How to Create a Great Channel Strategy - Pro Tips from an Expert
A channel sales strategy is crucial to scaling a startup. However, most startups fail to launch and execute a successful channel sales program. Securetech Managing Director, Mel Shakir, brought Evan Blair to the Dreamit Dose to share his experience leading global channel sales and partner programs at ZeroFox, Accuvant, and Ciphent over the past decade.
Evan gets this question a lot from entrepreneurs:
“I’ve got great technology that I’m ready to bring to market. How can I get the channel excited so they can do the selling for me?”
Evan says he usually asks 3 rhetorical questions to help entrepreneurs understand what it takes to build a successful channel program:
1. Do you have a well-defined market and proven repeatable sales playbook?
In other words, Evan wants to know if you’re looking for market-makers or market-takers. The reality is that most channel partners are not interested in creating a market for your product. That’s your job as an entrepreneur. Most channel partners are market-takers, not market-makers. However, if you have proven customer traction and are able to articulate who, why, and how much buyers are willing to pay for your solution, that is when you’re ready to have a substantive conversation with valuable channel partners. If not, Evan recommends that you go back to the drawing board.
2. What is your ideal partner profile and how can you be meaningful to them?
Even though most Securetech startups want to work with large resellers like Optiv, CDW, or GuidePoint. They may not be the right partners for you. You want to find partners that will truly be able to add value to your startup. To figure this out you founders must ask an important question:
Why would channel partners decide to forego other products to sell yours?
Finding the right partner requires you to understand the business, the decision-makers motivations, and the sales team’s motivations. Can you clearly articulate the following items?
Your product’s revenue potential
How your product helps meet their business goals
How the sales team gets paid and how much reps can make from your product as a result
Still, it’s important to be clear on the value your product offers beyond margins and commissions. Ask yourself the following questions concerning your product:
Will your product allow the partner to build a professional services practice around your solution?
Will your product provide a competitive advantage against other partners?
Does your product allow the partner to achieve business goals beyond revenue?
Or, and this is OK...Is your product strictly great for retail?
Being able to articulate how your product will be meaningful to your partners is crucial and will enable you to get your foot in the door with the RIGHT partners.
3. Are you able to invest sufficient time and resources to get the most out of the partnership?
Think about every partnership like an investment. You can’t earn a return on your investment if you don’t make an initial investment to begin with. Don’t forget when you make an investment there is risk associated with it. In order to be successful in your chosen channel though, you must be willing to do what’s necessary and take on a certain amount of risk.
So, what types of investments should you be thinking about making?
First, bring your partner a deal. We understand that as an entrepreneur you may be hesitant to do that. As a startup, deals are hard to come by. When you worked so hard to get a deal, you may be hesitant to share it with someone who did not have to put any work in to get it. However, you must change your mindset on this. Think about the partnership like a steam engine. You have to put some coal into the boiler to get the engine moving, before there’s sufficient momentum.
Second, invest time in helping sales representatives do the dirty work. Here are a few suggestions from Evan:
Run a call campaign with your resources against the list of their target accounts
Bring them into every lead you generate
Build out a custom go-to market program
Think about the things sales reps don’t want to do and do them for your partners
Now, let’s get into a Q&A to cover some common questions that executives ask their channel leaders.
Question #1: Should we offer additional SPIFF’s (a short-term sales incentive) to keep the momentum?
Evan answers: Just pretend you never had this idea. There ARE scenarios when SPIFFs work, but honestly, unless you already have an engaged salesforce who is actively selling your product and a good channel management motion with the partner, a SPIFF is just a waste of your money.
As I mentioned before, if you really want to get them fired up, try doing some of the dirty work for the sales reps.
Ask the partner sales rep for a list of 10-20 customers that bought from them in the last 12 months. Then, do some prospecting and meeting preparation around them. Take a look at their business and craft an email or one-pager specific to how your technology could help that company. Give the rep 5-10 discovery questions to ask so they look good in front of their customer.
This is a much better way to get a meeting than offering a $100 or $500 incentive. Sales reps are much more motivated by commission than SPIFFs.
Question #2: Do we need to hire dedicated Channel Account Managers (CAMs)? Can our sales reps double as channel managers?
Evan answers: Remember what we talked about earlier? Investments? Let’s think about it this way. Does Ferrari or Mercedes ask their drivers to do maintenance on their race cars? Does the pilot serve the passengers drinks and snacks? Does the lead singer also bounce at the door? You get the point.
Sales reps are paid to sell. Even if they are capable of doing the channel management job, you don’t want them doing that. They should be focused on identifying new business, expanding existing customers, and building relationships with the partner reps in their territory. A sales rep and a channel manager should work as a team. They have very discrete jobs to do and we need to ensure we keep them in their lanes so they can succeed both as a team and as individuals.
Question #3: Do we need to hire dedicated Channel Sales Engineers?
Yes! You know how we often call sales reps “account executives” or “account managers?” That’s because they own the overall relationship, but they won’t be diving deep on the product or spending time in the technical sessions with the customer’s IT or security teams.
The Sales Engineer (SE) is your secret weapon to having a great channel partner. Invest in the SE’s, train them, support them, and make them LOVE your product. Customers will find every opportunity to bring up your tech if they love it - it’s just like the guy who likes Porsches, he’s going to find a way to work it into the conversation. SE’s will do the same thing for technology they really like - make them your advocates! They’re worth investing in.
Question #4: Should we run Quarterly Business Reviews (QBR’s) and set mutual expectations for success?
Yes. Although I often found myself looking at new partners going, “We have no idea what we’re going to produce so why bother setting goals.”
Alright, we know that’s a lot of information. Here’s a recap. Below are the three points you MUST keep in mind to execute a successful channel program:
Make sure you have a well-defined market and a proven repeatable sales playbook.
Know who your ideal channel partner is and how you can be meaningful to them.
Stay top of mind with your channel partners, and make sure to invest the proper time and resources in your partnerships (and the reps’ paychecks).
By Alana Hill, Securetech Associate at Dreamit Ventures
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