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Yet Another (ex-)VC Blog

Cloud computing, startups, and venture capital

Three tips for building successful channel programs

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Venture-backed companies often leverage distribution and VAR channels to ensure that their product is available to a wide variety of potential customers.  Companies with a well-functioning channel program can increase revenues without a proportional increase in costs.  Investors like to see this kind of scalability develop in companies they’ve backed, or believe that this scalability can be achieved at some point in the future.

If you are thinking about taking your product or service to market through the channel, here are some things to consider:

If you can’t sell the product, the channel won’t be able to sell it, either.

Just as you probably shouldn’t hire any sales and marketing employees until you have come up with a product that you (the founding team) can successfully sell, trying to establish a channel before you have developed some market traction on your own is a moot point.  After all, why would a potential partner want to spend time and effort on pushing a product that no one has shown interest in purchasing?

Potential partners are going to want to see market interest in your products (as evidenced by sales or PR) before signing up to work with you.

Enable and support your channels.

A sure path to failure for any moderately complex technology product is to sign up channel partners to resell and/or support the product without educating them on the sales and support of the product!

It seems obvious when you see it in print, but in my experience this is one of the big ‘gotcha’ areas when developing and supporting channel programs.

Lack of education will result in unhappy customers and often a perception that your product is flawed in some way (even though it might not be).   Take the time to educate the channel and you’ll see much better results.

Avoid channel conflict.

Companies who have a direct sales force as well as a channel program need to be careful not to alienate channel partners by competing for the same customers.  Make sure your salespeople are incentivized not to compete with your channel partners.  Again, this probably sounds obvious but you’d be surprised how often it happens.

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Written by John Gannon

March 24, 2009 at 5:39 pm

Posted in Uncategorized

Tagged with , , ,

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