Friday, January 27, 2012

Are you ready for a channels-based cloud business?


5 key questions to consider before you leap into building a channel-based Go-To-Market program for your cloud solutions

1.  Are you ready to commit to an indirect channel?

Creating, managing and making a channels program successful is not a part-time job, nor is it for the faint of heart. Either you are committed or you’re not. It’s also not a short term experience delivering short term results. However, the end results of a properly executed channel program can be a scalable, high volume, market share expanding sales machine that can reduce your cost of customer acquisition and dramatically increase the value of your company. Far too many times we’ve seen tech companies saying “Yes, of course we are committed to the channel” only to find out that when the deal flow doesn’t grow as fast as they would like and cash gets tight, guess what happens? They start taking deals from their trusted partners. And the next thing you know they are blacklisted by the channel – the kiss of death.  The first commandment of indirect sales is “Thou shalt not compete with one’s own channel”.  Are you ready to fully commit to the channel?

Rate yourself on a scale from 1-5 (5 being highest)    ________

2.  Do you have a compelling channel-directed value proposition?

What does this mean? Do you have a channels program that includes a saleable and viable end user solution, with proven sales success and with the tools required to help the partner replicate your success?  Do you have a revenue sharing plan and profitability model that shows a potential partner how they can make a business out of your cloud solution? Approach this like you are providing them with a franchise opportunity.  Really adopt the mindset that you are the franchisor and your partner is the franchisee.  Provide them a repeatable success formula that is proven to be effective.  Do you have a compelling channel-friendly value proposition?

Rate yourself on a scale from 1-5 (5 being highest)    ________

3.  Do you have a compelling end-user value proposition?

Is your end-user value proposition based on a deep dive technology sell or is it based on creating business value?  Are you the only one in your company who can really close sales?  Or have you been able to craft and capture your message in a way that any intelligent sales person can deliver?  If your value proposition requires a rocket scientist to deliver, then get ready for a long and costly sales process in the channel. Instead, make sure that you have a nicely defined, well positioned, ROI-driven end-user value proposition that a channel partner can use to find prospects, engage in a sales process and close deals at a reasonable rate. Do you have a compelling end-user value proposition?

Rate yourself on a scale from 1-5 (5 being highest)    ________

4.  Are you ready, willing and able to make the channel successful?

Do you have the proper support system in place to enable a successful program?  A support system includes sales and marketing tools, a sales management and review process and resources to provide assistance before, during and after the sale.  A channel support system is not something you create on the fly.  It requires careful preparation before you ever launch the program. All too often we see technology companies put enormous development effort into their technology solutions and their direct sales model but when it comes time to launch a channel program, they fail.  They fail because they are expecting the channel to be self-sufficient. Enabling an indirect channel is no different than a franchisor enabling their franchisees to succeed. Are you ready, willing and able to make the channel successful?

Rate yourself on a scale from 1-5 (5 being highest)    ________

5.  Do you have enough patience for a channel program?

Do you truly understand the significant value a well-executed channel program can bring to your company and the ability for this program to significantly increase the cash valuation of your business? If so, then have patience, and lots of it. It will take much longer than you expect for your channel program to reach its full potential. You must be prepared for all of the hard work and time required to execute a channel program with “excellence”.  The first year will be a major investment of time and energy with few tangible results in the form of revenue from productive partners. The second year will bring some results, but certainly not the big payoff you were expecting. However, by the third year, you can find yourself sitting on a hugely profitable business that has far more scalability than a direct-only sales model.   Do you have enough patience for a channel program?

Rate yourself on a scale from 1-5 (5 being highest)    ________

What is your total score? ________
In which of the 5 areas are you strongest?
In which of the 5 areas are you weakest and need help?

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