Setting up a channel in SaaS

After 15 years in channel related roles, I’ve got a pretty good picture of what make a successful channel business. While a lot of my experience has been around enterprise hardware and software channel programmes such as Cisco, Polycom, Checkpoint, Symantec etc, I’ve spent the last 3 years in the SaaS space where channel models are relatively new and continually improving.

The best partners of SaaS vendors are those that mirror your market & product fit, eg if your core audience is SMB then find ‘born in the cloud & for the cloud’ SMB focused partners. This area of the industry is in hyper growth mode and the savvy partners are jumping on board early. These partners remunerate their sales team on Monthly Recurring Revenue (MRR) rather than old-school upfront revenue targets. As a SaaS vendor, this is key - you’ll never get a sales person selling your $50 monthly subscription when they can sell some upfront tin and licenses for $5000 if they have a $10,000 target.

Here are some other key areas to consider. This is by no means an exhaustive list but a starting point to work out of channel is an area you should investigate further:

What do you want to achieve?

Consider if you just want more leads or do you need partners that can solve problems you can’t; eg offer complimentary solutions. There’s a good case for both and it depends on the issue you’re trying to solve - keeping customers happy and around longer - or finding new ones.

Do you have exec buy-in?

You’ll need financial investment but also support across the business - it’s not just a sales channel but you need channel marketing, support and customer success teams onboard with this strategy too. You’ll possibly need staffing resource and budgets to execute campaigns and promotional activity.

Have a clear strategy internally for channel vs direct business

There needs to be clear rules of engagement for you and your partners. You CAN NOT compete with your channel. No one wins.

How much control should you give up?

Referral partners typically send warm leads and you handle the customer from start to finish. Integration partners own the entire engagement including finding their own leads as well as post sales support.

There can be some joint engagement depending on the complexity of your onboarding, but it needs to be clear to partners and end users so you can manage expectations and ensure the customer's journey is seamless and positive.

Commission

In my experience the really amazing integration partners can build a thriving business from services rather than commission, but you still need to reward them appropriately. Referral partners often get a one-off rebate and integrators get ongoing commission. Remuneration should be appropriate to the level of support and engagement provided by the channel partner.

Enablement

Often, teams can be so excited about the partnerships that thoughts as to how to enable them post announcement is forgotten. Think about how are you going to incorporate these partners into your messaging. It needs to be tailored to partner type and it needs to be easily updated as your product changes. This can be a huge cost if like most SaaS teams, you’re moving at rocketship speed. The messaging needs to be slick and exciting while aligning to your brand and culture.

Speaking of culture….

As a last thought, ideally you want partners whose values and culture align with yours. This ensures your customers get a consistent experience. Ideally you want your best partners achieving the same or better NPS scores than you - don’t just track them on revenue, they bring a lot more to the table including stickier and happier customers.

That’s just a small taste of some things to think about. If you’d like to pick my brain some more, sing out as I’m available for coffees or cold beverages.