The Complete Guide to BUILDING A SUCCESSFUL SAAS CHANNEL STRATEGY®In 2015, the Tax Foundation of America reported that more than 60 percent of all revenue in the U.S. was generated through indirect sales and marketing channels. This is only the latest confirmation of the undeniable value and efficacy of the indirect selling model, which has allowed countless businesses to go far beyond the limits of their direct sales relationships through well-structured partner programs. The channel, it is clear, is a huge potential source of sales and profits in todays economy.But if youre selling software-as-a-service (SaaS) solutions, it might initially appear that channel sales isnt a model with much to offer. With cloud-based solutions being quite easy to deploy, requiring comparatively little on-site maintenance and customization1, it may be hard to see where your business can benefit from a good selling partner. But the more the new world of SaaS solutions develops, the more its becoming clear that SaaS suppliers stand as much to gain from indirect sales as companies selling traditional IT hardware and software solutionsor from businesses outside of the IT landscape entirely. IntroductionThe Ultimate Guide to Building a Successful SaaS Channel Strategy 1In a recent LinkedIn blog post exploring the issue, Tomasz Tunguz, venture capitalist at Redpoint, noted that the channel delivers three uniquely valuable features to companies selling SaaS solutions: The financial advantages of such relationships are easy to see: more customers with fewer up-front investments. And the fact that you can generate unprecedented profits through a channel partner program might make you want to immediately get on the phone with everybody you know and see who is willing to hop on board and sell.But a partner program isnt some-thing to be jumped into without looking or to be taken lightly. Creating a good partner program to sell your SaaS solution requires careful planning and a thoughtful strategy. The Ultimate Guide to Building a Successful SaaS Channel Strategy 2It prevents companies, especially cash-strapped startups, from needing to invest in a full sales staff.1It enables companies to sell their solutions in markets that they normally wouldnt have access toand to a far broader range of potential clients.13It allows the SaaS company to deploy its solution without investing in a full customer support team, as support can be handled by partners.2“With cloud-based solutions being quite easy to deploy, requiring comparatively little on-site maintenance and customization1, it may be hard to see where your business can benefit from a good selling partner.”The Ultimate Guide to Building a Successful SaaS Channel Strategy 3Doing this work up front will position you to benefit from the revenue-maximizing potential of the selling model. Doing otherwise could set you up with a partner program that withers on the vine. At best, this is a waste of resources; at worst, its an ongoing drain and a source of stress.The following ebook will give you a full understanding of the questions you should be asking yourself, the steps you should be taking, and the choices you should be making to build out your channel partner program the right way and avail yourself of all the potential profit waiting out there for you in the channel. Are You Ready for the Channel?In your enthusiasm to get started on putting together a channel program, channel readiness is the easiest step to overlookand the most important one not to. Determining if youre ready is key to setting up the internal infrastructure that will allow your channel to flourish. Following these nine strategic tips is critical to setting you and the businesses that you will eventually partner with up for success:The Ultimate Guide to Building a Successful SaaS Channel Strategy 41. Build out your buyer personas (and your sales strategies around them). What kind of customer do you want buying and implementing your software solution? Do you have a specific market that youre planning to target or that you want to use your partners to break into? If youre selling cloud-based storage solutions and want to crack the healthcare market, create a persona that gets granular on exactly the type of healthcare enterprise youre interested in working with and how a partner with a foot in that world should position your product with regard to its specific needs. 2. Create marketing content that maps the buyers journey.Once you know whom you want to sell to and why, its time to think about how. Youve identified the ideal buyer, and you know how he or she is going to benefit from your solution; now create the marketing materials that tell this storyones that you can put into the hands of your partners to guide the customers through the journey to conversion.3. Identify your ideal partner.Just as youve determined who an ideal client company is, you should determine who your ideal partner is. This is no small task. Youre getting involved with a company that is going to be representing your solution, and you want a company that will do that to your satisfaction. That means a company that will remain on brand and on message. But that also means a company that is working in the correct space. You can have a partner that is incredibly good at selling solutions in the healthcare space, but if you dont believe your solution matches up with that market, theres no point in partnering with that solution provider. So keep in mind that youre not just coming up with a partner thats ideal in general, but ideal for your specific purposes. While doing the kind of prep work detailed in these first three steps may seem like something you can glance over, make no mistake - a clearly-defined buyer journey and meticulously-defined buyer and partner personas are critical parts of a well-constructed channel partner program. They lay the fundamental groundwork for your success, and if you dont have them, you are definitely not channel-ready.The Ultimate Guide to Building a Successful SaaS Channel Strategy 54. Get set to onboard and bring every last person into the fold.If you know whom you want your partners selling to, and you have marketing materials created that you know will drive home why they need your solution, its time to make sure that you can effectively communicate this selling strategy to your partners. Create training materials and processes that will make them into brand evangelists, with the resources and knowledge to position your solution perfectly to a potential customer. And create support resources as well so that theyre never hit with a question they have to fake their way through.The Ultimate Guide to Building a Successful SaaS Channel Strategy 65. Make sure the company is willing to invest.A well-thought-out partner program will save you resources and earn you money in the long run. But to get to that point, its going to require an up-front investment. Make sure that everyone in your enterprise, from the C-suite to the sales team, understands the importance of the channel program and that those in charge of the necessary funding are willing to make it. A partner program without an adequate investment of both capital and human resources is going to be kneecapped from the get-go.6. Determine your channel programs value proposition.What is your channel partnership going to do for your business? If the furthest youve thought is about building ROI in the vaguest and most general sense, think deeper. Understand what aspects of your sales presence youre hoping to build, what type of valuefinancially, reputation-wise, and so onyoure hoping to build and understand how youre going to quantify it. 7. Understand the metrics.When youre working with a channel partnership, youre dealing, by definition, with people working remotely from you. Youre not going to be able to quantify success based on gut feeling alone. By having the right solution in place to track and aggregate metrics and setting up time frames to determine where you should be after a set number of weeks or months, you can say definitively if youre succeeding in what youre setting out to do, and you can know when its time to reevaluate whats working and what isnt.The Ultimate Guide to Building a Successful SaaS Channel Strategy 78. Align your partner program with internal sales.Your channel partner program isnt just a stand-alone entity. Its an auxiliary wing of your sales team, and so understanding how the two teams will interrelate and communicate is critical in using the two sales presences to maximize each others value. Even if, as a SaaS startup, you have a minimal sales team, its still critical to coordinate the operations of the two and make sure that everyone is on the same page and that no one is getting short shrift. 9. Put the right software in place to make it easy.If youve followed these steps, you have the conceptual foundation for your channel program. Now all you need is the technological infrastructure to make it happen, conveniently and effectively. Implementing the right channel sales software packageone that allows your partners to collaborate with your internal sales and marketing teams, your partners clients, and all the other figures in a complex channel sales ecosystemis as important as any strategic preparation. Its what lets you take all of the theorizing and strategizing youve done and turn it into reality.“Make sure that everyone in your enterprise, from the C-suite to the sales team, understands the importance of the channel program and that those in charge of the necessary funding are willing to make it.”The Dos and Donts of Choosing Your Channel PartnersOnce youve carefully considered and undertaken the steps above, youll be ready to make a move and start building your partner program. You have that ideal partner in mind, and that should be the starting point for your selection process. And its a process that must be selective. The Ultimate Guide to Building a Successful SaaS Channel Strategy 8Do not just put a form up on your website soliciting partners to sell your services. If you do this, youre going to end up wading through a lot of potential partners that arent in the right line to benefit you, that are startup sales outfits hoping to benefit more from attaching themselves to your name than you can possibly benefit from them, or that show promise but just arent ready to sell your solution as a partner.Dogo back through your network of professional contacts, looking for those proven, reliable business partners that have a reputation you can trust. Or if youre looking to find a home for your solution in spaces where you dont have a ton of experience or contacts, look for referrals from people you trust who operate in those areas. Dolook for partners that offer services complementary to what you offer2and that understand what selling cloud services entails.Doreach out offline, not just online, to organizations you want to do busi-ness with and allow for the cultivation of organic relationships that flourish because they make sense and that bring in other high-quality partners.The Ultimate Guide to Building a Successful SaaS Channel Strategy 9Deciding How Much to Pay Your PartnersMutual profitability is, of course, an important end goal of a channel partner program, both for partners and for SaaS vendors. Because of all the variables involved in any given selling relationship, there is no hard and fast rule for how to divide up the profits to best incentivize and reward selling while still building the kind of ROI youre looking for.But it is critically important to have the conversation about compensation. From the outset, you want all of your partners to understand the details of the relationship, of what they can expect in terms of compensation, and of what goals can result in more profits. Negotiate something that is fair to all parties involved. In a channel partner program, everyone is working for everyone elses benefit, and this will break down if partners are unclear on the financial aspect or begin to feel slighted or underappreciated.That means that compensation has to be more than just the referral fee. A well-constructed partner compensation program features a combination of the margin that a reseller makes, well-managed incentives, and channel rep compensation, calibrated to manage costs while also moving the channel forward.3More complex deals, harder but more profitable sales, and customers that need a lot of hand-holding require more work on the part of a partner, and a partner program must be structured to recognize and reward that. Treating the easiest sales the same as the most difficult and most complicated deployment will turn your channel partners off from wanting to handle the truly profitable dealsand maybe even turn them off from selling for you.Regardless of what the cause is, you shouldnt be shy about pivoting. If you and your partner are no longer trying to do the same thing, youll be working against each other instead of on each others behalf, with the partner putting a drain on your resources. Partner quality, not partner quantity, is what counts. So if a particular partnership isnt meeting your expectations for whatever reason, cut that partner loose. Remember: The partners that create value for their clients are the partners that create value for youand vice versa.The Ultimate Guide to Building a Successful SaaS Channel Strategy 10Know When Its Time to Say GoodbyeNot every partnership is going to be a winner. Sometimes a partner might just not be pulling its weight, out of disinterest or a shift in priorities. Other times, it might have changed its focus due to turnover or other situations on its end that leave your solution on the back burner. Sometimes your goals and your partners goals mutually grow apart.The Ultimate Guide to Building a Successful SaaS Channel Strategy 11Being the Best Partner in Your Channel PartnershipWith the right partners in place and the right setup to support them, things will start getting off the ground. At this point, its critical to realize that channel partnerships are a two-way street: To be a success, you need to be as good of a partner to your channel partners as they are to you.That means understanding that the partnership isnt just about you accomplishing your business goals, but about your partners accomplishing theirs also. Get to know what theyre going for and how they envision your SaaS solution fitting into their suite of offerings and see what you can do to help them achieve that.And you can take things far beyond just a two-way relationship. If theres a service that one partner needs as an add-on to sell adjacent to your solution, but its something you dont offer, you can tap other partners in your network and broker relationships between th