What To Expect When Shifting To A Channel Sales Model

A conversation with Patrick Johnston, Savvius

Savvius, which offers a range of software and appliance products that provide visibility into network traffic needed to resolve application and network performance issues, is in the midst of shifting to a channel sales model. Currently at 75 percent of business via distributors/VARs, Savvius expects to be at 90 to 95 percent channel business by the end of Q3 2018.

What has Savvius learned during the first year of this transition? What challenges have they faced and overcome? Why make the shift now? Patrick Johnston, Savvius VP of worldwide sales, took time to answer questions for Software Business Growth about this and more.

Q: Why did Savvius decide to switch from a direct to a channel sales model?

Johnston: As of a year ago, about a third of our U.S.-based sales and all of our international sales were through channel partners. But we were not doing a good job of educating these VARs on our products and how they integrated with other solutions, so they couldn’t articulate the value of our solutions to their customers. This made for a very transactional relationship which was not optimal for either the partners or the customers.

Savvius has been in business for over 25 years and we have over 6,000 customers, a tremendous number of which are repeat buyers. In the last two years Savvius has released many products which bring our technology to the edge of the network, into the security space, and provide deep, real-time analytics, but we did not have the sales coverage to both reach all of our customer base and new customers. To grow the business, we knew we needed to reach back into existing customer relationships to introduce our new products. Engaging the channel in a meaningful and committed manner was the only way for us to capitalize on our loyal customer base and acquire new customers

When we studied how our customers were using our products, we found they were frequently using them in conjunction with other solutions from companies like Cisco, Palo Alto Networks, Ixia, and Gigamon. To expand our customer base, we saw we needed to develop our ecosystem and teach customers how they could use our products together with products from these other vendors. That meant working with the VARs and distributors tour technology partners were using and educating them on our solutions and how they complemented the other products they were already selling.

Q: How do you ensure VARs get off to a good start once the partnership agreement is signed?

Johnston: Our program is simple. It’s a two-tier system with Silver and Gold levels and it’s very clear what it takes to qualify for each one. Our goal is to make it easy for partners to make their first sale. We provide a prescriptive, 90-day onboarding plan for each role which includes online sales training, access to sales assets on the comprehensive portal, and email campaigns to the partner’s customer base. We have been introducing Gold partners to our loyal installed base and we allow them to upsell and cross sell our new products in conjunction with their other complementary offerings.

Q: Did you have to hire any new positions when making this transition?

Johnston: Yes, I was hired about a year ago specifically to build the channel for Savvius and I’ve hired a number of other people with global channel experience from NetScout, Riverbed, Extreme Networks, Microsoft, and Juniper Networks. We also brought on a marketing team with specific experience in the channel they obtained from VMware and EMC. Our Head of Marketing has won several Women of the Channel awards from CRN.

Q: What has been your best tool for recruiting new VARs?

Johnston: Our technology ecosystem has been very helpful in showing us who we should be working with. We chose our distributor because they had most of the business for several companies whose products complement ours, such as Gigamon and Fortinet. We know their VAR network would be a good fit for us because they were already working with so many of our technology partners.

We also researched the distributors and VARs our former direct sales customers were working with. This was helpful for two reasons; First, it made the transition easier for those long-term customers, and second, we knew those VARs and distributors would have the high level of technical expertise and connections to networking professionals that would make them good partners for us.

Q: In what ways is working with VARs different than having a direct sales team?

Johnston: We are actually able to keep in touch with our customers more frequently via the channel. A direct sales model has its limits, and when you have thousands of customers it’s just not possible to check in with all of them as often as you should. VARs and system integrators who have deep customer engagement and a good understanding of how our products fit in a “best of breed” offering with their other products and solutions can help us understand our customers’ needs much better. So, we are actually able to get more feedback on our products and customer pain points using the channel than via a direct sales team.

Although we sell through the channel, we still consider ourselves to be a partner to our customers, not just the reseller. We support both our partners and our customers throughout the sales cycle with our high touch sales teams in order to understand the customer’s needs and ensure a good outcome.

Q: What has surprised you since making the shift to a channel sales model?

Johnston: I have been in this business for more than 30 years, building channels for technology companies all over the world, so not much surprises me. However, I was impressed with how quickly our new partners came to understand our solutions and offerings and how motivated they were to get access to our large and loyal customer base. I expected the transition from Direct to Channel to take three to four quarters, but we are fully transitioned to channel in just two quarters.

We have seen excellent results. Twenty-three percent of our sales were from net new customers from Q3 and Q4 2017, up from 9 percent a year ago. And 20 percent of our sales opportunities now are from partners, meaning we would not have them if our sales channel was not in place.

Q: What are some of the challenges you have overcome since launching your VAR program

Johnston: One of the differences between Savvius and most other companies who start selling through the channel is we already had a very large and happy customer base. So, we were very cautious to keep all of those customers satisfied during the transition. Working together with sales teams, providing the right tools, and training were key to that successful transition.

We also needed to teach VARs about our products in detail, since they are often working with network engineers or executives at their customers with specific technical needs. To do that, we’ve been developing a detailed training and certification plan to teach our channel partners about our products. We also offer a deal registration program to protect our partners who are committed to us and working to move our brand forward.

But despite these challenges, we’ve seen excellent results from the move to the channel so far. We currently have approximately 90 percent of our NA sales through the channel, up from 33 percent at the end of 2016. We plan to have over 95 percent of all sales through the channel by the end of Q3 2018. Sales in Europe have grown 220 percent over the last two quarters as we’ve introduced a two-tier distribution system there, so we know we are on the right track.

Q: What advice do you have for other software companies who are considering making the shift to a channel sales model?

Johnston: You can’t just go halfway when putting together a channel program. Trying to maintain a channel program with a significant amount of direct sales just makes both programs weaker. Pick your go-to-market strategy and commit to it.

Understand how your products fit into the broader ecosystem of solutions, how your customers use and consume your technology, and form deep relationships with those ecosystem partners. That will foster deep relationships with your customers and partners alike.

Work with value-added distributors that have VARs who fit your model and who sell the solutions that work with yours. Choosing to work with a distributor that sold our technology partners’ solutions was one of the best decisions we made.

About Patrick Johnston

Patrick Johnston is Vice President of Worldwide Sales at Savvius, and has a 30-year track record of building channel sales programs for outstanding networking and software companies including Extreme Networks and Brocade. Patrick holds a BA in Management of Information Systems from California State University Fullerton and in the past has been president of a school board of trustees, a flight school owner, and a college student mentor.