Why Adopting a Channel Sales Model is the Best Move a Startup Can Make
Directing your sales towards a channel sales model offers certain advantages to companies still finding their feet. It is faster, you are expanding your sales footprint to a large area immediately, and exposing your product to a huge audience open to hearing about what you have to offer.
Compared to a traditional sales model, it is a smart way of introducing your product to the market.
But choosing to go the channel route is not simply the quickest road to success. It is a rich and diverse ecosystem where relationship-building trumps the promise of a quick buck.
The Focus Is on Relationships, Not Deals
A channel sales team approaches the marketplace slightly differently to a traditional, customer-facing sales team. The key focus for channel sales is on relationship building.
The skill set also differs. You must first have a product that is sound and differentiated, and be able to educate partners on those differentiating factors while at the same time gain their trust. That is paramount to success. Channel partners like to work with people they trust. Once you build that trust and gain a channel partner’s confidence, they will be willing to share your product with their sub-agents who trust them in the same way.
There are many advantages to this mutually beneficial relationship. The channel sales model enables companies to go to market and gain “feet on the street” exponentially faster than you could accomplish in a direct sales fashion. The model also allows you to gain access to your partner’s base of customers who will be more open to additional offerings provided your relationship remains solid and your customer support exceeds their expectations.
Gaining new customers is much more difficult and costlier than selling added services and offerings to established relationships. So, this becomes a win-win for both the supplier and the partner. We gain new customers, they gain a greater wallet share of existing customers.
The Benefit for Resellers
Resellers are paid a percentage of the Monthly Recurring Revenue, (MRR). Building an MRR model with reseller partners adds to the overall valuation of their businesses by adding additional recurring revenue streams. They also benefit by surrounding offers with their own professional services (such as network optimization, for example). There are also sales promotions and incentives throughout the year that serve as additional commissions for partners and their sales associates.
It Is a Long-Term Strategy
Naturally, companies will need to stick to the channel model once they come on board. Nothing is more detrimental to a partnership than cannibalizing sales. It breaks that trust and results in partners turning their attention towards other suppliers. You have to commit 100% and if you do, you will continue to reap the long-term rewards. Why else would you devote so much time and effort to building these relationships, only to abandon them? It does not make business sense and it is unethical.
When Zailab entered into a partnership with a recognizable master agency, we respected their reputation and track record. They, in turn, recognized a differentiated offer and trusted that it would benefit their partners. We trust them to sell our product and to nurture those relationships on our behalf. Every transaction, whether it is between Zailab and the master agency or the master agency and their partners, is built on a foundation of trust and respect.
Innovative Products Reach the Market Faster
For cloud companies like us, or any tech startup for that matter, joining the channel accelerates a new product’s entry into the market. The ability to deliver the cloud offer is relatively quick and easy as there is a need for it. A master agency identifies those opportunities and offers your product to an already receptive market. That means there is no time wasted on singing the benefits of the cloud and convincing companies to abandon legacy systems.
Master agencies help us to market our offer to their partners and educate them on why they should do business with us. Their partners trust them to find the best offerings for them to sell to their customers. This saves a lot of time for all parties and ensures a streamlined, frictionless process.
Tech companies should seek a channel sales partner with expertise in your specific area and who have an existing portfolio of offers that align with yours.
Companies willing to make the commitment to a channel model and who are willing to build on their partner relationships will reap the benefits tenfold. It is a model based on mutual growth and respect and is an environment where all parties only want the best for each other. It is the sort of goodwill money can’t buy. For new companies, that’s gold.