Swimming the Startup Sales Channel Waters
It’s Your Job to Make Sure That Shiny New Penny Stays Shiny
June 30, 2022 by Clint Chao, Moment Ventures
I have fond memories of the highs and lows of setting up the sales infrastructure for the startups I used to work with, even though that was eons ago. However, many of the issues are still relevant today as startups seek to extend their sales reach through strategic sales and reseller partnerships.
Startups: Here’s a quick note about channel or strategic sales partners, as it can be easy to get distracted by a name brand, and underestimate the amount of work involved in maximizing their potential impact. Make sure you develop a good sense of how your offering complements theirs and know which pulls through the other to best determine how you should work with them. Oftentimes it’s a contrast of telling versus selling.
1. They sell because of you and are they’re able to pull through revenue of their own products as a result
2. You get sold because of them as they are bringing you into customers they are already doing lots of business with
For (1), expect to spend time in front of customers along with them, as they will learn from your words — your product could open doors for them with new customers, so try to get them to tell your story as well as you can. You’ll have their attention on new opps as their prize is commission from your product plus pull through revenue of their own products as a result.
For (2), expect to do a lot of “sales management” as they will be busy selling their own stuff, so you need to get their attention with training, spiffs, bonus commissions etc, and you may need to do a lot of your own following up to make sure the opportunity doesn’t fall into the cracks. They will be protective of their customer relationship (a bad experience with your product could jeopardize their client relationship) and they may also take liberties in discounting your prices in order to get customers to act.
In both cases, don’t ever think that the burden of selling is pushed onto your channel partner. They are merely the gateway to customers and you will have to dedicate time, energy & expertise to making them successful. And just like how you would be totally fine if your top sales executive became the highest paid person in your company (meaning that she’s been effective), you should be thrilled when you have to cut big checks to your channel partners for big time revenue success, even if you have to do a lot of the heavy lifting up front. A bad channel partnership is good for no one and there is zero gain to just blaming them for lack of success after the fact. Good luck out there!
Clint Chao is a General Partner at Moment Ventures, an early-stage venture capital fund based in Palo Alto, CA. You can reach/follow him on LinkedIn, Medium and Twitter.
