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Finding the Right Channel to the Market

Finding the Right Channel to the Market

If you are like me, you probably have years of experience selling for great companies where you refined your sales skills. You were a front line and second line manager for several years. You may have also helped some startup companies that didn’t really ever start.

Now you are in a new young company, and you are trying to sell a product that has never been sold before. There are a lot of very talented people in the startup. Like the fable of Damocles’, there is always an unseen yet prevalent pressure. And what you do to hit your sales forecast is to fall back to old habits. For example, you probably designed your sales force around a similar structure from a prior company. If your background is big software sales like mine, you brought on a couple of big hitters and enticed them with stock options (because you couldn’t promise them a pipeline). If you are used to channel sales, you may have recruited some sales partners to bring your product to the market.

Whatever you decide, you need to question it. Here are some ideas:

Direct Sales

  • What are all the pre-sales activities in my deal cycle? If you are in the enterprise software market like my startup, Agile Stacks, and have a platform on new technology like containers, Kubernetes and Infrastructure-as-Code, then consider part of your deal cycle will require education almost as long as closing the sale. Consider the time burden you need to carry to educate. Also, consider how market forces such as analysts or journalists can shortcut these pre-sales activities.
  • Can marketing create 3x in demand gen? This one is really all about the math. Having a good (not great) marketing team to find your customers are is critically important. Make sure that you are teaming with the CMO to ensure messaging is in sync, and a frictionless strategy is in place for campaigns. Every marketing person I have ever met dislikes being considered part of sales, however, they love being part of the revenue equation. Going with a direct sales model demands that marketing be part of the whole process regardless of departmental assignment.

Channel Sales

  • Am I selling lipstick or am I selling machine learning automation? Obviously, these are completely opposite product categories. Whether you are a consumer product or enterprise offering, partners and alliances can be useful if you feel that sales velocity can be better achieved by the reach of players already established in the market. Also, do a quick read of How to find the perfect partner as a SaaS startup from my Business Development peer here at Agile Stacks.
  • Does my product require a heavy service implementation to it? My very strong opinion is that tech startups should never compete in the systems integrator market (unless your startup is a system integrator). If investors see an imbalance in your revenue model (e.g. services is greater than licenses) then you are a less attractive investment. The solution is to let partners handle the implementation.

OEM Sales

  • Are they big enough to make an impact? Since we at Agile Stacks are in the new category for DevOps automation, there is still an uphill climb to be well recognized. Luckily, we have a great partnership with HPE because they are an investor. But not everyone get this off the bat. Make sure to do your due diligence in the OEM’s market size and growth trajectory.
  • How far out is the inflection for ROI? Incumbent tech companies will be very interested in what you are doing but don’t be fooled – the negotiation is a very long road. Ask yourself whether the time and effort is going to help sales this quarter or next year. Startups cannot afford to graze. Find OEMs that fill a gap. For example, I look for conversations with our brethren in the hardware space because they are great at making stuff that goes in racks. And I make great stuff that runs Kubernetes in those appliances.

Nothing guarantees a failed startup (or a startup that didn’t start) like no revenue. There are a lot of reasons for a startup to not start:

  • Developers are not as good as they thought, and the product just simply doesn’t work.
  • Marketing missed the market and didn’t know what prospects would spend money on.
  • The CEO and CFO couldn’t convince investors to give the company time to mature.

The worst one though is your fault as the VP of Sales or Chief Revenue Officer – you didn’t set up the right way to sell the product.

The good news for the company is that you can be fired and your replacement might have the trust of the investors to have enough time to fix your mistakes.

Or, maybe you should be flexible. Don’t set up the sales channel that you are familiar with, but instead develop the right sales channel to make your product fly off the proverbial shelves.

Let me close with a reference to Episode 24 of Reid Hoffman’s project called Masters of Scale. In this episode, he interviews Mark Pincus, Founder of Zynga. The resonant quote from the interview, “I believe you have to be relentless about pursuing a big opportunity — and ruthless about killing your own bad ideas along the way.” Flexibility and experimentation is key to success when you are selling a product that has never been sold. Don’t be stuck in your ways. Design a sales model that works for your product even if it is a different model than what you’ve done in prior companies.

Header photo “Indirection” by virusslayer 

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