They Said it Couldn't Be Done
Updated: Feb 21, 2019
The Channel Selling SaaS ??
Case Study at a Project-Management (PM) software company – Results of the 1st 6 months of SaaS Channel:
$1.2M in pipeline. 31 partner opportunities created. Contracts that will sustain growth. Enablement 90% complete… a wild success by any standards, especially given the skepticism toward SaaS channel viability.
There’s a rumor out there in the rarified air of the SaaS market (Software as a Service) that the Channel has finally met its match. Quick definition - any product as a Service simply means subscription-based payment by the week, month, or year – the new normal for our teenagers – and now for tech too! Some SaaS Vendors contend it won’t succeed because they look at the undisputed king of SaaS, Salesforce, which made its fortune selling direct – i.e. without traditional VARs (Valued Added Reseller, i.e. Partners) - but stop short of noting that Salesforce did choose to concentrate on a few power-packed partners...such as Deloitte.
It's time to #ChannelyourSaaS.
So it’s not that cloud SaaS can’t be sold through partners, but rather… the partner focus just needs to be selective, placing your bets on a handful of smart partners with the deep domain knowledge required for your heavy lift.
At great cost, the MIT Biz school echoes what we all learned back in Algebra 1 - the first biggest hurdle is identifying the problem(s).
Why won’t it work? Figure out the variables, man.
Then just solve for the equation.
OK then - so why they’ve said it won’t, and the response why it will (& now has). They already “found x” for me… here’s how we solved for x:
“It’s too heavy of a lift.”
Solution: SaaS quite often requires a lot of planning & implementation, well beyond the traditional VAR model of sales pass-through. In the PM software space for example, 3-4 months of Implementation is the norm. Does that mean failure? No way. The vendor just needs to now whittle their go-to Channel partners down to the select few with the deep domain knowledge in that exact space.
“The payment model is backwards.”
Solution: the traditional model calls for the VAR to “hold the paper”, i.e. take the PO (Purchase Order) and pay the bulk of the payment to the vendor, minus the VAR’s margin. Well now, it’s the other way around – “the paper” stays with the SW (software) vendor who will be collecting on a schedule. Recall the name SaaS: Software as a Service, Subscription based, By the slice, call it what you will – the VAR is not built to take recurring payments – but not to worry, because fortunately today’s SaaS vendor is totally set up for it.
“The niche SW only addresses a small TAM (Total Addressable Market).”
Solution: Nonsense…that’s silly. If there’s a market for you, Mr. Vendor, there’s a market for partners. The #1 mantra of the channel is: if you can sell it, they can sell it.
So, what are the keys to becoming the savvy SaaS Channel partner? Easy ✔
- Product Focus – Narrow it down to amass your expertise in the target SW’s planning and implementation.
- Revenue Model - Build your process to bill and accept payment from the Vendor AFTER THEY are paid.
- Multi-year Deals – The Channel will be rewarded by the smart vendor for delivering them.
- Customer Success (CX) - Keep the customer continuously happy. The new normal requires focus on Customer Success … and the winning Channel partner will jump in to team up with the vendor to keep the customer happily subscribed.
...Just a year ago, one prominent San Fran-based cloud security company was pretty sure the SaaS Channel wouldn’t succeed… and they were not alone. Now, like many watching from the sidelines, they all might be looking to get into the game.
So, 6 months into the Cloud SaaS Channel at the PM software company...
...the verdict so far is a resounding win.
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