Five Compelling Reasons to Use Channels
David C. Thomas, President, FAQTORS
December 4, 2008
In the early 1980s, we tried selling the first accounting software products to the mid-market. We ran ads in business publications, sent out direct mail, even cold-called on prospective customers, trying to find the proverbial needle in a haystack--a business that owned a PC. In our quest for sales, we stumbled across the PC dealer networks, who were struggling to find the magic bullet that would close PC sales to their prospects. It turned out that accounting software and channels were made for each other. As we fine-tuned the pricing, marketing programs, customer support model and reseller toolkits, revenues skyrocketed, firmly establishing the PC software industry for two decades.
Today "webtop" applications are capturing increased marketshare, on the PC browser, but also on mobile web devices such as the iPhone, with 10,000-plus applications in its online store. This webtop shift from product to service, disrupts the business models of the software industry--and the 14,000 software channel partners in the US.
Below you will find a summary of the top five reasons SaaS companies should work with indirect channels, and how you can evaluate their value to your firm.
- Trusted Advisors
Most executives will not select a critical business solution without consulting an expert that they know and trust. We refer to these experts as "trusted advisors." A trusted advisor may not seal your prospective deal with their recommendation, but they will certainly kill it with their veto. A careful evaluation of your market will reveal who the trusted advisors are. In the accounting solution market, the best sales channel is the IT provider--but the trusted advisor is the CPA firm. No matter how we charmed our sales prospects with attractive features and subscription pricing, if their CPA said it was too risky, the deal was dead. Ultimately, we launched an education campaign aimed at CPAs to resolve their natural concerns about SaaS accounting--a successful strategy that may apply to your market as well.
- Systems Integration
New applications add to a customer's satisfaction when they integrate with their other applications and legacy systems. If integration is critical to your customers, a systems integration partner can make all the difference in both sales and customer retention. While pre-integration with popular solutions such as Salesforce.com is a winning strategy, the customer's greatest concern is usually how to make the new solution work with their legacy systems and processes. The right systems integrator can provide that assurance to the customer and increased sales to you, if you provide simple-to-use, powerful integration tools and the prospect of increased and profitable consulting revenue.
- Domain Expertise
Myth: if you build a horizontal application such as an accounting suite or CRM, you can successfully sell it to every business. Fact: No business is horizontal, and every product must meet vertical needs. In very large enterprises, the vertical functionality is provided through multi-million dollar contracts with Accenture, Boeing, or IBM. The very small business or home office makes do with a spreadsheet and a filing cabinet. But the vertical needs of the massive mid-market have frustrated every major software provider seeking critical mass in that arena. The earliest mid-market software providers learned to rely on vertical solution providers to contribute their domain knowledge and expertise to meet the special requirements of their customers. Most of these channel partners are local or regional firms with a very loyal client base. Your challenge is to locate and convince them that your solution can be a part of their highly targeted solution.
- Feet on the Street
Software as a Service, while gaining ground, is still in the early-adopter phase of acceptance, and it is still an uphill battle to close a sale. The physical presence of a person who comes to their office, observes their reactions, and gives a personal demo of a solution will always be more effective than the impersonal online demo or webinar, or the faceless voice on the phone. Thousands of value-added resellers have sales teams that already call on your potential customers, delivering systems and networking solutions. These resellers not only have the advantage of being there, they are often the trusted advisor for technology solutions. If your solution becomes part of the value-added reseller's suite of solutions, you are already halfway across the chasm.
- Business Process Outsourcing
Successful businesses have always tried to outsource those processes that are not core, but still critical to their business. Law firms, accounting firms, collection agencies, and payroll processing companies represent a few of the well-known examples of business processes that have been subbed out. With the unparalleled accessibility of the Internet, and the emergence of SaaS solutions, we can expect enormous growth in this area. Take the time now to evaluate your solution and see if it can be part of the services provided by business process outsourcers. You may even decide that your firm should expand your offerings to include such services yourself.
Conclusion
Now is the time to rethink your indirect channel strategy. Evaluate how your prospects reach a decision, and convince any trusted advisors to at least not give your solution the thumbs down. Improve your integration interfaces and toolkits to make it easier and more profitable for systems integrators to use your solution as a part of their offering. Focus on those verticals that can make the greatest use of your solution, and try to partner with solution providers in those domains. Make it compelling and profitable for value-added resellers to sell your solution when sitting across the desk from their prospects. Finally, consider whether your solution can be a part of an outsourced business process, and either partner with those firms currently offering such services or add the business process support to your offering. You may find that channel partners are the key to your success.
OpSource.net
