“Entering new vertical markets or industries can be challenging because they require you to understand the dynamics of that industry.”
When Partners sell your solutions, your revenue, market share, and profit increases. As a bonus, Partners can give you access to market segments you would not otherwise penetrate.
Most technology companies maximize profit by maximizing revenue. This principle is the basis of digital economics. If adding more direct sales resources is not a practical approach to revenue growth, or if you need to diversify your business so you are less dependent on one revenue stream, an indirect strategy may be the best option for your business.
But how do you know you need to partner? Here are a few situations where you may need a channel to sell and support your business:
- You’re trying to break through the mid-market. The size of the mid-market is massive, making it difficult to effectively drive sales through this channel. The only effective way to target mid-market is by leveraging channel partnerships that profile-specific businesses in a specific category. The same logic applies to small businesses.
- Your company needs to expand geographic reach. Outside of North America, channel and indirect business models continue to represent 80% of the IT industry according to CompTIA. Doing business in certain countries requires an entity and often currency translation. Partnerships and channel models are an efficient and cost-effective way to get into geography and learn the business.
- You want to target a specified segment. Entering new vertical markets or industries can be challenging because they require you to understand the dynamics of that industry. Knowing the exact customer profile, the client participates in like, detailed business challenges and industry governance regulations is the only way to be effective. The right channel partnerships can help you reach those industries effectively and build much stickier and differentiated value offerings for the client base.
Doing business with channel partners is highly cross-functional in terms of the resources required for execution. Organizations have the task of orchestrating activities in Product, Sales, Services, Operations and Marketing, among others, to deliver the requirements for product readiness for the channel. Developing and successfully implementing a channel model right the first time is not a sales only initiative; it’s a company-wide effort.
Want to know more about starting your channel? Check out our eBook, The Ultimate Field Guide to Building a Channel.