Starting a new channel program can be a daunting task. The great news is: you don’t have to do it alone. We teamed up with Jim Frey, VP of Channel Sales at Kentik, to understand the steps he took to take the Kentik partner program from a one man show to an international powerhouse in our webinar How to Build a Successful Channel From Scratch.
This webinar shaped the four stages of building a channel program below. We outline where you should be, which items you should focus on in that stage to move to the next, and Jim shares some of the best practices he’s learned along the way.
Stage 1 of Building a Channel Program: The Startup Mindset
When a partner program is in its early developmental stages, expect it to be pretty tactical. Typically, one individual receives the task of testing the channel model to see if it delivers ROI. In this stage, you’ll heavily rely upon preexisting relationships. Are there companies who you already work with that will refer business to you? Do you have a company whose product is often paired with yours? This individual could be a fantastic reseller.
Develop a partner pitch
When you’re pitching your channel program to prospective partners, your talking track will likely highlight these items:
- Our channel is a new entry into the market
- We have a new creative way to solve a problem
- We’re the latest and greatest
- Early adopters will want our new “must-have” software
Although these things may be true, partners want to know what you’ll be able to do for them. There’s one proven way to motivate partners to want to work with you: margin. (Or in the referral model, a finders fee commission-based structure.) Partners want to see three things:
- What problem does your product solve
- How you’re going to differentiate yourself
- How they’re going to make money from you
If you want to wow a potential partner, bring them a deal. You’d be surprised by how often a reseller partner gets a pitch, but what’s going to make you stand out is the initial and direct investment with a deal. For other tips, read Eight Tips to Find and Recruit Channel Partners.
At this stage of channel maturity, it’s best to focus on building your program’s presence in one initial area. If your company base is in North America, then that’s the most natural place to start. If you want to explore international partnerships, work with a few niche players who are personal contacts you already know and trust.
A strategic pro tip from Jim
For channel partners, direct business can be a turnoff. For instance, if you’re heavily relying on direct sales to make sales in the EU, partners may assume you won’t be dedicated to the channel. The worst thing you can do for channel success is to take a deal from a partner. Even if the buyer comes to you directly versus you reaching out to them, it will still negatively impact your channel.
Stage 2 of Building a Channel Program: The Budding Channel Program
Develop Partner Contracts
You’re more familiar with what you want from a channel partner and what works well at this stage. This timing presents an excellent opportunity to update your contracts now that you’ve learned how you really want to do business. Create standard agreements per partner type and an ad-hawk contract for exceptional cases.
You’ll want to reevaluate how you do quotes. What is the standard process, and how do you document that? Remember that when you sell to a reseller, you’re selling to them, not to the customer. That’s a factor that needs to be considered in your quotes.
The post-sales engagement process
Define your post-sales engagement process. The questions you’ll want to ask are:
- Who takes the lead?
- Who takes the first call?
Most partners want to be the face of the company to their customers, especially outside of the US. In software, that initial sale is essential, but renewal is just as crucial to business success. (It costs more to get a new customer than it does to retain an existing customer.) If your partner is handling the post-sales engagement process, you’ll want to ensure quality and set a process for turbulence they may not be able to solve on their own. There should be a guide as to which issues your partner can handle and which issues should be passed to your customer success team.
Building visibility for your partner program
During this second stage of channel development, it would be wise to establish a partner page on your website. A benefit to being a partner of yours would be the visibility on this page. There should be a PR strategy accompanying this page going live. You want prospective partners and end-users to know that you have a partner program! Partner with publications like CRN to gain visibility in the right areas.
Partner type expansion
Once you’ve gotten into a good rhythm with your current partner types, it could be beneficial to explore new options. If you’ve solely had referral partners, would a reseller partner type also fit into your program? Are there partners who want to build a service around your technology? Understand the different motions and potential revenue models for partners.
Perform a channel health check
Once you developed relationships with few partners and built program processes, assess your pain points. Here are some strategic questions to ask:
- What are the snags you’re experiencing?
- Is manually managing your channel still working well for you?
- Are there enough people on your team for the volume of work?
- Would automation help you solve any pains?
- Is it the right time for PRM?
At this point in your channel maturity, it may not be the right time for PRM (and that’s okay!) but creating a list of pain points will help you better assess solutions in the future.
Formalize onboarding and training
The chances are that up until this point, training has been pretty ad hawk and manual. Training at this stage isn’t structured or repeatable, and typically, partners have the same content as the internal sales team. The most significant piece of growth in training between stages two and three is formalization. Start thinking through which pieces of content help prepare partners to sell.
Continue partner recruitment
It’s likely that you have a couple of partners under your belt but would like to add a few more to the roster. If you don’t already have a partner pitch deck, this is your time to create one.
Tip: once you meet with a partner and present your pitch, send the PDF their way so they can share it with key players in their organization.
Stage 3 of Building a Channel Program: Channel Maturity
This is the exciting stage in which your channel makes an impact on your revenue. You should start to see your list of partners get longer and be within the double digits.
Take a look at your commission structure, what has been working well, what needs improvement, and collect partner feedback. Commissions vs variable recurring revenue should be considered at this stage. Here are a few questions to guide your evaluation process:
- Do resellers make margin only upon initial sale or with renewals as well?
- What happens when base revenue goes up?
- Does the finders fee increase when your pricing rises?
- Do referral partners get any recurring revenue?
- Are your margins competitive?
Examine channel partner tiers
If you’re not currently tiering partners, this is a great time to explore that option. Regarding the topic above, tiering partners is a fantastic way to create a growth opportunity for partner margins and drive pipeline results. I.e., Silver partners receive X discount, Gold partners receive Y discount, so on and so forth.
Launch a channel portal
In this stage, it makes sense to leverage partner portal software. With a long roster of partners, automation helps eliminate manual tasks and focus on the strategic piece of the partner puzzle. A driving factor for a formalized portal is the need for a clean deal registration process. Partners emailing deals is informal, invites channel conflict, and can be lost within an inbox. Introducing automation makes this process more repeatable and enforceable.
A portal will help you:
- Streamline the deal registration process
- Give partners a 360-degree view into how their deals are progressing
- Standardize your training curriculum
- Allow partners have 24/7 access to content
- Formalize MDF
- Utilize Channel Insights to assess channel health and drive success actions
Here are a few ways to get partners to adopt your portal:
- Only accept deals within the portal
- House all training in your portal
- Require deal registration to be eligible for SPIFFs
- MDF tied to deal reg at the launch of the portal
Even with all of that, some partners won’t want to log into the portal or actviate. These partners will only do the bare minimum and won’t be a value add to your channel.
Partner type expansion (round two!)
Have you perfected your relationship with specific partner types? Did you find an opportunity during stage two that you weren’t ready for yet? This is a great time to reevaluate. If you’re already working with MSPs, are there new partners you should test? Would distributors fit your program? (Remember, distributors are not just for physical goods!)
Expand your internal team
Seeing an increase in partners, deal registrations, and formalization of processes means that this is also a great time to expand your team! (You’d be amazed how much more two people can do than one.) Developing your team allows for one individual to be strategic and one to be tactical. Internal transfers are great here due to a decreased onboarding time!
Stage 4 of Building a Channel Program: Optimization and Iteration
You have a handle on your partner program, your portal is built out, and you understand the partner lifecycle. This means that you’re ready for the optimization stage! In this stage, you’ll want to focus on your resources to drive more channel sales and pipeline as well as recruit more partners and drive channel engagement.
Dive into your channel analytics
After this period of time, the channel analytics within your PRM should have enough data to drive optimization. Here are a few questions you may want to answer:
- What is your most and least engaging content?
- Who is your highest earning partner?
- Is there a specific piece of content or learning track that is driving that partner’s success?
- Does portal activity correlate with pipeline?
- What is your channel activation rate?
Build out your partner program’s content
Once you have your initial content in a good spot, it’s time to develop specialized content for your partner program. A few ideas are industry insights and best practices, industry playbooks, playbooks by region, case studies on joint initiatives, and more. Take a look at content that is more than two years old and revamp it with new insights.
Expand into other geographies
You have most likely dipped your toes into some international partnerships. Now that you’ve gotten into a good flow with your home region, consider expansion. Consider hiring a region-specific CAM if you’re going to invest in expansion. A CAM who lives in the Pacific Standard Time zone will have a hard time having an optimized relationship with a partner who is on Central European Standard Time.
Grow your internal team
You’ve been managing your channel for a while now, so you’ll be able to identify the blind spots and growth opportunities. Should your content be getting more love, attention, and strategy? A channel marketing manager is the move! Are your CAMs feeling overwhelmed? Add another to the team to lighten the load. Be sure that each hire you make is strategic.
Building Channels: Jim’s Best Practices
- Look at other channels – What do you want to emulate? Get recommendations from channel folks that you know. Adopt the best practices you’ve learned from individuals who run thriving channel programs. Look at people who have a similar business model.
- Take the time to define a channel program – (piers, requirements, asks, discounts for resellers, amount of sales commission for referral, etc.)
- Understand which partner types you will target – Some people want to make money on margin, some want to build services. What is the business model of this prospective partner, and how do you speak to that? You want to be a part of their strategic initiatives. How do you compliment them? Adjust your recruiting pitch to reflect the answers to these questions.
- Be ready to bring partners a deal as a catalyst – Most resellers will take your call, but they get pitched a ton. Talk to your sales team and be ready to bring a deal to them and say, “I’d like you to handle this deal.”
- Never take a deal direct once you have an engaged partner – If you have a direct motion, a big red flag is if you’re talking to them about a deal and end up taking that deal direct, you’ll be done with that partner. There is no trust there. If this does happen, have the customer tell them direct.
- PRM platform is key to consistency and scale
For further learning, we suggest reading Channel Sales Business Plan and Proposal – Guidelines and Tips.