Sales Roadmap, we will help you build your channel partner program by identifying, recruiting, onboarding, and supporting your partners.
Step 1: Building Your Partner Network: Identify the Ideal Channel Partner
Once you have evaluated the readiness of your internal teams and are confident that you can successfully execute a channel sales strategy, it is time to take the first steps toward building your partner network.
1. Create the Ideal Partner Profile
Just like correctly identifying a target customer is critical to the success of a direct sales team, identifying your ideal channel partner is critical to the success of indirect channel sales. What are the characteristics of your ideal channel partner? Consider details related to:
Company size (employees and revenue)
Competencies, expertise, and special skills
These elements are the foundation for your evaluation process. With them, you can develop a short list of the top channel partners with whom you would like to engage to determine if a business relationship would be mutually beneficial to both parties.
2. Create a List of Channel Partner Candidates and Evaluate Them
Once you have created your ideal partner profile, use the information to develop a partner selection checklist. This will enable you to conduct an in-depth evaluation of each potential partner against the criteria you have put in place. The checklist should help you uncover:
corporate alignment or synergies
level of customer satisfaction
sales skill sets
and much more
This checklist of selection criteria is a starting point in your evaluation process and can be changed depending on your type of business, customer base, product offering, and markets served. Gauging a potential channel partner’s strength, expertise, market exposure and alignment with your business goals will help you better understand their capacity to achieve early and rapid sales growth.
We have created a partner selection checklist which you can use as a template to evaluate your potential channel partners or as a reference when creating your own.
3. Build Real Relationships
The critical component of step 1 in launching your partner program is to build a relationship with potential partners. You would not marry someone without getting to know them first. The same is true when building your partner network.
To interest potential MSPs, VARs or other IT service providers in joining your partner program, you may have considered email marketing, PPC campaigns, or webinars. If your company has a well-known name like Microsoft, VMware, McAfee, Cisco or others, this might work. If your company is not a well-known brand, it will not. Potential partners will not be drawn in by an online ad campaign for a company they know nothing about.
You will need to get out of your office and build real, personal relationships. Attend conferences, speak at industry trade shows and participate in other live events. This will enable you to position yourself and your company as a leader in your market and a business to which potential partners should take a second look.
Step 2: Channel Partner Recruitment
When evaluating potential channel partners, it is not uncommon for a new vendor to take a less assertive role and let the potential partner ask all the questions about how the business relationship will work.
Remember, this partnership is a two-way street. Your due diligence should be as in-depth as that of your potential partner. Interview them as actively as they interview you.
Is new customer acquisition, reducing CHURN, and increasing ARPU important to them and part of their key metrics? How do they accomplish these things?
What do they do to strengthen their relationships with their current customers?
Are they successfully selling complementary offerings with which your solution could be bundled?
How frequently do they switch from one ISV to another?
These are just a few of the questions you should ask when evaluating the effectiveness of a potential partner and how successful they may be in selling your solution. Often, the vendor is so anxious to develop the channel program and onboard new partners that they overlook certain red flags which could have easily been uncovered with a few simple questions.
On average, channel partners resell the products and services of 14-18 different vendors, so it is also important to understand what they are looking for in this relationship. The goal of most partners is to find a product/service that will complement their other solutions and help enhance their portfolio while at the same time differentiating their company from their competitors.
The challenge is not actually finding potential partners. There are tens of thousands of MSPs, VARs, and other IT service providers who could be potential candidates. The challenge for a relatively unknown ISV is to persuade partners to join your program.
Make sure you have established your value proposition. What makes your solution, your company and your channel program so much better or different than your competitors? What do you bring to the table that others do not?
For an unfamiliar brand, one of the ways to do this is to let others speak for you. As you onboard new partners and they become successful at selling your solution, use their success stories in partner case studies, webinars, podcasts, newsletters, and other marketing materials. Reading about their success in a case study or hearing them speak on a webinar provides potential partners with first-hand insights into the current partner’s experience, their relationship with your company and how new partners can also be successful by working with you.
Step 3: Issues to Tackle Before the Onboarding Process Begins.
Before you complete the recruitment process, sign an agreement, and begin the onboarding process, there are critical issues to tackle to ensure that both parties are on the same page and will be successful in traveling this road together. Here are 6 important questions to consider. I’m sure you can think of many more.
1. Who is Responsible for Lead Generation – You or Your Channel Partner?
Do not simply assume that either you or your partner will be responsible for generating leads. Evaluate your business, go to market plan, and buyer persona to make an informed decision.
If you have chosen to build a partner program in an industry you already know very well and your solution will be sold to a type of customer with whom you have had experience in the past, then it may be beneficial for you to generate the leads and distribute them to your channel partners to close.
If you are entering a new industry vertical such as healthcare and are transitioning from SMB sales to enterprise sales, it would be beneficial to let your new channel partners take the lead. They already have large healthcare clients and know how to sell to them, so your partners will be more successful in generating qualified leads on their own.
2. How Do Partners Want to Hear from You?
To achieve sustainable growth, it is critical to remain in constant communication with your channel partners.
Some channel partners will prefer that they speak with you directly via phone or online video chat. Others might prefer to receive a less frequent newsletter which they can read at their convenience. Regularly scheduled social media posts, monthly update calls for the entire partner community, emails or other means of communications may be appropriate.
Communicating in the way that is most effective for your channel partners will result in a more valuable experience for them and enable your messages to rise above the noise of their other vendor partners.
3. Does the Channel Partner Already Have an Infrastructure in Place to Support Your Solution?
If you are just starting to build your channel partner community and are anxious to sign up your first three or four partners, the tendency will be to accept any company that has shown the least bit of interest in your solution.
But, have you vetted those companies sufficiently to know whether they are ready to become your partner? Do they have the infrastructure – people, technology, and resources – in place to support your solution? Is their billing system able to process and invoice new customers? Can their existing technical team be trained to support your solution, or will they need to hire an additional team?
4. Who Owns the Customer Relationship?
This is one of the most contentious aspects of any vendor-partner relationship.
On one hand, this is your product or service. You developed it and are allowing your channel partners to resell it. You want to make sure that the correct marketing messages are presented to your target customers in the appropriate way and at the appropriate time. Since this is your offering, no one knows better than you what the right messages are, what the right timing is and how to successfully close the sale, right? Not necessarily.
You have most likely chosen to implement a partner program because you want quicker access to an existing customer base who may already have purchased complementary products or services with which your new solution would fit perfectly. The partners with whom you work have built long-standing personal and business relationships with these customers. The clients trust them and the recommendations they make.
Getting in between the relationship your partner has with its client will not help you close more sales and will actually alienate you from your partner. If they ask you to participate in a customer call, invite you to join them in an on-site meeting or conduct a joint marketing campaign, that’s wonderful. Just remember that it is your partner who should take the lead.
5. What is the Alignment Strategy within a Larger Portfolio?
When selecting a potential channel partner, it is important to choose a company that already sells complementary solutions to your target audience. This enables your partner to:
cross-sell additional services to their customers, increasing their ARPU.
develop a portfolio of bundled products and services which provide a competitive differentiator.
increase the likelihood that the end customer will remain a customer for a longer period of time. The sale of each additional service to a customer increases the stickiness of that customer, making it more difficult to migrate to a new service provider.
Spending time to onboard a channel partner who has an incompatible portfolio is a waste of time. They will not be able to cross-sell additional services and efficiently scale their sales efforts across their entire customer base. The addition of business continuity, security, AI, or marketing automation solutions, for example, enables your partner to enhance their portfolio, differentiate their offering, and become a single source for their clients’ technology needs.
6. How do You Motivate A Channel Partner to Sell Your Service over a Competitor’s Solution They May Also Be Selling?
Sales quality over quantity: The 80/20 rule of sales says that 80% of your sales come from 20% of your customers. This can also be applied to your channel development strategy – 80% of sales come from 20% of your channel partners. Limiting the number of channel partners you take on will enable you to support each of them more effectively, leading to a closer business relationship and sustainable sales growth.
Capitalize on initial and ongoing training: During the first few weeks of the onboarding process, it is critical that you provide comprehensive training to both your partner’s sales and support teams. Ideally, this will be conducted in person with your training team visiting the partner’s office or their teams visiting your location. Either way, a formal training schedule which delivers early and ongoing education is essential to ensure that they feel comfortable selling and supporting your service and provide an exceptional customer experience.
SPIFFs and sales incentives: Salespeople are naturally competitive and enjoy the recognition that comes with closing the most deals or generating the most revenue. Developing sales SPIFFs or contests can incentivize them to sell more. But, you may say, “It is their job to sell. Why should we have to incentivize them with money, trips, or other types of rewards?” Remember, your solution is just one piece of a much larger portfolio of products and services provided by multiple vendors. Your personal relationship with the partner, the support you give them, sales incentives you put in place and all of the other resources you provide, work together to encourage the partner’s sales team to actively sell on your behalf.
Marketing assistance: Many smaller MSPs and other IT service providers either have a single marketing person on staff or no internal marketing support at all. Providing marketing assistance with customizable collateral, sales tools, digital marketing campaigns and funding through co-op marketing or market development funds (MDF), will demonstrate your commitment to their success.
Qualified leads: Simply agreeing that you will provide your partner with leads on a regular basis is not enough. A list of 100 contacts who downloaded an e-guide from your website could include college students looking for information to write a paper, incorrect phone numbers, and names like Mickey Mouse and Donald Duck. Expecting your channel partner to reach out to this unqualified list of contacts is an inefficient and ineffective use of their time and will quickly turn them off (and no SPIFF or sales incentive will entice them to sell). Use your team to prequalify suspects and prospects so that when the final list is handed over to your channel partner for follow up, it includes sales qualified leads which are more likely to become customers.
Step 4: The Onboarding Process
It is critical to focus your time, effort and resources on the onboarding process your partners will go through to become skilled at selling, supporting, and marketing your solution. Although the first 3-6 months of channel partner enablement are critical, the full onboarding process could last a year or more. This is the period when you lay the foundation for their initial and ongoing success.
All of the resources you develop to onboard and engage your partners should fall into two categories: 1.) Resources for channel partners to use themselves to better understand, sell, market and support your solution. 2.) Resources for end-user customers that channel partners can customize to help sell to and support their clients.
Having these materials and resources in place will enable you and your partners to hit the ground running and have a much greater chance of success. Here are some that you should consider:
1. Dedicated Partner Success Team
The most effective way for your partners to be successful is for you to build a dedicated partner success team. These employees, focused solely on onboarding and enabling your channel partners, will focus on building a personal relationship with each partner, understanding their sales process, training them on your solution and how to sell it, training the technical team on how to support it, and helping them market it. This may include actually participating in sales calls, going with the partner to a joint sales meeting or sitting with the support team to assist in solving customer problems.
It is critical that you show your partners that you care about their success and are willing to put in the time and effort to help them be effective in selling your solution.
It is about the relationship you have built with your partners.
Do they feel comfortable reaching out to you at any time with questions?
Have they been sufficiently trained to appear knowledgeable to customers?
Does your support team respond quickly when a problem arises?
Is the solution easy to sell because the partner has been provided with all of the resources they need?
2. Partner Portal
A partner portal is a secure, online site which provides your channel partners with access to resources like training slide decks and videos, marketing materials and campaign templates, co-op and MDF funding approval forms, price lists, sales collateral, special partner promotions, a lead tracking database, reseller agreements and many other tools available to help them be successful.
A partner portal has become a standard component of a channel program. But, for some vendors, it can be used as a crutch. It should be a tool to enhance your entire program. Unfortunately, some vendors apply a “set it and forget it” attitude. These vendors believe that if they include a few training slides, a piece of sales collateral and their company logo, they can abandon their ongoing responsibilities, let their channel partners fend for themselves and they will still be successful.
Your partner portal can be a terrific resource, but it is just one component in a larger channel program. It does not take the place of that personal relationship which needs to be built and nurtured from the start.
3. Customizable Marketing Materials
Whether your channel partners are small IT consultants and cloud solution providers or larger MSPs and VARs, customizable marketing materials can be beneficial to them. This refers to the ability of your channel partners to download professional marketing materials you create and add the partner’s own company name, logo, contact information or other data before it is distributed to customers.
The benefits to smaller channel partners include:
The use of messaging developed by the vendor which is already known to resonate with potential customers.
The use of professionally designed collateral, e-guides, case studies, online ads, white papers, slide decks and other materials by partners who may not have the marketing resources in-house to create these materials on their own.
Larger partners who have a marketing team on staff may want to differentiate themselves by developing their own collateral or other materials which present a unique combination of services to their customers. In this case, they may not be interested in utilizing your materials as is but may choose to incorporate your marketing messages into their own pieces. This ensures that the message is accurate and appeals to potential customers but is combined with their own brand positioning and competitive differentiators to help them stand out in a competitive market.
4. In-Field Training and Support
Placing your internal channel management team in the field so they are physically closer to the offices of the partners they manage will enable them to provide technical support and sales training in your partner’s office. Live and in person training is significantly more effective than pre-recorded video instruction (although that is sometimes required). It also enables local partner account managers to regularly sit in on sales meetings, actively listen to sales calls, and travel with sales executives to customer offices for joint meetings.
This in-field support will deepen the channel partner relationship and enable them to see your company as a true business partner committed to their success.
5. Co-op Marketing/MDF Funds
Offering financial assistance for partner marketing campaigns is another component of a successful channel development strategy which demonstrates that you are willing to step up, “put your money where your mouth is” so to speak and make a financial commitment to your partners’ sales and marketing efforts.
In very simple terms, co-op funds are monies given to all channel partners as an incentive to sell more of your product or service. It is a percentage of previous sales. Once given, the funds are owned and controlled by the channel partner and can be used by them to create new marketing campaigns.
Market Development Funds or MDF funds are given to select partners. As the name implies, the funds are usually given to develop a new market or product offering – for example, entering a new geographic territory, transitioning from traditional small business customers to mid-size and enterprise customers, or targeting an industry vertical such as healthcare, legal, education, financial services or non-profit organizations. The funds are usually given to partners in whom the vendor has confidence that their expertise will enable them to successfully sell the vendor’s solution.
Before you hand over the MDF funds, be sure to meet with each channel partner individually to discuss your goals, how the partner will use the funds, what marketing activities they will conduct, if there will be any special sales promotions and how frequently the partner will report back to you on the success of their campaigns, sales goals, and overall ROI. Unlike co-op funds, MDF funds are controlled by you, the vendor, and can be taken away if you do not believe that the funds are being used as originally agreed upon.
Not all partner programs contain co-op or MDF funds but, for those that do, it can be a win-win for both the vendor and their channel partners, increasing revenue for both companies.
6. Milestone and Performance Metrics
As each channel partner comes on board, you will need to regularly evaluate their progress and success. It is important to put formal metrics in place to provide you with insight into their progress.
During the first 60 days, the metrics may measure the various types of training received, any technical certifications required and integration of your solution into the partner’s sales, billing, and marketing systems.
As time goes on, metric may change or new metrics may be added. They could include the number of support requests which were closed on their first call, how many qualified leads converted to customers and a monthly forecast from each member of the partner’s sales team.
Consider the metrics that you would require of your own internal sales, marketing, and support teams. Although not actually employed by you, your channel partners are an extension of your team and should be asked to meet similar milestone and performance metrics to drive steady growth.
Since 75% of all world trade is conducted through an indirect channel, the opportunity for you to build and grow a successful partner network is significant. But, the challenge for today’s ISV, VAR, and MSP developing their own IT services is that new technologies like SaaS, cloud, AI, and IoT are continually changing how business is done.
Today’s strategy requires an authentic collaboration between vendors and resellers to be able to anticipate, pivot, and evolve as market forces and customer needs change. A true partnership with shared values, ideas, insights, and goals will enable you to withstand and overcome those changes and challenges and deliver long-term, sustainable growth.
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