It’s tempting to follow the old adage, “fish where the fish are” – but going directly to your customer’s front door is just one path among many to achieving sales revenues.
In the early days, time to market is of the essence, and partnering with an established entity in your industry can be an attractive option to get exposure quickly.
By leveraging the partner’s existing customer base, you can gain access to your partner’s customers, who may have similar needs and interests. You also stand to benefit from all the work that your channel partner has done to reach this point in their evolution: market research, beta testing, customer interviews, and more. You can learn from their experience, and often much quicker than they did.
A channel partnership can also be structured to include joint marketing efforts or cross-promotions, to pool resources that help both parties reach a wider audience and improve their chances of customer acquisition. This helps your business increase its brand visibility, and customers may be more inclined to trust and engage with you when they see your association with a reputable partner.
This type of partnership need not be limited to sharing sales and marketing resources, however. A channel partnership could be built on shared expertise and resources, giving each partner access to complementary intelligence, skills or resources that would be more expensive for them to acquire on their own.
Examples of channel partnerships
- Hilton Hotels books the majority of its rooms through channel partners, such as Expedia, Orbitz, travel agencies, and airlines. These channel partnerships give Hilton access to a wider range of customers, helping to keep its capacity utilization rates high.
- A large share of Apple’s revenues come from channel partners with retailers, mobile carriers, and enterprise customers who buy their products/services in bulk (such as school districts, government agencies and large corporations).
- If you have ever had a can of Pepsi at a concert, movie theater or sporting event, that’s a classic case of a channel partnership. In spite of the recent rise of consumer products going direct-to-consumer (DTC), these partnerships still represent tremendous sales revenues to manufacturers.
- Technology companies like Google and Salesforce offer robust certification programs for channel partners like systems integrators and media agencies. The investment in these programs generates a high return, because once certified, these service providers are incentivized to act as a reseller.
Key Questions To Choose The Best Sales Channels
In a growing business, it’s not feasible to explore every single path to the customer. Failure to prioritize a channel strategy leaves you open to risk.
You may fail to reach the right decision-makers, wasting time and money. Your sellers may suffer from low conversion rates, which not only is inefficient but can drag down morale. Customers may be stuck with a poor experience, jumping through hoops to buy your product (or abandoning the purchase all together). Some potential customers may experience the product in the wrong context, damaging your brand reputation.
A founder or leader of a Seed stage company will often ask themselves certain questions to address this challenge:
- What don’t we know about your market, product or customer? How can we accelerate our understanding?
- Are we going direct to our client’s front door, or are there side doors worth a knock?
- What could we learn from a partner (e.g. product features, marketing strategy, customer feedback) to accelerate your own business cycles?
- Are there market conditions threatening potential partners that we could help offset?
- What technological capabilities can be acquired through external relationships?
- What value are we able to offer in exchange for these benefits?
- Are we looking for a partner to expand market reach, enhance our brand reputation, increase sales – or all of the above?
Choosing The Best Sales Channels For Social Impact
The optimal sales channels for social impact will vary depending on a number of factors, including your product, your target market, and your budget. However, a few general principles can help you make the right decision.
When choosing your mix of sales channels for social impact, consider the following factors:
What kind of product are you selling? Is it a technical product that requires a certain amount of expertise to make an informed buying decision? A complex insurance product targeted at low-income communities may require a lot of attention to fine print, whereas a SaaS (software-as-a-service) product connecting job seekers to internships is easier to understand. Different selling environments lend themselves better to each.
How important is brand recognition to your sales cycle? If you’re selling services, for example a consulting practice advising corporations on environmental, social, and governance (ESG) strategy, reputation is a critical driver for your prospective buyer. Conversely, a new player in the smart thermostat category might get by easier on innovative product features alone.
Are there creative partnerships that could lower your customer acquisition cost (CAC)? If you’re selling a new type of high-efficiency EV charging cable for residential use, which is cheaper: acquiring customers directly, or building a network of electricians who can recommend your product when they’re installing a Level 2 charging outlet?
As always, you can hedge your bets by employing a mix of direct and partner channels, and with sound measurement you can compare results on an apples-to-apples basis.
Our Approach To Choosing The Best Sales Channels
We start by identifying a range of potential channel partners, by building a list of companies that reach your same target market and have a good reputation. This list can be augmented with companies offering complementary products or services (the classic example being peanut butter and jelly). With some basic diligence we reach out to prospective partners to stress-test assumptions and collect feedback. The focus of the dialogue is to explore each party’s mutual benefit, and the overall fit of the relationship.
Once data is collected, we create a scoring rubric to objectively measure each channel’s potential. The channel partner program is launched, outlining the terms and conditions of the channel partnership, starting with the roles and responsibilities of each party. This would also include financial incentives as well as provisions for access to (and protection of) intellectual property. We set up partner onboarding programs and, if necessary, outbound communications programs for ongoing partner recruitment.
Through the duration of the partnership, it is imperative to track sales performance and provide support wherever it is needed.
Solutions For Choosing The Best Sales Channels
Door-to-door selling can be very inefficient — it limits market reach and brand awareness, and can be very resource intensive. When speed to market is a priority, you need to play every card you have.
Find partners who already have traction in your market, gaining access to customers and intelligence.
Our Process
- Identify primary business objectives & desired competencies/market access to gain via partnerships
- Build an initial seed list of diverse targets; augment the seed list in a workshop setting and apply reductive filters
- Articulate a partnership value proposition distinct from direct-to-customer channels
- Structure partner program with provisions for onboarding, performance metrics, comms/cadence and access to critical IP
- Establish an internal rubric to periodically review partner engagement, performance & feedback
This process includes periodic interim reviews with key stakeholders, to solicit feedback guiding the overall direction of the project.
Deliverables
- Definitive list of available direct/indirect channels, with associated firmographic data
- Memorandum of Understanding (MOU) template for prospective partner outreach
- Onboarding & enablement materials, incl. guidelines/KPIs for confirmed program participants
- Internal reference material for measuring ongoing performance & conducting partner reviews
Impact
- Accelerated brand awareness and market reach
- Accelerated access to market intelligence, new technology and expertise
- Increased sales and/or decreased cost of goods sold (COGS)
Click for more information on Channel Partnerships, or get in touch.
Other Revenue Growth Challenges For Seed Stage Companies
This discussion about how to choose the best sales channels is one post in an 8-part series about revenue growth challenges for seed stage companies. See below for how to address other common revenue challenges:
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