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The Partner Channel Podcast | Season 2, Episode 15

How to Secure Channel Budget for 2023

Show Synopsis

Just in case you missed our webinar last week, we formatted the recording into a special BONUS episode of the Partner Channel Podcast.

In a time of economic uncertainty, securing channel budget is harder than ever. David Paul, Venture Capital and Growth Equity Investor, and Tori Barlow, VP of Marketing, will go through the framework of a pitch that can’t be beaten.


  • How internal alignment is crucial in future successes for your program
  • Why you need internal buy-in to secure budget
  • How to define clear directives to easily discern success or failure

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The Script

Tori Barlow:  Today, we’re going to talk about how to secure channel budget for 2023. I can’t believe we’re already here in the year to do so and get firsthand advice from a growth equity and venture capital investor, David Paul. Welcome, David. So a few housekeeping items. This webinar will be recorded and we’ll share this out after we’re done recording. So feel free to share away with your colleagues, friends, and we’ll also give away a template and a tracker that we’ve created and we’ll talk through during the webinar. If you have any questions, please add them in the chat or Q&A and we’ll try to answer them. David, a little bit about you before we dive in; You’re the CEO and a founding member of DWP Capital. For more than seven years, you’ve actively engaged in growth, equity and venture capital investing, primarily in software and tech enabled services. In 2016, you joined Canal Partners, a multifamily office specializing in growth capital opportunities. And after working at Seed Stage Venture Fund Tall Wave Capital as an associate during your five year tenure at Canal Partners, you were jointly responsible for software investing. In addition, you were one of two lead partners for seven investments serving on the board of directors of six companies. And you recently left Canal Partners in 2020 to focus your time on other investment interests, including DW capital. So I think we’re talking to the right person today for this topic.

David Paul: Yeah, you got the right guy.

Tori Barlow: That’s cool. Well, just diving in. I know I, on the direct side, manage a budget, a pretty hefty budget. But partner leaders also manage a budget not just for headcount and stiffs and bonuses, but for other things involved. And I think it’s really a prudent exercise to get budget in place before the year ends. But when is a good time to start planning for the following year’s budget?

David Paul: Yeah. Tori, thank you. I believe if it’s possible, it’s really good to do your annual planning for your indirect sales motion in sync with the rest of the go to market strategic planning. And the reason for that is because, you know, oftentimes, you know, you try to keep them separate, but you do have to sometimes commingle resources specifically, especially if you don’t have a very mature channel program. And to get everybody on the same page from a messaging and directive perspective, I think it’s kind of easy. Now I can understand some industries, like if you’re selling into education or maybe even health care, the budget cycles might be different towards the budget cycle of your annual strategic planning. So I can appreciate that. Sometimes it can be different, but it’s really great if you’re able to do that succinctly.

Tori Barlow: Yeah, and actually, speaking of who to collaborate with on the budget, who are those teams within your organization that the indirect sales machine should collaborate with?

David Paul: Yeah, so I think that obviously the CEO has somehow vouched for an indirect sales program for a go to market motion within a company. So they have to be really involved to make sure that that works, because generally an indirect strategy isn’t the first strategy, a company that’s growing will do because it has the least amount of control and it takes the longest to retrieve revenue, right? So it’s usually maybe the second or third kind of directive that a company would go through. So the CEO is directly involved. And generally, I really think that the top of the funnel marketing needs to be, kind of brought into the fold because they want to be on cue and on brand with everything else that’s being, distributed from the OEM or to the distributors. And of course, also any type of sales function as well.

Tori Barlow: Yeah, I think that makes sense. I just know being totally aligned with the direct motion, if you are a partner leader is crucial to getting budget approved. I think it just goes back to the rule of thumb of getting buy in from not only executives but other departments you’re working with. You need marketing resources. You depend on marketing, but you also work directly with the direct sales mission. My next question what is a good rule of thumb of how much a partner team should ask for within budget? And let’s take two examples, maybe a new channel program starting out and then a mature channel program.

David Paul: Yeah. So how I know a really smart person once told me that you can only burn a dollar once, right? And you really want to make sure that you get maximum ROI. And another smart person once told me that people are generally very successful in directives that they clearly define So getting early alignment about what you’re trying to achieve with these dollars makes a ton of sense to me. So if we were to go on the earlier side, if we’re just starting a channel program, we’re kind of trying to find that proverbial go to market fit.  So we have to find the right type of partner with the right type of compensation package to push the right type of product to the right type of customer base. So there’s a lot of different variables. So really identifying what are those different types of experiments, I should call them, to try to find the right mix. And what are we willing to pay for, not just from a dollar perspective, but from a headcount perspective? Because I think you’d be kind of naive to think that your new channel sales initiative is not going to live on an island and not affect the rest of your go to market function. They’re going to be pulling people in for demos, they’re going to be wanting marketing material. So it is going to be disruptive. So understanding like what is that lump cost and what are we willing for like a cost of failure, quote unquote.

David Paul: So like, if it was all like a big zero, right? Like, what are we willing to risk for an indirect exploratory channel? And then what would what would be a success? How would we judge success? And then basically put those kind of lines in the sand and then revisit after a quarter or two. For a more mature channel, strategy and kind of asking for budget. You know, I’m a firm believer and, you know, picking up the lowest hanging fruit possible before reaching out more. So I like doubling and tripling down on what’s working until it no longer works. Or like the economics don’t become as favorable. So like I think of budget as almost like two different lines like what is like double tripling up on certain efforts and what is, kind of new experiments? You know, maybe we’re going after a new, different type of channel relationship. Maybe we’re looking on to bring on new partners, and we need to have recruiting efforts for that. So we’re diversifying our partner mix so we’re not don’t have as much risk of people start to drop off, etc.. So it’s really judging like what’s working and what’s not and what we’re willing to pay for experiments.

Tori Barlow: Yeah, I think that’s a good point. I think it also goes back to realizing where you are in the channel journey. If you’re brought on to a net new company with a net new partner program, you’re going to have to collect data, understand what partner types you’re really working with and mesh well with your company. And then, you know, who are the partners that are bringing you revenue and who isn’t?

David Paul:  To go your point, Tori, it’s not just about like knowing where, it’s where your partner channel the information of where you’re getting your dollars from. But how are you how are you managing that risk? Because generally it’s kind of the 8020 rule. Most of your partner, most of the results are only from a smaller amount of your partner base. So you have to treat your partners almost as like a customer concentration, like how do you nurture them versus, you know, find new ones? How do you manage that mix? Because if you lose those partners for any particular reason, maybe it’s a maybe it’s an M&A role, maybe it’s beyond completely your control. So how do you how do you really manage that risk?

Tori Barlow: That’s exactly right. And I think it also goes back to measuring successfully. You know, you don’t understand if you have 80 partners, you don’t understand what the 20% that are generating revenue or referrals are actually doing for you, what those leading and lagging indicators are. And I think it also comes down to when you do create those partner relationships. Not every contract is the same. The partners may want different spiffs or different sort of agreements for reselling or referrals, whatever it is, and you’ll have to bake that into your your budget for the following year.

Tori Barlow: If indirect is bringing in X amount of pipeline, what is that close rate could be different from a direct motion versus an indirect motion. And then how long is your sales cycle? So at least you get a good understanding throughout the year of what is your revenue walk from all of these different departments and then what is partner the indirect motion bringing in, you know, a few things to think about when you’re creating your your budget is, to David’s point earlier, get together with your sales teams and work on this together versus putting a partner forecast together, submitting it to the CEO. That’s very misaligned. But get together with everyone. Have everyone sign off on this and figure out what you’re contributing from a forecasting perspective and based on your close rate, what the actual partner revenue will be. I think this will help you create a budget. Think about what headcount to David’s point, again, you want to bring on, do you need more marketing resources, sales resources, whatever that is, but this can help you forecast for a budget. David, any thoughts here?

David Paul:  If I was a board member that was looking to press on this or an advisor within this, I would say, what is your level of certainty around these assumptions? So, you know, I don’t know if you have any more assumptions in here, but, you know, this is very simple model and usually simple models are very, very good because the more complicated you make them, sometimes they just break. But no, I really like using like a red, yellow green basically on green being utmost certainty, yellow wavering and red, not so certain. So it kind of gives you a a litmus test on if this is what I’m submitting. You know, everything has a assumption around those those driving, like the revenue, driving activities for that. So what’s your certainty that you’re going to be able to get $80,000 for this market segment, that your sales cycle is going to be 90 days? Why is it yellow? Why is it not green? How can we get it to a green? So knowing the level of certainty behind the assumptions, I think is another way you can kind of dig into the model. So it’s more than just a pretty revenue ramp.

Tori Barlow: That’s really interesting. I guess the only other, I did not factor in seasonality or recruiting or ramp time, which definitely makes a difference. But to your point, if someone were starting net new is the first channel program or partner program with an organization. Maybe they’re a ten year, $10 Million ARR Company, but this is the first year for partner forecasting. If you don’t have any data behind it from a partner perspective, how could you even submit something to a board? What would you look for if if someone were to ask for budget but you really didn’t have a ton of data around that?

David Paul: Well, yeah. I mean, you have to start with somewhere, right? So I think just clearly defining what your assumptions are, what your level of certainty behind the assumptions is like red, yellow, green, you know, and if you’re truly being intellectually honest, I mean, most of it would be probably yellow and yellow and red because you don’t have a proven success track record in direct channel sales. You might have the ACV because the product similar and the market is similar. However, your sales cycle, that would be a red because you’ve never actually have done it before. I mean, I just look at it again as like, what’s the cost of failure? It’s a terrible name for it, but like really, what is the amount we’re willing to run experiments and what does success look like and what is failure and what are we okay with spending to try to achieve that?

Tori Barlow: Yeah. Yeah, that’s a really good point and measuring success. So yeah, there’s a mock budget template here as well for folks who are listening but creating line items, these are just recommendations here. But you know, everyone on your team, the payroll, any MDF, partner enablement, what are you doing to enable partners? David brought up this point earlier. How do you retain the good partner talent and what are you doing to ensure that they stay on with you? What are some tools that really help you propel forward within your partner program? And then are you traveling to go see your partners and train them? Could be. So I think having this budget in a good spot. I know the question I get asked is you’re asking for this amount of money, what’s your dollar in dollar out? And so having that forecast for a walk really helps make the case for a good budget. But David, any other thoughts from a investor perspective on a budget breakout?

David Paul: No, I think this is great. I think that really understanding, you know, by writing it out, what you’re trying to achieve is the only way to successfully do it, because you can be wrong but just actually have it have a line in the sand somewhere. One thing I might want to add to was to build off your next point is how would you illustrate expansion opportunities with your existing partner base? You talked about the leading indicators of how can we actually nurture them, but what is the qualification process on getting them to sell more? And then how would you bake that in? Because I would assume it’d be a lot cheaper to get them to sell more than to get new partners.

Tori Barlow:  Yeah. Once they’re performing well, how do you incentivize to keep them on and get them to sell more.

David Paul: And how do you qualify how much more they actually have to sell? Right? Like how how big is their customer base.

Tori Barlow: Yeah.

David Paul: In order for them, what’s the total opportunity that they could do it if they were the biggest, OEM fan there was.

Tori Barlow: Yeah. Yeah. And there are tools out there to if you are going to market with a partner, there is account mapping tools for those partner leaders out there listening of what customers do you overlap with or what prospects do you have in both pipelines that you can go after and sell together? So it’s a really good point. When do you unveil that and go to market together and expand more? What else?

David Paul: I love expansion revenue. I think it trumps net new every day because that’s just it just becomes harder and harder to do.

Tori Barlow: Yeah, it’s less expensive. Yeah. What else do you feel like from a investor side of things is crucial in asking for budget.

David Paul: You know, aside from being super clear about your the intentions of the budget and having some assumptions really baked in in the levels of certainty to the budget, I think having like real conviction over why this is a super scalable opportunity, for the business more than  a direct sales motion.  And like you have to prove that, you know, I mean, I think it’s easy to say, well, we really don’t it’s a really great way or or cost of acquisition becomes extremely low once we have partners that are selling for us. But, you know, you are competing for dollars, you know, for other departments. So how would this be better, than doubling or tripling down on Google ads or Facebook ads or whatever? Or why is this a diversification strategy much better for the company long term? Not that you want to be make enemies out of your colleagues, but, you do have to fight for those dollars and those ROI dollars, they’re longer tail.

Tori Barlow: Yeah. I think it goes back to you can’t set it and forget it with a partner program. I mean you’re recruiting constantly for partners, you’re managing them and and yeah, to your point, how do you differentiate from the direct selling motion? And I think there’s a lot that goes into that too. But as new as a new partner leader, if you’re starting a partner program measuring everything you do from the time it takes to recruit or get a good partner on board and train and onboard them, what does that mean from a dollar value, from a revenue perspective, I think is is really important that. Yeah. That’s a good call.

David Paul: Yeah. And when you’re measuring new partners, what is the level of touch that’s required? the partners selling your product for the first time versus them selling it for the 10th 20th time. And how involved does your staff have to be in that process of them talking to the customer or them implementing for the customer just to make sure. Because honestly, you want the relationship to work, right? You want to make it as easy for them as possible. But when are you enabling versus actually setting them up for success? And the goal is that you don’t have to sell for them. And you don’t have to implement for them.

Tori Barlow: Yeah. Yeah. That’s a really good point. I think everyone here, David, is ready to go get their budgets approved after listening to you. So David, thank you for joining. Always a pleasure.

David Paul: Appreciate it. No problem. Tori, thank you so much for having me.