Handing off your tech

Which sales channels to use for startups? Part 2: When indirect makes sense

If you have tech that could possibly generate traction in a variety of channels and there are resources to promote and sell effectively through all of them then you should go for it. In part 2 of a 3-part series we will focus more on the indirect channel but we’ll also ask some hard questions that need to be asked of all potential sales channels.

The first hard question is can you support them? To be able to address multiple channels you need the necessary resources or you may never get to see any of those efforts come too fruition. You could just be digging across and burning up your resources but never have enough surplus or time to dig down into sales success. Anything worth doing will take time, money and effort; do you have these to back your chosen channel(s)?

If you are a startup the possibility to address direct, indirect and OEM / Licensing is going to be limited. As I mentioned in part 1 of this 3-part series the Golden rule is; don’t try to get others to sell something you have not been able to sell yourself. Theories can look great on paper but if you have not actually run through the examples in real life and worked out how to get the product across the line in a repeatable fashion forget about getting someone else to do it for you.

Bad reputations live long lives

But let’s imagine you have worked that out. You do understand how to sell your tech and you are thinking of additional channels. It is critical that you have the necessary resources for each approach (additional and existing) and are in a position to support them all. If not, it’s better to keep what you have and incrementally improve on it while you bring on additional pieces to the puzzle step by step. Getting third parties involved (channel partners, OEM partners) and not following through is a very dangerous and costly activity.

From a reputational stand point if you get others (partners) fired up, gung-ho and willing to go to battle for you but you don’t bring the necessary resources to back them up in the field you will burn a lot of bridges. These will no doubt be bridges you will not be able to use in the future. In the same way nothing succeeds like success nobody forgets being left out on a limb. Bad reputations live long lives. In addition to your reputation you will also use up a lot of resources in the bridge burning process.

Your tech should show you the way to go, or at least give you an idea

A good way to figure out which way to go is to look at your product and ask some simple questions. Is your product complex to use? Is there a lot of friction (is it difficult) in getting it up and running for an evaluation or trial? Does it require help at this stage? How much mind space does it take for a sale person to “get it”?
Let’s look at a low friction option. You have a product that can be distributed quickly, can be implemented effortlessly and has a user experience that is intuitive enough that your target audience doesn’t need a lot of hand holding to get it into place and see that it does what it says on the box. In addition, if it is crystal clear the value of the product; the problems it will solve for the customer once in place then you are onto a good opportunity for a reseller channel sales model.

When I was at Panda Security I saw the company grow exponentially and part of this was in part due to the fact that the product was low maintenance and did not require a lot of hand holding, the tech team did a heck of job! The value was clear and it didn’t require a lot of thought from the reseller sales channel, with some minimal sales training, a few well scripted documents and some experience a sales team could churn your product out quickly enough once they were pointed in the right direction and engaged with the right target audience. This of course you will have explained in the training.

Nothing comes for free

These types of resellers will look to you for marketing development funds (MDFs) and leads. However, once you can feed their sales funnel they will focus on volume and hopefully churn you out results. These resellers don’t necessarily add a lot to your value chain as they will most likely be ripping and replacing products, although they can get you into new market spaces which is value in itself. As the added value is low, margins are generally tight so volume for these partnerships is critical. So you need to make sure you know how those sales funnel will be feed; will it be feed by you, by your partner or a mix? Make sure to hard code how this will actually happen into your agreement and be crystal clear on how it will roll out and when.

And then there was the other type

If there is more hand holding to get a product into place you know one thing for sure; it’s not going to sell itself! This can lead to another sales channel opportunity; Value Added Resellers, Managed Service Providers and or Systems Integrators. There are several names and specific business approaches here but the common denominator here is businesses that focus on generating added value for the customers moreover than reselling tech; rip and replace. They take away the complication, they do all the heavy lifting and they are capable of showing the customers exactly what they are doing for them and how that makes their lives so much easier.

These types of partners are attracted to products that allow them to bill for customization, implementation, maintenance and service hours, which is how they make their money. In addition, they are not only looking for additional revenue but recurring revenue so products that enable some type of subscription model will get their interest. They will be interested in products that will open up multiple service opportunities moving forward, so if you can present tech that can be leveraged into multiple services over time you are on the right track.

There are many challenges with these types of partners but once you have a good MSP that has invested time and resources in your relationship you can be guaranteed that they will be long lived as the services they want to offer should be as sticky as possible. These types of partners place an important emphasis on being hands on, even if it is automated, to guarantee that these accounts renew without any issues and are always looking for additional ways to generate new added value.

Focus on the early few

If you are addressing these types of channels for the first time the best way to go about it is by really drilling down on your first few partnerships and figure out what works and what doesn’t. You may have the tech but you need to be able to show them how they can package that into a service; what would be the cost of that service to them? How many resources will they need? How much actual heavy lifting will there be? How should they price the service? Solid MSP pride themselves on getting pricing right so be willing to show them the way on pricing in regards to the service they could offer using your tech. Never expect anybody just to figure it out for you, at least not on their own. You may not have all the answers but show clear next steps and try figure out step 2 while you are running through step 1 with them.

It is also important that the product isn’t so complex that the partners can’t be reasonably trained on the product to enable the delivery of these services somewhat independently in the field, with a minimum level of hand-holding by the vendor after an initial training period. There should be some tentative timeline as to when they can expect to go solo on these deals and also your team’s availability in the hand holding phase.

In summary

• Once you have your direct model down, under control, you can look at indirect, if and only if you can sustain both channels
• Which indirect channel will depend in part on the complexity of your tech
• Choose the channel that best suits and back them up until they are up and running, play the long game