Marc Odenweller, Principal at SBI, takes a look at creating or expanding a channel in order to more efficiently and effectively cover your company's addressable markets, and as a result, grow revenue.

Market coverage, growth, speed, revenue, retention, and customer success are factors for all companies. With the rate of venture funding being poured into companies increasing yearly, companies are popping up everywhere and competition is more prevalent than ever.


So, a prevalent question is, “How does a company efficiently and effectively cover its addressable markets and grow revenue?”


Creating or expanding a channel is one logical answer. The problem is that it is a logical answer for 1000’s of other companies as well.


You Are Not Just Competing Against Your Competition


Competition for mindshare with channel partners is higher than I have seen in my career. Partners have options, and lots of them. Where the Principal of a channel partner chooses to invest money and resources is a critical decision. If you have been in to see one of your top partners recently, chances are so has your competition. The same is true for many other companies. Many of these are not representing direct competition but are playing in complementary or synergistic segments, such as areas where a channel partner can logically extend their footprint in an account with minimal investment. These are not direct competitors to you, but they do represent competition in the all-important mindshare battle. Many venture-funded companies these days are calling on the same channel partners you are, regardless of their market segment.


Building a successful channel requires many things. Ideal partner profiles, segmentation, enablement, coverage maps, deal registration, margin maintenance, rules of engagement, programs, and tiers are all examples of these things. Lots of different pieces need to be in place to launch and maintain a successful program, but one area that I see not getting enough attention is viewing your partnering initiative through the eyes of your partner. It is very simple to see the benefits of having of a channel. Having access to 1000s of end -user customers has obvious benefits. It provides instant scale and incremental revenue. While the benefits seem clear to the manufacturer, many companies fail to have a true understanding of why the relationship makes sense for the channel partner, especially given all the alternatives available to channel partners nowadays.


Simple Math Problem


When developing your channel program or engaging with the Principal at your partner, there is a core thing to consider. My solution:


“Offering + cost of maintaining partner internal resources (must be) > than the alternatives. “



The following factors, and whatever other components are specific to your unique situation, must be better than the alternative. Not necessarily just your competition, but better than any other company competing for mindshare. IT IS A MINDSHARE BATTLE:


  • Product margin
  • Length of sale cycle
  • Average sales price
  • Life time value of customer
  • When does deal 2 happen
  • Size of deal 2 relative to deal 1
  • When does deal 3 happen
  • Size of deal 3 relative to deal 1
  • Services drag ratio on license
  • Margin on renewals
  • Leads received from vendor
  • Lead closure rates
  • Cost of maintaining my internal resources


I grew up selling in the channel 20+ years ago. I started by selling enterprise software data center solutions, specifically in storage and networking. We represented manufacturer lines based on what we knew and who we liked working with (still very important factors today).  If you do not have a data driven process to articulate why it makes sense to work with you vs. an alternative, you will struggle to recruit and to retain. It is the equivalent of selling product without an ROI calculator; there are just too many options for channel partners. The next guy will come in and appear to be more compelling.


Build Outside In


I have lived on both sides of this; companies that looked at a channel inside out and companies that looked from the outside in. Success came from the companies that looked at the program through the lens of the partner – outside in. Those that didn’t, had programs that never took off or eventually stalled. The channel is your customer, cater to them. Make sure they understand how and why it makes sense to work with you, and have the data to back it up.


My current company, SBI, works with companies in all industries to grow revenue faster than the market and the competition. Channel optimization is one aspect of our assessment. Download our Gap Gulf Assessment Tool to see how your company aligns to current emerging best practices against other top-performing companies.


For more assistance, come visit me and my colleagues in The Studio.




Additional Resource


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