Don't Kill the Channel...Yet

Most folks who follow me know that I grew up back when the Channel was characterized by weird terms like “shrink-wrapped software,” involved hard goods sold by Egghead, and was run by pick-pack-ship distributors.

Today, most of the location-specific value-add that 40 years ago gave birth to IT Channels of Distribution have disappeared.

In a new world dominated by B2B SaaS, almost nothing is physically sent through the channel, and physical proximity – a channel’s geographical distance from the ICP – is completely irrelevant. In fact, the Channel doesn’t even serve up the SaaS - SaaS is ‘delivered’ directly.

Last November, I wrote an article about How Partner Ecosystems Ate the Channel, including how:

  • SaaS has altered the customer experience.
  • Partner roles are evolving from partner types to partner functions.
  • Technology and platform business models have redefined ‘the product.’

All these ecosystem pillars remain just as true today as they were last year, but it's amazing how much has changed. Considerations for how the channel will continue to evolve and might even experience a rebirth at the hands of SaaS and the cloud include an anticipated channel renaissance, which we wrote about just last month in PartnerHacker.

The Channel Has Changed

So what does this new Channel look like today in this digital-first world? The Channel is emerging as a vital means through which multi-vendor, digital value is delivered while driving Influence, Sourced, and Retention/LTV outcomes across SaaS companies.

Five critical roles stand out:

  • Create IP (Product innovation).
  • Advocate & Influence decision-making (Marketing).
  • Design & Sell Solutions (Presales and Sales).
  • Develop & Implement Solutions (Pro Services).
  • Manage Solutions (Customer Success)

Let’s explore each of the 5 elements in more detail to clarify what the channel is, what it is not, and where it is going.

Create IP (Product Innovation)

Long the bastion of Technology Partnerships, channel partners regularly engage in no/low code innovation and not too infrequently build apps on platforms and integrate bespoke apps with other ISV applications. Not to be mistaken with Tech Partnerships, where co-innovation is the steak on the plate, Channels that engage in product innovation usually do so as a "last mile" in their otherwise services-centric offerings.

Most of the time, these last-mile solutions are domain-specific according to the channel partner’s core competency, e.g., an application that takes an ISV’s horizontal solution and solves a core business process unique to a vertical where the channel partner focuses. Gone are the days when channel partners are 100% services driven, they need and want to codify their IP with high-margin software add-ons.

Advocate & Influence Decision-Making (Marketing)

Channel partners are valuable because they are part of the Sphere of Influence of your ICP. They are regularly called upon to give advice and make recommendations across the tech stacks where they hold sway.

On a more cautionary tale, one of the biggest drivers that cause committed deals to fall out of the funnel is when a channel partner does not give positive feedback to your ICP when asked about your product. If you don’t have an important channel partner (to an ICP) on your influence list, you won’t even know why you lost the deal.

Design & Sell Solutions (Presales and Sales)

One of the most valuable services a channel partner provides is assembling end-to-end solutions consisting of multiple B2B SaaS companies, along with the people and processes to drive complete business processes. Few B2B SaaS companies can achieve this high-value customer outcome without the help of Systems Integrators, particularly at the upper end of the mid-market and into the enterprise.

Understanding the other products that your ICP wants to consume alongside your solution helps to not only justify investments in technology partners but to unify tech partnerships through the downstream channel that can bring you and these tech partners to market.

Develop & Implement Solutions (Pro Services)

The bread and butter of the channel are the service dollars generated by implementing the solutions that they design and sell. As B2B SaaS solutions have become plug and play, the traditional plumbing value that the channel provided back in the days of physical product distribution has given way to integration and business process value engineering and realization.

When analysts speak about the ecosystem multiplier – e.g., for every $1 of software, the ecosystem appreciates $5-6 – most of that multiplier is derived from professional and other services.

Manage Solutions (Customer Success)

In addition to the terms Agency and Systems Integrator, another long-standing channel term is Managed Services Provider or MSP. Once a customer has successfully integrated and implemented one or more B2B SaaS offerings, channel partners are quick to recommend managed services contracts.

These service offerings are very important to customers and need to be harmonized with the B2B SaaS customer success teams to ensure high levels of customer satisfaction, NPS, renewals, and ongoing cross-sell and up-sell motions.

Don't Neglect the Channel

Don’t forget about the channel and build a strategy to ensure that you monetize all the hard work you’ve put into your Tech Partner programs.

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