How Can you Anticipate the Costs of Managing an External Channel?

Leveraging external sales channels has always been critical to the success of B2B software and hardware vendors.  But many ISVs claim their biggest challenge is building and supporting their external sales channel infrastructure and are searching for ways to keep their costs in balance with their channel revenue in an effort to strengthen their ROI.  Whether it’s a new SaaS vendor or an established ISV move to a cloud-based software subscription models, vendors are taking a  deeper look at their internal channel operations to determine where they may trim expenses and operate more efficiently. 

It takes people, processes, time and capital to manage a successful channel partner program:  planning, recruitment, contract management, on-boarding, product training, deal registration, commission management, incentive programs and market enablement, all must be thought through and well-executed.  Assuming you have a successful channel recruitment program, how will you then manage the contract process?   Can you optimize your existing channel marketing personnel to assume multiple responsibilities in creating, managing and administering marketing programs designed specifically for the channel (assuming they have channel knowledge)?   Are there other ways to support this process?   What about your channel sales reps?   Can they make a transition from hunting to farming to make the most out of the channel you have built?

External sales teams expect ISVs to establish a team of channel experts to support them.  This team typically consists of the resources listed below.  Although there may be some positions which could own responsibility for both internal and external resources, volumes may dictate the need for several people in each of those roles.  The size of the organization will be dependent on the extent of fully embracing the channel, the size of your channel as well as revenue and volume objectives.

*Note the breakdown by position/salary below:
·    Channel Development Executive – ($150k+) responsible for the strategy and overall execution of the Partner Program.
·    Channel Recruiters – ($60k+) responsible for identifying, recruiting and on-boarding.
·    Channel Contract Administrator – ($50k+) responsible for creating, tracking and managing Partner Agreements.
·    Channel Marketing Managers and Administrators – ($50-80k+ each)  responsible for developing demand generation programs designed for the Partner channel; creating, tracking, validating and processing MDF claims as well as  managing Partner events.
·    Channel Sales Manager – ($90k+) responsible for tracking, reporting channel activity and the overall relationship between the ISV and their Solution Providers.
·    Channel Commission Analyst – ($60k+) responsible for calculating and processing Channel Partner Commission Payments.
·    Channel Operations – ($60k+) responsible for day-to-day business operations relating to the Channel Partner Program.
·    Technical Account Managers – ($75+) depending on the complexity of your application, you may require technical resources dedicated to the channel to train them, help with installations and provide technical support. You will find it difficult to utilize resources that support end clients to support your Solution Providers.
*Salaries listed above are for informational purposes only and will vary based on a variety of factors.

Consider also how your Solution Provider partners will communicate new opportunities to your firm.  Is there a system they can access that will enable your firm to accept the deal in a manner that avoids channel conflicts? Providing easy-to-use, efficient tools for your channel to electronically submit lead registrations, quotes, sales, and track activity is key to your success. However, how you handle this activity will dictate the amount of customization, enhancements, management tools and staffing required to oversee and manage the process.  Once you consider these requirements, the total costs can be astronomical!  

For more information on how you can get involved with SaaSMAX as an App Vendor, go to Follow us on Twitter @WiseSaaS, or join our LinkedIn group, SaaSMAX Beta.

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