The Truth Behind Channel Sales Programs

So you have heard all these wonderful things about having a Channel Sales Program for your Data Center/Cloud Operation.  Really, how hard can it be?  Offer a 10% commission and the resellers will come knocking on your door.  It is sure to give you that 25-40% boast to your sales numbers you and your shareholders are looking for.

Sorry to be the bearer of bad (or rather realistic) news.  While a solid Channel Sales Program can boast your sales 25-40% it is not easy! Over the course of the next couple months we will explore what is needed for a successful Channel Sales Program.  We will cover:

1. What to expect from your resellers/channel partners.
2. What commission do I really need to pay to be competitive and top of mind?
3. Training.
4. Marketing Material.
5. What type of person do I need to lead this effort?
6. When can I expect to see a return on my investment?
7. Recruiting top resellers/channel partners.
8. How to register a lead.
9. How do your sales people work with channel partners? Do they still get paid?

Let’s get started. Most people new to the Channel Sales/Reseller program believe that the partner will sell your wares and for the effort you pay them a commission. This is very true…In about 5% of the cases.  You see only about 5% of Channel Partners in my experience working with Channels for nearly 20 years actually sell your product.  These rare 5% know the Data Center/Cloud space and have the sales skills necessary to run a sales process from beginning to end. The vast majority is what I like to call Very Expensive Lead Generators. (VELG)  Here is a typical VELG scenario.

The VELG calls your company to register ACME CO as a lead.  They know they are looking for colocation for roughly 10 cabinets.  They are looking to deploy in next 6 months.  Once registered, the VELG will give you the contact information and if the deal closes he expects to get paid.

Are you seeing the HUGE gaps here in the needed information to close a deal? VELG thinks (and rightly so, since your competitors will take this limited information and pay the commission if the deal closes) he has done his job.  He uncovered a prospect currently in need of colocation that you did not know about. You now have to be prepared to run with this as a hot lead. You still need to do all your sales due diligence with the exception of actually having to hunt this original lead. The only way I have found to make this palatable is to think of these as found money opportunities.  These are generally deals you would not of discovered on your own.  True, the margins are generally smaller because of the costs of the sale. But then again, these are sales you would never have discovered on your own. Found money.

Please come back and join me as we take our deep dive into the world of resellers. In the meantime, if you’d like to discuss your Channel Sales Program, click here and fill out our contact form.