How To Leverage Channel Sales For SaaS
How to partner with the right businesses to increase sales of your software solution
As a SaaS company, you want to be increasing your sales continually. Still, with a finite amount of time and resources in your sales team, you’re eventually going to hit a plateau.
You can hire more salespeople, outsource parts of your sales process, or automate some of your tasks, but this still has limitations and comes with a high cost.
A solid long-term solution is leveraging channel sales for SaaS or selling your products and services through partners who use their marketing and sales teams on your behalf.
Channel Sales vs. Direct Sales
Channel sales for SaaS typically involve a third-party organization that will use its marketing and sales teams to sell on your behalf for a commission on each sale. In some cases, they may even bundle your product with their own to provide higher value to their own customers.
You can use channel sales for your entire sales process or a mixture of direct sales from your own team and channel sales from multiple partners to boost overall revenue.
If you’re a smaller organization, then channel sales is often a good approach and may be preferred over outsourced sales to remove the cost in your sales process and simply take a smaller cut of the expected revenue.
There are pros and cons to using channel sales for SaaS, which should be considered before you create a program or partner with another sales organization. Let’s look into this.
Channel sales for SaaS – Pros
Channel sales allow you to reduce costs in your sales process, boost sales quickly, and expand into new markets rapidly.
Channel partners can give you an instant boost of trust with their existing customers or through their brand.
Bringing on channel partners is faster than hiring new salespeople, and the risks are much lower if there are issues.
Test new markets or customer profiles where channel partners have an existing footing.
Support for your product can often be done through your channel partners first, which reduces your support and customer success requirements for new customers acquired through channel sales.
Channel sales for SaaS – Cons
Like any sales strategy, channel sales also have some cons that might need to be considered. You no longer entirely control your sales process and can’t continuously regulate how your product is being marketed or sold.
With less control over the entire sales process, your sales team can often only advise, so they can’t jump in to help if sales are slow or made poorly.
Reduced revenue as commissions or parts of the sale will be going to the third party.
Types of channel sales for SaaS
Channel sales for SaaS come in a few distinct models. Understanding the channel sales models will help determine which one is right for you.
Resellers take your product and service and resell it through marketing and sales channels to new or existing customers.
A reseller may buy many licenses or a dedicated system from you for SaaS services and then resell those to new customers.
Typically you’ll never interact directly with the customer, and they may not even know they are using your service.
Distributors typically provide the marketing and sales process for your product and then hand off the ongoing support and sales opportunities to you, so they’re effective in bringing in new customers, but customer success is often left to the primary organization.
Managed Service Providers (MSPs)
A managed service provider will use your infrastructure or service but handles the entire marketing, sales, and support process for their customers.
This is very similar to a reseller, but an MSP typically focuses its entire business on handling customers and integrating services into its overall systems. So you will normally be part of their comprehensive solution.
Your customer is the MSP, and their customers are the users of your solution as part of a more complex system.
System Integrators typically work for large organizations and provide a range of services or products that are required for each project.
So your SaaS service will be bundled and integrated with a range of other systems for a total package. Your sales organization will need to be involved, but the marketing and initial part of the sale will be with the system integrator.
Affiliate partners will perform most marketing and bring in new customers to your sales channels. Often this is helpful for smaller customers that you can sign up directly on your site rather than talk to a sales rep.
You’d need to set up an affiliate program to track sales for each affiliate and payout based on those sales.
It’s not always a practical approach for SaaS because you often still have the burden of fulfilling the sale and providing support. But it is an excellent option to generate leads or initial small sales.
When is channel sales a good solution for a software company?
Utilizing channel sales for your SaaS may not always be the correct option now or ever, depending on your specific SaaS business, so you should consider several factors before implementing channel sales.
Can your SaaS business handle increased sales? More customers come with more demand for your support resources. Think about customer assistance, customer success, and onboarding new customers.
Do you have a repeatable sales process that channel partners can leverage? If you bring a range of channel sales partners on board, it can be beneficial to provide them with a methodology to sell your solution faster and more effectively.
Are you willing to hand over your brand reputation to another company, and do you have a process to determine which companies to accept as channel sales partners?
Ultimately if your sales have plateaued and need to grow but don’t want to keep building out your own sales teams, then channel sales for SaaS can be an excellent option that is fully scalable long-term.
Let us support assembling a stable channel sales strategy
At Salescode, we support you in defining a tailor-made channel sales strategy to boost the revenue generated through your channel partners. Furthermore, we can help your channel sales organization by providing partner hunting, onboarding, and managing partner services to the channel consultancy.