The Why, When and How of Channel Partnerships Part Two: When

Let’s assume that you have decided to take your solution to market through channel partners (see my previous blog post on WHY you should work with the channel).  Because early-stage companies are constrained for resources, we are rewarded for assigning resources to the right tactics, at the right time.  When you engage with the channel is just as important as if you should sell through resellers (we’ll get to how later).  Get the timing right, and you will create a capital efficient revenue engine.  Get it wrong, and you waste valuable resources.


Assuming that your customers do in fact purchase similar solutions through the channel (or through “trusted advisors”), then the question is “When should we recruit a channel?”  My stock answer is that it is never too early to consider the channel, but it should be with a strategy.  The last two companies I joined had both launched their SaaS offerings and started to recruit channel partners by the time I joined.  But they were reacting to inbound inquiries and not screening prospective partners properly.  In both cases they had generated awareness and interest from the channel, but only as a by-product of their end-user lead generation activities.  What they had was a collection of different types of partners (distributors, MSPs, VARs, etc.) with different terms and motivations.  With little reliable revenue coming from those partners.  They needed a strategy.

The earliest that you should consider recruiting channel partners is when you understand how to market, sell and service your solution yourself.

 I made the mistake early in my career of trying to recruit resellers before we had proven out the solution ourselves.  I jumped on a plane to Chicago to meet with the SVP of a very large corporate reseller who had told us on the phone that one of their largest customers was interested in buying our solution.  “Perfect!” I thought.  We have an interested partner AND an expression of interest from one of their customers.  An immediate revenue-positive “win-win situation” I thought.  Imagine my disappointment when after an in-depth demo and presentation we were thanked and told to come back in a year or two “when your product is more mainstream.”  I learned the hard way that many resellers are not risk takers, and they require their vendors to do the diligence when it comes to proving out the market, knowing how to market and support the product, etc.  Even though their customer was pushing for it, they didn’t yet see the (on-going) revenue opportunity.  And I’ve also gotten better at qualifying potential partners.  Trying to recruit a channel too early is painful.  You will waste time that would be better spent on building customer traction. 

 But the opposite is also true.  If you have validated that they have unique access and capabilities in your chosen market segment, then you don’t want to wait too long before creating interest and awareness in the channel.  You don’t need to perfect the formula and product functionality before approaching potential channel partners.  I’ve seen several cases where better products were beaten in the channel by other products that had invested early in building loyalty from channel partners.  But they already knew how to price, market and sell their solution, and how to translate that knowledge in a way that made their partners successful.

Don’t waste your time by either trying to recruit channel partners before you can teach them how to market, sell and support your own product.  And don’t get distracted by responding to random, inbound channel inquiries.  That said, don’t realize that you are playing catch up either. Launching into the channel is as important as launching your product to the end-user community.  It takes a strategy and experience to get it right.