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Micah Smurthwaite is Partner at Next47, where he focuses on sourcing and supporting investments in enterprise software, infrastructure, cybersecurity, and frontier technology companies. Before joining Next47, Micah was the first sales hire at Cloudflare where he was part of the team that grew revenue from $1M to over $100M. While scaling Cloudflare he opened Cloudflare’s EMEA sales office and established Cloudflare’s channel sales division.
In this post, Micah and Next47’s Director, Global Go-to-Market, Wikings Machado, share their getting-started guide of tactical tips and considerations for starting a successful channel sales program.
Selling through partners can be a sales force multiplier. There is a laundry list of channel sales best practices: MDF (market development funds), channel neutral compensation, account tagging, etc.. But igniting initial channel sales from a cold start is much harder than operating a partnership go-to-market motion already in growth mode. Here are some tips and advice for the early stages of kickstarting channel sales.
Selling directly to a customer without the help of a partner gives you full control of the customer relationship. You can manage the renewal, case studies, expansion and upsell opportunities, and most importantly, you don’t have to split any revenue on the sale! Unfortunately, some buyers won’t purchase directly from you. Some buyers may want to purchase from systems integrators, digital agencies, MSPs (Managed Service Providers), and VARs (Value-added Resellers). Or maybe your product is too technical for another buying persona and through an OEM agreement you can reach a new audience.
The guiding question when evaluating which partners to engage with is, “Who can bring me customers I can’t get on my own?”
Imagine starting a meeting with a potential reseller saying, “We already have 3 joint customers, maybe we should do something more formal together?” The reseller will take you seriously, the business case has been validated, and their internal dialogue will be, “They’re already selling this to my customers. I’m missing out on the revenue!”
Getting a meeting with a partner about a potential partnership is easy, and so is executing the partnership agreement. The toughest part of the job is operationalizing the partnership and getting actual sell-through. When a partner has competing products to resell, or even their own core product, why should a partner prioritize enabling their sales team on your theoretically fruitful partnership?
This is where having joint customers puts you at the top of the partner’s priority list. So how do you find out who those partners are? Ask your customers! A best practice is to
ask all of your direct customers what partners they like doing business with.
When there are an overwhelming number of partners who could help take you to market, listen to your customer’s voice to create hierarchy in your list of potential partners to target where you already have evidence of a successful partnership.
With an expansive catalog of products, generalist resellers have the challenging task of learning how to sell disparate SKUs, and often are unable to achieve fluency across so many product lines. In contrast, specialists deeply understand a smaller set of products sold to a smaller market of buyers. These specialists are the partners you want to work with early in your go-to-market because their enablement will be a shorter learning curve as opposed to the heavy training investment a generalist requires.
Consider Magento’s eCommerce partner ecosystem. These are digital agencies and systems integrators who create and maintain websites for retailers. These partners specialize even further within eCommerce with expertise in automotive, beauty, or food websites. If your startup’s product is in the web application tech stack, these partners can help you find customers in the eCommerce automotive sector that may not purchase from you directly.
One success story of a specialist partner I saw recently was Opus, an events agency. If you’re a large tech company organizing a large event (e.g. AWS re:Invent) Opus is an agency that helps plan and execute the event. Bizzabo, an events management platform (and Next47 investment), was considering which partners they should go-to-market with. The deep knowledge Opus had in the events industry made them the perfect fit. The ability to quickly understand the value that Bizzabo delivers and to match it with the pains of its key customers helped Bizzabo reach multiple deals in less than 6 months. A quick enablement cycle and quick wins are the ideal outcome for kickstarting partnerships.
In order to resell your product well, the partner needs to learn a new sales motion. At mature organizations, sophisticated enablement programs and proctored certification exams are codified best practices (e.g. Salesforce implementation certified). But a resource-constrained startup will need to use a mix of broadcast (a speaking slot at their Sales Kickoff, or a training in sales pipeline meeting) and narrowcast (joining a sales call, 1:1 account reviews) enablement tactics.
A simple enablement training program to make your partner successful is the level 1, 2, 3 training framework.
If everyone in the partner organization is at level 1, some at level 2, and a level 3 in each region then you’ll have enabled a self-sufficient partner.
Conflict creates interest. When you close a deal directly with one of your partner’s customers, this can spur your channel partner to action.
“Isn’t customer X one of yours? Oh we just closed a huge direct deal with them. You should have pitched us to them.” And the opposite is true. When your partner closes a deal with one of your direct customers you can broadcast that news to your direct sales team to create a sense of urgency among your own team. Lighting a fire under a partner, or your direct sales team, is easy when you tell them someone else beat them to the punch.
By identifying vertically specialized partners that can connect you to customers who won’t purchase from you direct, you’ll have a set of partners who can multiply your salesforce. Using joint customers to validate the partnership’s potential will accelerate the partner’s buy-in and increase their appetite for enablement trainings. Once enabled, these partnerships will have enough momentum that they can be managed with traditional channel sales management best practices. Hopefully these tips give you some ideas on how to get initial liftoff with partners.