You have a great product with Product-Market-Fit (PMF) and are ready to tell the world about it. But how do you actually go about telling the world? Do you open up an office in a new country and build out a sales team there or hire new business-development-representative (BDRs) to focus on different verticals?
The expansion possibilities are endless but that also makes it difficult and resource-demanding to do it in-house. SaaS channel marketing might be the answer to your prayers.
Chances are you probably have come across channel marketing in the past in some shape or form but you might not be familiar with it and how to include it in your go-to-market (GTM) strategy. Channel marketing (sometimes known as indirect sales) is when a company recruits partners to refer, distribute, resell, or white label its products.
There are many reasons why a company should consider channel marketing but the main rationale is to increase your market share without the cost of developing those markets (geography, language, segment, or vertical) by giving up a portion of revenue to your partners.
You can think of the different types of channel marketing on a spectrum ranging from low commitment to high commitment partnerships. Common types of partnerships are:
In an affiliate or referral program, partners promote your products to their network in exchange for a percentage of revenue share. This is a low commitment and low resource required partnership.
Reseller programs are when you allow partners to resell your products normally at a discounted rate with a higher percentage of revenue share. You provide marketing and sales support in addition to partner training on your product. Oftentimes there is an incentive given to partners to complete training and certification so that they can provide the highest level of service and sell your product.
Common reseller types include:
Reseller partnerships require higher levels of commitment in exchange for higher revenue share and support.
White label or OEM programs are when a partner places their brand onto your product and sells it as their own. This is a high commitment option from partners—they have to put in significant effort and cost to wrap their service around your product. However, it can pay big dividends because their incentive is now fully aligned with yours: sell more product.
When evaluating the success of your channel program and what types of programs you should offer to partners, it is helpful to consider the Reach, Frequency, and Yield model. It will help you illustrate your value proposition to your partners and maximize your partnership.
There are many benefits to having a channel program for your SaaS business, however determining when you should include this strategy is a crucial part of the success of your channel program.
We recommend companies who have hit Product-Market-Fit (PMF) to employ the channel marketing strategy because before this stage it is vital to have fast and direct user feedback from your customers.
Another great time to consider deploying channel marketing is when you want to expand into different geographic markets.
An example of a company that successfully utilizes channel marketing is Hubspot.
HubSpot is one of the biggest and most successful SaaS companies and a big part of their success is attributed to their partners who resell HubSpot. Most of HubSpot’s partners are marketing agencies that work with clients who need to automate and optimize their marketing functions.
HubSpot’s strategy to partner with these agencies allows it to reach more potential customers and cover a lot more ground in terms of language, verticals, location, and size with relatively little cost.
Having a channel program allows you to form strategic alliances with partners who are familiar with the local markets, so you don’t have to spend the time and money to build from the ground up.
Keep in mind, if you are primarily targeting large enterprise businesses, then it may not be the best to use a channel strategy. The number of potential customers in this scenario is limited and you don’t want to have a partner sitting between that relationship. It goes without saying but channel marketing also shouldn’t be your primary revenue source.
Channel marketing can be a lucrative revenue source with relatively little resources required if deployed correctly. However, it is crucial to also be cognizant of the limitations and drawbacks of this strategy. If you are still unsure, send us a message to see if channel marketing is the right choice for your SaaS company.