5 Signs You’re Ready For An Indirect Channel Strategy

May 25, 2017

One of the most popular questions I am asked is, “How do I know when my business is ready for the channel?” No doubt, adopting an indirect channel strategy is a big step for any company. There are many things to think about and consider before you move in that direction. How do you know your organization, culture and offerings are ready for the channel? And, more importantly, how do you make sure you are successful the first time out of the gate?

It may seem like a daunting decision, so, let’s break it down. It should go without saying that most companies maximize profits by maximizing revenue. But what if adding more direct sales resources is not a practical approach? That’s usually the first sign that you may be ready for an indirect strategy. However, there are other, somewhat less obvious signs that you may be ready. Here are my top 5 scenarios that should be on every CEO’s radar.

1. You need to get to the mid-market to sell your product or service.

Enterprise is great. But it is finite. Mid-market, however, has vast opportunities. Mid-market is loosely defined as a company between $100M and $1B in annual revenue. As you can imagine, that wide definition includes a very large number of businesses. It is a large enough number to know that the only cost effective way to target mid-market is by leveraging channel partnerships. Looking to get to small businesses? The same logic applies. More often than not, small and medium businesses will have a supplier for all or part of their IT Services.

2. Your product or service is not a stand-alone offering.

If your solution requires other products, services or other companies in the mix during an end user sale, and you do not provide them as a company, then the channel is the way to build your solution for customers. The breadth and depth of partner expertise and complementary technology solutions add to your offering and improve the “whole product” offered to customers. This means partners can offer your components within a combined solution sale.

3. Your growth strategy includes opening new geographies.

According to CompTIA, outside of North America channel and indirect business models represent 80% of the IT industry. So, if you’re looking to go abroad, channel should be your plan. Not only can an indirect strategy help you get to revenue faster, partners will also mitigate the risk, taking on credit and collections for their business and navigate the local culture and language.

4. Your growth strategy includes new vertical markets.

Entering new vertical markets or industries can be challenging because they require you to understand the dynamics in that industry. To be effective quickly in a new vertical, you need to know the exact customer profile, the media, press and events that the vertical client’s participate in, the detailed business challenges, and industry governance regulations – national, state, (province) and city. The right channel partnerships can help you navigate new verticals and build much stickier and differentiated value offerings for your client base.

5. Your product/service is bought by someone outside of IT.

According to a study by IDC, 61% of the current IT projects are funded by Line of Business (LoB) buyers, and LoB decision makers have additional influence in another 20% of IT projects. This new category of buyer and influence is very important in a sales cycle. If you don’t already own this level of relationship, a channel strategy may be the right fit. Investing in that sooner than later makes sense, as LoB decision makers will make significantly more of the software and solution decisions over the coming years.

Chances are if you identify with one or more of the above scenarios, a channel strategy is the right move for you. Once you’ve decided to move in this direction, you’ll need the guidance of a channel expert to help you execute properly. The only thing worse than missing your channel opportunity is missing the expertise to do it right the first time. With the right strategy, channels can be a wealth of opportunity.

Looking for information on spinning up a channel sales program? Be sure to check out the Ultimate Field Guide to Building a Channel here.

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Chief Program Officer

Jessica Baker is a channel evangelist, author and industry speaker. She champions partnering performance with her clients and works to transform channel strategy into channel success. She always welcomes a good channel conversation; so connect with her at [email protected].