The question of how to get to your market from a sales perspective, direct or channel sales, often comes up; for most start-ups there is no one right answer, it really all depends. It depends on what you are selling, who you are selling to, how they purchase, how long your sales process is and the cost of the product.
From my experience though, a start-up needs to consider both direct and channel sales. For startups early on, they may want to lead with direct sales before engaging a channel because it is important to understand how to sell your product to a customer, why they are purchasing it and the business pain it is solving so that you will be able to educate your channel partner on this.
Going the “channel” route definitely is alluring, especially early on, as you dream about global market reach with little investment as your channel covers both of these. Be wary though, the picture in reality is not necessarily so appetizing. Remember within all of your channel partners there is a sales team that is compensated on achieving a revenue target that includes many products, not just yours.
No One Can Sell Your Product as Well as You Can
We have one client today, who prior to us getting engaged focussed their entire sales strategy on building a reseller and channel partner network. Unfortunately for them, after two to three years of effort, very little revenue was ever driven via these partners. Our feeling was that a direct sales component needs to be added in and so far, the plan is working and sales and opportunities are growing. Our goal is to stimulate market demand and uptake by driving sales to key targeted customers and then engaging the channel to fulfill the order and take up the sales torch.
Channel Partners Are Customers Too
Another firm we know went direct to channel instead and had a challenging experience. They were fortunate enough to sign a deal with one of the largest healthcare solutions providers in the world which made for a great PR & marketing story. The challenge was that the product itself was not quite ready for that type of turnkey sale and the sales team in this large company was not all that interested. So even after a great story, a few years later, there was still no generated revenue. Remember to work proactively with your channel partner to help them sell.
Our recommendation is that you often need to seed your own market. You need to do some direct sales to get the flywheel spinning. Once that momentum is generated, it is much easier to convince your channel partner and their sales reps to sell the product.
If you need help developing your direct or channel sales and marketing strategy or need help adding some horsepower to it, please don’t hesitate to contact us.