Starting a new ISV reseller program for any of the following reasons hints to more struggles to come (3-minute read)
Over the past 20 years I’ve heard just about every reason an organization might want to boost their company’s revenue stream with the promise of a new cash cow partner program.
Pumped with enthusiasm and the parental belief that their solution is the best thing ever, they can be a bit too biased to hear our cautionary message – “…not every product and service is Channel viable, and temper your cash flow expectations, this can take awhile”.
As my tip-of-the-day I’ve brought together several of the most frightfully common and potentially career ending reasons that, sad to say, we continue to hear from Channel hopefuls time and again…and again.
4 Excellent Reasons to rethink your Channel Plans
- “We need a quick infusion of cash and believe that a few good partners will take care of that.”
Most experienced partner managers agree, even with SaaS shaving off some ramp-up time here and there, a well conceived and executed program is still going to take you closer to 1-year before revenue begins to off-set costs.
Unless you have experience getting a new start-up channel program off the ground (not the same as maintaining an existing program) you are very likely to underestimate your budget costs by a 2x-3x factor…and that’s being favorably generous.
In the meantime, your Board of Directors will go from an initial posture of confidence and pleasant patience to a frustrated blood-thirsty inquisition court, and “…heads will roll!”
- “We have no customers or success stories yet, so we’re going to leverage our partners’ customers to bring us our new business.”
Wrong! No reseller is going to risk their reputation or customer base to an unproven solution. The partner will expect that you have referenceable accounts that they can hold up to their customers and prospects before they stick their neck out for you.
You have a “branding” responsibility before you can ask them to evangelize on your behalf. Good partners, those worth pursuing, are wise administrators of their sales and marketing resources and will expect you to respect their time and value.
- “Our competition has one, so we need one too.”
All things considered, that’s probably not a bad idea; but, it needs to take into account how long your competition has been in business, how many customers they have, what was their purpose in launching a partner program? Perhaps it was to leverage their existing reputation and customer base to launch a new product and the partners were part of the delivery strategy. Fact is, this is not a time to be keeping up with the Joneses’ unless you’ve independently validated your own product’s channel viability first.
- “We had a successful Channel program at my last company and if I do everything we did there we can also have a great program”
Sorry, one size does not fit all – and, what worked well at Cisco or Oracle is not necessarily what will work for your start-up. Partner candidates are lined up in the halls outside of the industry Big Boys just for a small chance at a partner contract, yet – no one has ever heard of you – that makes all the difference in the world. They paid their dues to get where they are. You will need to take a different path to “your” success.
When we meet with new vendor prospects – and you can do this for yourself – our initial focus is to take a deep dive into the organization, product, price point, customer base, business case studies, sales cycle, available documentation, training/certification process, infrastructure and other factors to discover all of the reasons that that prospect should not have a reseller channel. We ask: “Is there enough incentive to buy the (street) sales person’s time and mindshare.” We assume nothing.
All of this is necessary because, every month, we see new ISV’s springing up like mushrooms after a rain storm; and, like the ephemeral fungi, can go away just as quickly.
Reseller leadership and new alliances managers look for stability, happy customer references and evidence that they can comfortably execute a shared long-term business plan with you and your organization.
The challenges facing a start-up partner program are immense and too often underestimated because the creators of the product believe that their solution is all that matters; when, in fact, the wary and experienced VAR executive is looking for a strategic long-term business relationship that only starts with the product.
Our partner philosophy is to introduce Channel sales to start-up organizations at the appropriate growth phase moment. Reseller partners are capable of great things and can be a wonderful addition to your revenue stream; however, like merging onto a crowded highway, it takes good timing and execution to avoid serious consequences.