CloudApp is an instant video and image sharing platform for companies. It’s one of the best ways to share within your screen, embed gifs, screen recordings and visually share your desktop.
People might wonder why a startup would want to develop a channel sales strategy and grow our business development initiatives. Why not stick with the traditional inbound and outbound sales format? Here we will discuss what worked, what didn’t and our journey through this process.
Should a small startup focus on channel sales?
When I first started, there was a perception at CloudApp that channel sales isn’t something for smaller startups. There is too much risk, the potential to waste time or limited resources. Sometimes, there is nothing to show for a long period of time while building out deals and creating relationships.
But it might make sense to take that risk. The initial payoff can be amazing if you use a methodical strategy and test out each potential channel until you find one that fits your product.
CloudApp has figured this out over the past eight months. We are a small and growing start-up with about 25 people. We have found a way to test things out quickly and efficiently. We have also identified the right channels and partners to work with and really started growing and expanding our business development initiatives.
Do you expect what channel sales really is like?
Before CloudApp, and like many people in channel sales, I had this notion of what business development actually entailed. I thought it was about meeting interesting people, talking strategy and doing all the fun stuff you hear about in this type of work. I was very excited and wanted to dive in and grow this area of business for our company.
I learned that business development often varies based on industry and sometimes even just based on the company. At times people don’t really understand what you do, especially if you’re doing a bit of everything while expanding and growing your channel sales strategy. One of the important steps before diving in as a startup business is to make sure you have buy in from everyone at the company. It’s also important to make sure you’re colleagues understand the value that you’re bringing as you’re growing your area of expertise.
Challenges can be expected if your team isn’t familiar with business development. If they are used to the control of fast results that come from working directly with customers, you might need to lead them through understanding the value of business development. Business development typically requires a different mindsets and patience as you ramp up and build. It’s extremely important that people understand this when starting out.
Correctly setting expectations for channel sales internally and externally
The first step to determining your company’s needs requires communicating with your team to get a better understanding of their expectations of your role in the process. You will also need to know what the company’s goals are to reach success.
Once, I was able to determine this, the next step was to figure out our revenue model for these different channels. Again, it’s important to really understand what partnering may look like for your company.
Take the time to conduct the research before you look for partnerships. Chat with the partners, look for new opportunities and figure out the revenue model that makes sense for these different channels and what partnering essentially will be like for you and them. This is probably one of the hardest things to initially figure out as you start.
If you do share your revenue stream, ask yourself, what are some decent margins to have in place? You need to know what does and doesn’t make sense. If you’re going to sell your solution through a reseller or a distributor, will you offer volume based discounts or any discounts at all? Knowing what is fair and attractive for larger users is one question you will need to answer.
We learned the answer to these questions through informational interviews, meetings and phone calls with resellers and fire systems integrators. We spoke with other tech companies that were further along than ourselves and had proven success in channel sales. Eventually we figured out a decent benchmark that many of our partners were pleased with. That was a good starting point for us.
Getting resources for business development in a small startup
You may not have access to a dedicated marketing specialist or developer to help bring your initiatives and vision to life especially if you are part of a small team like me. So for example, you’ll need to really use your marketing team to create new material, designs and logos that you can share with your partners.
If you’re going down the integrations route, tap into your development team and either have them help you create a new solution or act as a technical consultant if the work is being outsourced.
In my role, I work alongside the outbound sales teams, on larger deals or if we are working with new resellers or VARS, they’ll assist with the on-boarding process and help train them on how to sell CloudApp to their users.
Since everyone is dealing with a variety of tasks, the ability to really manage these internal relationships is extremely important. Without this you’re going to learn pretty quickly that you’re going to hit roadblocks along the way.
Use an experimental approach to focus
Once full buy-in occurred, the next step involved putting together some initial experiments to see what worked and what didn’t work. Having a research background was very useful for this part of the process.
To create good experiments, initially start off with developing some hypotheses on what type of partnerships work well with your company. You want measurable goals that you can actually track and look at. It’s important to identify your why. Ask yourself, why do you want to develop a channel sales strategy? Why does it make sense for you? For our company, the main goal was to increase business and team accounts and to increase the number of new integrations installed and potentially find new integration partners as well.
As a result we focused on partnering with affiliates, resellers and integration partners to name a few.
Can you provide enough support to your partners?
It is also important to know how much support you can realistically provide to your partners. This question came to the table repetitively during the initial conversations my company had.
Channel partners expressed having bad experiences working with smaller start ups at the beginning of the project. Having little to no support meant they had to do the majority of the work themselves. They were given new solutions, tools and services to provide to their customers, but without the on-boarding support in the early stages, they experienced challenges. Relationships suffered as a consequence of that.
To assist them we simplified the process as much as possible. This made it easier for them to work with us as we got started. It took time and effort at the initial stage which we were not expecting.
Again, it’s important to figure out how much support you’re willing and able to provide to the partners you’re working with. Being transparent with them is crucial to making the relationship work. Let them know up front what resources you will be providing them with through the process so it makes sense to them.
How to avoid competing with your partners
I also suggest not competing directly with your partners. If you decide to use channel sales you need to be prepared to commit to it entirely. Communicate with all members of your team. Make sure they understand the terms and how everything is set up. If your channel partners do see you as a direct competitor, they will be less likely to work with you and promote your product.
Making sure that your sales team understands this will avoid conflicts as a result of miscommunication or an individual seeking a quick commission. This will only harm the relationship that you’ve developed with your partners.
For example, our company’s policy for new accounts brought in by resellers, distributors or any additional seat requests are invoiced through that company. We are added to that customer’s invoice. This simplifies the process since we are a smaller team. They are able to handle it and it enables them to continue growing the relationship.
We are very conscientious about how many direct competitors we bring into a small space. We try to find complements in the partnerships we have between technology partners and VARs partners we work with.
It’s ok to use vanity metrics when starting out in channel sales
When you are starting out in channels sales strategies or working on a new potential channel, it is frustrating to deal with vanity metrics. For example, clicks, page views or sign ups that lead nowhere.
Often they are not actionable but they are still valuable and really help you to better understand your audience and each channel that you are comparing. It also helps you to get a better grasp of what you should focus on as you review the metrics.
The number of engagements may not always correlate to the number of sales, but it will indicate that digging deeper is needed to see why the numbers are inconsistent. It allows you to follow the traffic, see where it’s coming from and where it’s going as well.
Affiliates are a good example of vanity metrics. Our strategy was to use affiliates to drive more traffic to our website and create more sign ups that would eventually lead to increase sales.
However, it was not successful. As we looked closer at some of the vanity metrics and monitoring the traffic, we found something interesting. We were getting sign ups and paid users, yet paying next to nothing for those leads.
But the biggest value had been the content our affiliates were creating. This was interesting and unexpected. I began to see that our affiliates were great content creators. They had detailed YouTube videos, detailed blog posting reviews. This was content being created without our involvement. They just took the initiative to do it.
Although we haven’t seen an increase in sales leads or revenue, we are getting good content that we share with our international customers and users. One affiliate created a 10-minute review of CloudApps windows tool in Greek. The video quality was amazing and it was evident that a great deal of effort was put into creating it. This is one example of the benefits of partnership.
How CloudApp did “light” integrations with no engineering to MVP technical partnerships
Another channel we considered was creating new integration partnerships. However, being a smaller team proved challenging when access to our development team became limited if they were working on other projects.
We decided to shift our focus to business development without the engineering component. In order to do this we developed what is called “light integrations”. This is any solution that CloudApp links are compatible with or text based tools that our users benefit from. It also includes visual content, communication or collaboration to explain a process or a workflow. Some include gifs, videos and screen cast.
Our most popular one is Asana. We started with 4 traditional embedded integrations or plug-ins, but have since added 30 light integrations and counting. Our users love this because it shows them how to use CloudApp with other tools currently in their stack. They’re using it more, it’s helping us grow accounts as well.
More importantly, it allows us to open the door to testing new potential integrations and creating a quick MVP that doesn’t require developers or engineers for the set up. We use the metrics and the installs that we identify to justify needing a developer to work on new integration projects so we can expand and grow.
How we found our first distribution partners
To build a distribution channel we approached it by sending e-mails to VARs and resellers that targeted our market. At the beginning, response was good but eventually it declined. We believe this was because our audience base was too wide.
We then decided to shift our focus to Zendesk, VARs and resellers as a starting point. Since they were our most popular integrations and plug-ins, I felt this would be a good starting point to use CloudApp to up sell their support desk offerings and potentially build services for CloudApp as it grew.
As we had more conversations with some of our Zendesk, resellers and solution providers, I learned that some of our ideal partners were current product users or had been referred to us through a current partner. They used the tool, understood the value and our customer base. I didn’t need to sell or pitch the value of partnership with us. More importantly they had the right incentives and the right customer base which made it easier. We find this makes them the best advocates, educators and the best partners.
How we then build a process to focus on the “right fit” partners
The great thing about this process is that with every win and every lost opportunity you get a clearer picture of what your ideal partner looks like. I found this process extremely important to understand why some opportunities worked and others did not, and where to put our energy.
Having gone through this process, we were able identify the “right fit” for partnerships. As we had more conversations and meetings we started seeing clearly the individuals who were more responsive, incentives that made sense and aligned with our own goals. Eventually, we could visualize what the ideal “partnership” should be.
By the end of this discovery process I found that we had an outline of what steps we took, the successes we had and now we could use this to create a scalable process that worked. As the pipeline grows, we now had a blueprint of what to do as we tested out other channels. We could also share it with new team members and employees that we on-boarded.
We closed our first deal last month with a growing pipeline. New accounts through our light integration have also increased. This has shown we are on the right track.