To channel or not to channel

Why should I sell through partners?

Can our product be sold by partners?

Why would a partner sell our products?

75% of global business is conducted via 3rd parties as opposed to direct. That’s to say that there is a high chance that if you have a product OR service to sell that it can likely be sold by partners of some description.

Low ticket items: Products that sell for very little but can be sold in volume are able to be sold via channel. Products that require additional services on top of the sale of the licence are also able to be sold by indirect channels.

Not a day goes by that I don’t see an advert on Youtube for someone plugging a VPN service that can “protect me from threats”. These items are low ticket products and rely on volume to make money when being sold indirect.

Products that require a certain level of technical knowhow: In my opinion, these are the best products to be sold through an indirect channel as the partner selling them can make additional revenues on services wrapped around the product. The sector that we work with, cyber security, generally requires some level of local support and implementation for the products to work correctly within the environment. The best way to do this is with a local partner who knows the market, knows the customer, and has a business relationship with the end user. It’s the ideal channel product!

High ticket items more than $5k per licence can be sold by partners on a margin basis as the partner can run the business on margins alone. These types of products could also need some level of implementation and support.

Looking at the table below, we get an idea of the types of partners that can work with the products that we work with. This is not an exhaustive list of partner types but a general idea of the types of products that fit each partner type.

We will always find the instances where vendors are selling direct, and they don’t want to move away from that model because they are making much more money. Imagine having 100’s if not 1000’s of partners generating sales week in week out where you just have to take a hit of 20% on average from the sales price. Well, that’s not always the case. Some vendors are moving away from the traditional margin on list price model because the partners can make their margins on the additional services that are packaged up with the licence.

Let’s take an MSP for example. An MSP doesn’t typically work on margin but on a list price to the MSP. This list price is what the MSP pays for each licence and they add on their services on top of this to bill to the end user. For a $5 licence purchased by the MSP, they can bill $30 worth of services which in turn makes more money for the MSP than margin alone.

Does this model work for everyone? Of course not. The value added resale of products needs to stay on a margin basis but in this instance, the resellers are not typically going for volume but on big ticket sales where they take a piece of a very big pie.

Working out if you should channel your product depends on the type of product you have. The question is not, “should I sell my products through channel?” but instead “What types of partners should I sell my products through?”.

In this article we have only looked at the different types of partners that can sell to the end users but we haven’t looked at the distributors. A distributor can be implemented to recruit most types of partners that the vendor wants to work with.

For free, no obligation chat about whether you should sell your products through channel or not, you can email us at info@channelyze.io and we can take a look with you. We work with channel consultants around the world who offer free, no obligation consultations to see if your product is fit for working in the channel.