Software Executive Magazine

August/September 2017

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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Defining "Channel" For Software Companies Is an indirect sales strategy a fit? D A N C H A N D R E ments. If you choose to share customer lists with anoth- er software offering in a similar space, that's a tradition- al referral agreement and one that may be successful for you. That being said, I believe that the strength in channel sales exists when the model consists of more deeply integrated organizations. In the current world of SaaS software, I feel that there are three primary varia- tions of channel strategy. Depending on your software, you may embrace one or all three: VALUE-ADDED RESELLERS (VARs) It is not my intent to diminish the need for VARs in the software sales/delivery landscape – that just wouldn't be accurate. Any time a software exists (SaaS or in- stalled) that requires an understanding of the com- plexity of the offering for the end user to realize the value, VARs will have a place in the market. Two things to consider: ▶ Is your software configurable and, at least, mod- erately complex? If so, creating a network of resellers that can add value through implemen- tation and configuration services may be a fit. A core tenet of VARs is that they offer something that buying the software direct from the provid- er doesn't. The merchant may want what that software ultimately does, but they need some- one else to help make it make sense. That's the VALUE in VAR. ▶ Do you have enough revenue to share? A VAR is basing its business on the ability to resell your hannel strategies are evolving. At least I like to think that channel strategies are evolving. The problem is that software has evolved, but the concept of channel sales has strad- dled the old software world and the new world of SaaS software. After all, channel sales were born when soft- ware was on-premises, installed server-based software that required a tremendous amount of customization and implementation complexity. Resellers earned com- mission by adding value around this complexity, hence the term value-added reseller (VAR). In comes multi- tenant, SaaS-based software designed to remove much of the cost and complexity that installed software used to represent. So how, then, do we embrace the long-held efficiencies touted by the reseller channel and work within the world of efficient, low-cost SaaS offerings? The most basic answer is that we evolve from tradi- tional reseller thinking to the current world of channel sales. First, let's clarify the difference between a reseller program and a channel strategy. A channel strategy implies that you embrace the reality that an external organization can drive interest, and ultimately sales, in your software. In reality, "channel" can have many manifestations, from referral agreements, marketplace representation, and reseller programs to software part- nerships. Reseller programs are simply an optional component of a larger channel strategy. Let's focus one level up on the overall concept of channel strategy. Now, there are many interpretations of how you bring a channel strategy to fruition. I would like to focus on channel strategies that are deeper than referral agree- C Building a direct sales force is expensive. Driving top-of-funnel leads is expensive and challenging. The answer? Go indirect and embrace the channel. Unfortunately, it's just not that simple. CHANNEL STRATEGIES Framework By D. Chandre DEFINING "CHANNEL" FOR SOFTWARE COMPANIES SOFTWAREEXECUTIVEMAG.COM AUGUST/SEPTEMBER 2017 38

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