How to Build Channel Partnerships for Vertical SaaS

A company can form channel partnerships with other companies to increase its exposure or improve its product offering for buyers. You can choose to partner with another company to enhance your efficacy in marketing, sales, service, support, or improving your solution for mutual customers.

The impact: Channel partners are often effective means of increasing bookings, reducing CAC, or reducing churn at all stages of a business. It is particularly helpful to young companies, however, who are still refining their sales, marketing and product approaches. Usually at an early stage, a company has a minimum viable product offering and few customers. Through channel partnerships, the company can leverage other company's networks and products to deliver a more complete product to an established customer base quickly.

The goal: Understand how channel partners can assist you in delivering and selling a product and evaluate whether a partnership is the most effective use of time and attention.

How can Golden Section Assist?

Background

Types of Channel Partners:

1. Referral Partners: generate leads in return for commission payments
2. Strategic/Technical Partners: typically integrate technology to improve product offering and customer's return on investment
3. Sales Partners: sell your product on your behalf. Often will improve your brand by tying yours to theirs

Steps

1. Answer the following questions regarding channel partnerships:
2. What will this partnership accomplish for our company? Will it add functionality to our core product? Will it give our product exposure to a new market? How will it affect our profitability, either by increasing MRR or conversion, decreasing CAC or churn, or some other metric?
3. Is this an efficient use of my time right now? Building channel partnerships is time-intensive and necessarily takes resources away from other aspects of building your business. Are the core components of your company (product, product/market fit, value proposition, etc.) fully developed and are you ready for the next step?
4. What channel support will you need to provide? Channel partners can never be as good as a sales force driven by you or your team. So how will you support the channel? Is it defined? Do you have the team? Are the incentives aligned to drive channel results?
5. Is it feasible? Regarding potential Sales Partners, will you be able to train your partner to sell your product on your behalf?
6. Assign metrics to qualify whether a channel partnership should be introduced. Some considerations when qualifying partnerships, include:
7. What is your strategic intent with this partnership agreement?
8. How can that be measured?
9. How are we going to compare the performance of the partnership to (1) our own performance or (2) the performance of other potential partnerships?
10. Assign metrics to measure the performance of channel partnerships. At the end of the day, a channel partner is selling your product just as your sales team is, and so the performance of a channel partnership should be measured by the same metrics, including:
11. Unit Economics like LTV, CAC, CAC payback
12. Sales Metrics, like sales efficiency, conversions, win rate, etc.
13. Codification: Create a process to judge potential partnerships and then to track the performance of existing ones. Assign a person responsible for making sure the process is followed. Make sure to identify the responsible person to share metrics and decisions with. Finally, share the process and any related documents with each person involved.