6 Mistakes Software Companies Make With Channel Programs

By Kevin Kogler, President, MicroBiz

Building an indirect sales channel is not easy.  It takes time and effort to do this correctly.  In building our channel at MicroBiz, we learned a lot of lessons.  Here are a few that we learned:

1. Moving into the channel before the product and infrastructure is ready.
   This should be obvious, but do not kick off your partner program until your product is market ready and you have built out the infrastructure to support your partners. If you cannot successfully sell and support your own product or service, do not expect a partner to be successful.
    
2. Investing too much time with single opportunity partners.
   When building out a partner program, there is a tendency to give priority to prospective partners that are coming to the table with a deal. If you do this, you will end up with bunch of partners that only delivered that first deal. Instead, focus on partners with the best long-term prospects rather than who can generate that first deal.
    
3. Selling both directly and through the channel.
   Selling both directly and indirectly presents a number of conflicts. If you decide to do this, make sure that you understand and put in place strategies to manage these conflicts. For example, do not list different prices for direct versus indirect customers.  Also, be prepared to pay a partner even if the prospect presented by the partner is already engaged with your direct sales team.
    
“When building out a partner program, there is a tendency to give priority to prospective partners that are coming to the table with a deal. If you do this, you will end up with bunch of partners that only delivered that first deal.”
4. Not creating enough economics to incentivize partners.
   It’s important to design your product pricing scheme and commission plan to provide enough economics for your partners. Be sure to put yourself in the shoes of a prospective partner to see if you would be excited to be a partner in your program. If you do not think your program is economically attractive, neither will a prospective partner.
    
5. Not being ready to support your partner in sales and/or product delivery.
   Do not assume that a partner can immediately begin to operate independently after signing up for your partner program.  Be sure to budget enough for the training, sales support, and technical support required to get a new partner up to speed.
    
6. Allowing direct sales people to manage partners.
   When starting out, it’s very tempting to use direct sales people to manage channel partners. Salespeople are coin-operated, so there is an economic incentive for direct salespeople to hang onto the best leads instead of passing them onto partners.  Clearly separating direct and channel sales operations helps avoid these conflicts.

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Kevin Kogler is the founder and president of MicroBiz, a cloud-based POS and inventory management software with more than 25,000 small and midsized retail partners worldwide. Kogler serves on the editorial advisory board for Software Executive magazine. For more of his advice on working with resellers, check out his article, “7 Lessons Learned From Building A Reseller Program.”