From Oracle and AWS to Salesforce and HubSpot, many of the biggest SaaS brands owe a good part of their success to their channel sales programs. For each, channel partners serve as extended sales and marketing teams, service providers, and brand advocates. All that extra help can be key ingredients to lasting and sustained growth for your organization.
When SaaS companies use channel sales effectively, they position themselves to:
- Expand their footprint into new markets and regions
- Get their products and services in front of new customers
- Save significant money on distribution, hosting, etc.
- Boost their company’s credibility and brand recognition
- Take pressure off their internal sales teams
- Offer a full suite of services and support for nuanced tech products
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But not all channel sales programs are created equally.
In order to achieve all those benefits, you must make sure you have the right sales channel strategy in place. Here are the three most prominent models SaaS companies use:
1. Brokerage Channel Strategy
Best suited for simpler SaaS products, this model is similar to the relationship between an insurance agent and the insurance company. Insurance agents often bundle together multiple policies and add-ons, creating a customized solution based on the particular needs of each client. The same thing happens with this SaaS channel sales strategy.
Your product is at the forefront of options for brokers to bundle with others when customizing packages for their customer base.
For instance, your broker channel partner may work with hotels or restaurants and develop a software stack with all the best SaaS solutions, and yours could be the service of choice for their transaction management.
By partnering with a reseller who is focused on high-volume transactions and already selling products similar to yours, your SaaS point solution becomes an integral tool in their toolbox. The best part? Brokerage channel models will also offer basic support of your service to the end user.
2. Value Added Reseller (VAR) Strategy
When companies say they “sell through the channel,” it most often refers to a value-added reseller (VAR) channel sales strategy. VARs offer your full-service turnkey solution to the customer — often bundled with added features, integrations, and services.
VARs basically do it all:
- Customize the software to the customer’s needs
- Invoice the customer
- Support the customer
Best with more complex and expensive SaaS solutions, this reseller model is commonly found with products such as cloud computing providers like AWS.
This model is also common in the cybersecurity industry, where cybersecurity firms resell various SaaS products alongside their services.
When your service is sold through a VAR, they will often pay you a royalty or license fee.
3. Consultant/Developer Strategy
Sometimes called the ‘Application Developer’ model, the consultant/developer strategy is very similar to a value-added reseller approach.
Just like a VAR, the third-party channel partner works with customers to sell, customize, and service your SaaS solution to its customer network.
But unlike a VAR, these partners don’t technically sell your software. Your organization still invoices and directly supports the customer after the sale and implementation is complete.
HubSpot’s partner program is a shining example of this strategy in action. Marketing agencies and similar companies sell services surrounding HubSpot’s platform and works with companies to purchase a HubSpot license. But those HubSpot licenses are always purchased directly from HubSpot rather than the partner.
These types of partners make their money from commissions/revenue share plus their additional services.
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Before you decide on the best strategy for you, be sure you’re poised to offer proper partner relationship management (PRM). Being able to properly identify, streamline, and even automate the processes and relationships between you and your channel partners can often help determine which channel strategy is right for you.
While the level of complexity and depth of your channel partnership will vary depending on your service offering, maturity, and business model, there are several things to consider as you research the best channel sales strategy for you. Here’s a quick checklist to help you determine if now is the time to bring channel sales into the mix for your SaaS company.
- Are you a small company looking to grow without hiring an internal sales team? Smaller and startup companies often find great success with channel sales as it allows them to grow their business and reach new customers without investing in their own direct sales team.
- Do you have a mature product or service? If your product is still in the early stages of evolution, you probably want fast and honest feedback from the end user. Since channel sales can delay or cloud that feedback, it’s best for products and services that have reached full maturity.
- Are there opportunities for your SaaS solution to be integrated with other services? Finding the right channel partners who can complement your technology is a wise and mutually beneficial move.
- Do you understand how to sell your product (target audience, buying triggers, average sales cycle, etc.)? Training and enabling your partners is key to your success. Before you embark on a channel sales strategy, you should already have a proven and repeatable sales process and an in-depth understanding of your sales cycle, customer journey, target personas and their pain points.
- Is your sales process relatively short and straightforward? The longer and more complex your sales process, the harder it will be for partners to execute it. A channel strategy is best for SaaS products with a relatively short and simple sales process. With that said, proper channel enablement has helped companies with complex enterprise solutions find success with channel sales as well.
- Are your offices spread throughout various locations? If you have offices in various locations (particularly in different countries), channel sales can help eliminate the need to sustain multiple sales teams.
- Are you financially stable with a good revenue base? Yes, channel sales cuts down a lot of costs for SaaS startups: recruiting, training, salaries, and benefits, to name just a few. But it will still take a fair amount of resources to get a program off the ground, so you should be financially stable before taking on channel partners.
In the end, and regardless of the type of channel sales strategy you decide on, the goal is the same: find partners who can help you reach, attract, and retain more customers.
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