What is your opinion on channel partners versus direct sales and how that percentage should vary over the journey of a startup?

Answered by: Michael Lock, Advisor

Category: Marketing and Sales

There are four distinct sales motions within enterprise B2B selling:

  1. A) Field direct sales used most frequently with large ticket items and in large accounts.
  2. B) Inside direct sales used most frequently with medium ticket items and the mid market.
  3. C) Online selling where orders are taken over the internet with little sales involvement used for small business or smaller workgroup/individual oriented sales.
  4. D) Channel sales used within certain product or customer segments that partners have unique access.

 

We are also seeing hybrid models emerge.

Generally speaking channel selling is a small percentage of early stage startups efforts. This is caused by several factors 1) a startup’s product is often innovative and disruptive and the startup itself is the best or only entity that can represent the value proposition well, and 2) channel partners are often playing a volume game and are less interested when product demand is early and small.

Over time as the startup product’s market grows and the concept is more widely understood and less evangelical channel sales becomes much more feasible.

There are some good exceptions to this general rule. If your product is in a replacement market, where the startup's product does the same thing as a legacy product, but cheaper, better or faster; then resellers are more willing to make an earlier investment. Another exception would be if your product is an easy add-on sale to an existing product. In this case a reseller might be very willing to carry and push the product because she can increase her sales deal size with little incremental sales cost. Lastly there are some markets like government where channel sales is the only reasonable option.