Build Out a Channel By Swimming Upstream From Your Deals

build out a channelYou have a product that is ideally suited for a channel-based distribution strategy.  But every time you approach a prospective channel partner, they expect you to already have landed some customers and already have an opportunity pipeline of deals to hand them.  In other words, they are looking for traction and they probably also perceive risk with your value proposition, possibly because you’re at such an early stage or maybe because you’ve never done business in their country.  So now you’re sort of stuck and don’t know where to go next to start building out your channel.  I have an idea to try.

One approach is to do what I call “swimming upstream” from your deals.  In other words, go ahead and start engaging directly with prospects.  As you get deeper into the sales cycle (possibly once a legitimate trial or proof-of-concept has started), ask the prospect which reseller or systems integrator they prefer to use for _______ (fill in the category of products that your solution fits into).

After they answer your question, tell them that you are building out a network of channel partners for your product and then ask if they would be willing to introduce you to an executive at that company.  If it’s one of their trusted resellers/integrators, they will gladly introduce you.  And their introduction combined with a live sales opportunity will get the proper attention of the new channel partner prospect.  It also might be obvious that the larger or more known the customer prospect is, the better this works.  So take that into consideration as you target your first sales prospects to go after.

This also works effectively when you’re solution nicely complements, or is integrated with, a product from a much larger company that has a big distribution channel.  Let’s use Cisco as an example.  Instead of asking your customer prospect which reseller/integrator they use for your category of product, you will ask them if they use Cisco for their networking infrastructure (you’ll probably already know this) and then will ask who their chosen Cisco reseller/integrator is.  I used this exact strategy at a former company to build out a global network of 215 Cisco channel partners across 30+ countries in less than 24 months.

The “swimming upstream” concept doesn’t just work to gain a network of first-level resellers/integrators (those that sell directly to end users and support them) but it can also be used with your new resellers/integrators to get to their chosen master distributors.  For some countries (maybe all), you will decide to implement a 2-tier distribution strategy by having a very small number of master distributors (in some countries maybe only one) who service a second tier of resellers.  You gain leverage and concentration this way.  But that’s a topic of another blog post.

Wait, there’s much more!!!

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Author: Gordon Daugherty

Over the past 15 years Gordon has seen more than 1,500 startup pitches, given personal advice to more than 500 entrepreneurs and been involved with raising over $45M in growth and venture capital. Throughout his 28 year career in high tech, Gordon has two IPO’s and a $200M acquisition exit under his belt. Now, through his advisory practice called Shockwave Innovations and as Managing Director for Austin’s Capital Factory startup accelerator, Gordon’s focus is purely on educating, advising and investing in tech startups.

4 thoughts on “Build Out a Channel By Swimming Upstream From Your Deals”

  1. Love the swimming analogy. From a swimmer no less! Another thought might be to research which channel partners your competitor (or similar) products are already using and then decide to do one of two things: 1. Approach them. Many times resellers carry more than one product to offer their customers choice, corner the market for that commodity, or leverage their investment in training and services development in that vertical. or 2. AVOID those, and find other resellers who for whatever reason didn’t chose (or weren’t chosen) as the reseller of choice by your competitor.

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