Latest / Partnerships Unraveled / 047 - Creating a Channel Architecture: What does a Channel look like?

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047 - Creating a Channel Architecture: What does a Channel look like? · Partnerships Unraveled

• 0:07
  Rick: Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries of partnerships and channel on a weekly basis.
• 0:14
  Rick: My name is Rick van den Bosch and I'm the CEO and founder at Channext, and I'm here together with Alex Withford, VP Partners at Channext.
• 0:21
  Rick: Alex, how are you doing today?
• 0:23
  Alex: I'm really excited.
• 0:23
  Alex: I am less than a week away from flying to my honeymoon, so, yeah, I'm in a great mood.
• 0:28
  Alex: Awesome, how's your honeymoon going?
• 0:30
  Alex: So me and my wife were off to the US.
• 0:32
  Alex: We're going on a food and music tour through sort of Texas and we're off to Nashville because my wife loves country music.
• 0:41
  Alex: Yeah, I'm looking forward to it.
• 0:43
  Alex: Yeah, I've got that holiday vibe coming Awesome.
• 0:46
  Rick: And what's your opinion on country music?
• 0:47
  Alex: You know, my opinion on country music, Rick that's a leading question.
• 0:51
  Alex: I hate country music, but I think that's proof that I'm a good husband because, yeah, we're off to there because my wife absolutely loves it 100%.
• 0:58
  Alex: What a commitment.
• 0:58
  Alex: Yeah, if you see me taking photos and I've got noise-canceling headphones on, you know why.
• 1:04
  Alex: Please post them on LinkedIn.
• 1:06
  Alex: Yeah, we'll do.
• 1:08
  Rick: Awesome.
• 1:08
  Rick: Well, I think ready for our next episode already in the series we're currently doing on building a channel from scratch, it doesn't matter if you're building it for the first time within your company or entering a new geography or vertical.
• 1:19
  Rick: There are certain fundamentals that you need to have right when you are building your channel, and last episode we went very deep into channel strategy and today we're going to do a deep dive into the second pillar building your channel, which is channel architecture.
• 1:35
  Rick: And maybe for listeners that think, what is channel architecture?
• 1:38
  Rick: How would you define that and why is it important when you're building the channel?
• 1:42
  Alex: Yeah.
• 1:42
  Alex: So I think one of the common questions we talked about sort of channel strategy, which is why are you building a channel?
• 1:47
  Alex: The channel architecture is what does the channel look like?
• 1:50
  Alex: So why are you building a channel is very intrinsic, whereas what the architecture is, what the design of the externally focus.
• 1:58
  Alex: So while you've defined in your channel strategy who you're going after, in terms of then user and partner, there are lots of ways to get those partners on board.
• 2:07
  Alex: So a very classic one is are you going distribution or not?
• 2:10
  Alex: Are you going resale versus referral model?
• 2:12
  Alex: There's a lot of different ways that you can build a channel, and today we're going to discuss the sort of what those can look like and what are the thought process that you need to put into place to come up with the right architectural design.
• 2:24
  Rick: Yeah, because I think that's one of the things, right like we've discussed a lot around strategy, where it's like what's the end goal of our organization and what does the end user landscape look like?
• 2:34
  Rick: What does the partner then look like?
• 2:36
  Rick: And I think then you need to make a definite decision or not definite, but the decision at that moment where you're like, okay, now we know where are we going, but now we need to figure out how are we getting there.
• 2:47
  Rick: And I think that's a need when you get the architecture in place where you think, okay, how can we support the partners in the right way?
• 2:53
  Rick: But before we can make those decisions, we need to figure out what type of partner are we going to help, and you already touched upon some of the options.
• 3:01
  Rick: But if you have your strategy in place, what does then like help you to make the decision towards?
• 3:06
  Rick: What type of partner is going to help us with this?
• 3:10
  Alex: Yeah, once you've got your ideal partner profile, you'll very often find that that ideal partner profile fits into a channel architecture already.
• 3:18
  Alex: Very rarely are you targeting businesses that aren't already partners.
• 3:23
  Alex: For example, there are some very, very edge cases where that might be true, but 99 times out of 100, you're targeting a type of channel, and so then what you want to do is analyze that, the type of channel that those partners currently belong to, and if that channel will also fit and be, provide value to the type of business that you want to do, and you don't typically want to break away from that too widely.
• 3:46
  Alex: But then there are very select few questions that you can go to to understand right, we want to recruit the these types of partners, we want to recruit these quantity of partners and we need to enable those partners.
• 3:56
  Alex: And then what is the system in the architecture that's going to allow me to do that most effectively, most efficiently and with the highest rate of success?
• 4:05
  Rick: Yeah.
• 4:06
  Rick: So it's really looking at what the mechanics of our business and our products look like.
• 4:10
  Rick: So let's say you're a hardware product, then it must be a resale and probably you need distribution as well for logistics.
• 4:18
  Rick: But also if you go to like a lot of different regions, then distribution is also very viable for software.
• 4:23
  Rick: When you want to do a resale model, then you know, oh, we need different languages, we need different currencies, we need different currencies, we have local legislation.
• 4:33
  Rick: So that's really where, very quickly, if you were very clear on where to go with your company and with the end user, like, how do we construct the right partner type around that?
• 4:43
  Alex: Yeah, exactly, and even questions as basic as how many partners do you want, right, that's going to massively affect your channel architecture, because, even if that's internal resource or you delegate that resource down to people like distribution, if you need 100,000 partners, ultimately that's what you're building for is really important that you build your architecture in a way that it is future proof, and so this is one of the key things that I see people really really get wrong.
• 5:11
  Alex: They've got a pretty good idea on what their channel strategy is, they understand why they're building the channel, they understand the end users they're going after, they've got a fairly good idea on what their partner profile is, and then they fundamentally get wrong the architecture to make that happen.
• 5:25
  Alex: Because the architectural design is the bit that's going to glue you and your end users together consistently, and so getting that right, getting the right consultants in or the right channel leaders and the program designers to have a very clear idea on we understand who our partners are and how many we need and then the right sales, marketing, technical and operational approach to glue all of that together so that ultimately, you can be successful.
• 5:51
  Rick: Yeah, because, for example, if you work with a handful of enterprise focused partners, your operations or your architecture will look wildly different than when you work with a lot of SMB focused partners, where you need a lot of skill, a lot of like really a high volume, low touch model versus like a real one to one model as such.
• 6:08
  Alex: Yeah, and even questions as well.
• 6:10
  Alex: There's an 80 20 rule with most channels, even as as as fundamental as where do you want most of your value to come from?
• 6:19
  Alex: Do you want it to be a very flat and wide channel or a very deep and narrow channel?
• 6:25
  Alex: Those and what does the evolution looks like?
• 6:27
  Alex: You're going to hear me say this is about evolution and not change.
• 6:31
  Alex: The fundamental practice around designing your architecture is yes, it will evolve, but you don't want to be walking decisions backwards.
• 6:39
  Alex: You want to be adding on to, and this will allow you to continually accelerate your channel strategy.
• 6:45
  Alex: Is that, yes, in year two you may make a tweak and you may make an improvement, you may make an evolution, but it's not pivoting from oh, we've hired distribution and now we're not going with distribution.
• 6:56
  Alex: That's not good architectural designs.
• 6:59
  Alex: You want to get the fundamental decisions right that are going to set you out for a good five years and then, yes, you can innovate and you can dial in and you can optimize over time.
• 7:08
  Alex: But if you get those core building blocks wrong referral versus resell, distribution versus not how many partners do we need how many internal resources If you get those things fundamentally wrong, it's so much work to clean everything up.
• 7:22
  Alex: So spend a bit of time, really map it out in terms of what you want to see in year one, year two, year three, and ensure that that's the right vehicle to get your partners and end users on board.
• 7:33
  Rick: And really get that clarity from your leadership team there as well.
• 7:36
  Rick: Like, what is our goal?
• 7:37
  Rick: Like, if your venture back, then it's all about revenue growth, then you have to care a little less around profitability of that specific channel.
• 7:45
  Rick: So then you can go all in with, like, different types of partners, go wide, but also make sure, like we work with global system integrators, we have to give more margins than the more SMB type of partners.
• 7:55
  Rick: But, for example, if you're maybe in the non venture backed company where the channel needs to become our number one revenue resource, but also with the right margins and the right profitability, we know from almost every mature channel that their most profitable part of the channel is the long tail, because that's where there SMB partners are.
• 8:14
  Rick: They do less revenue per partner but with better margins for the vendor.
• 8:18
  Rick: So those are all like the mechanics to think about before you make a final decision on your actual Parking type who we're going to target, and then what we're going to do in a minute is select one parking type and then, okay, how do you build the architecture around it?
• 8:32
  Alex: Yeah, and you raise such a good point.
• 8:33
  Alex: I'm so often have to sort of re-explain this to To channel leaders, which is, yes, there's an 80-20 rule and they go up, these 10 partners do most of the revenue and you go, yes, but how much time, how much effort, how much cost are you putting in?
• 8:48
  Alex: And then suddenly you look at the bottom of the pyramid and you go, there's 10,000 partners here who, yes, they do a few run rate deals a month, but actually you add all of those up and it's bigger than any Individual partner.
• 9:01
  Alex: And if you've got the right digital automation strategy, the right digital partner success strategy, you can suddenly macro enable.
• 9:08
  Alex: Well, those are fundamental building blocks that you need to decide on right.
• 9:12
  Alex: We really value our long tail.
• 9:13
  Alex: It's a high priority for us to get right.
• 9:16
  Alex: So that's part of the core architecture that we're going to put in place and again, we're going to talk about this.
• 9:21
  Alex: So, so, consistently Phased approach, right.
• 9:24
  Alex: So if you're targeting the big hitters first, excellent.
• 9:27
  Alex: Then your year two, evolution might be right.
• 9:29
  Alex: We're going to invest this in tooling to ensure that we've got a digital approach for the long tail.
• 9:33
  Alex: Right.
• 9:34
  Alex: We're version three, year three we're going to invest in better marketing, better whatever, so that we can continue to evolve.
• 9:41
  Alex: But we're not changing.
• 9:42
  Alex: It's all about evolution.
• 9:44
  Rick: Yeah, I think.
• 9:45
  Rick: Finally, indeed, for example, with the example you gave, referral versus resell just be crystal clear also Internally what do we want to own within the customer journey and what is the partner going to own?
• 9:55
  Rick: If you're very clear on that, you want to own everything as soon as the deal is closed, or maybe after being brought in with the lead, then it's a referral model and you'll build your architecture around that.
• 10:05
  Rick: But if you really want to scale white I think that's always done best with the resell model but then you also need to build the full architecture around that.
• 10:14
  Rick: How are you going to do that in multiple regions, multiple verticals, multiple Languages and really build the channel as such?
• 10:20
  Alex: Yeah, and if you're in, if you're a CRO out there or a leader in a business and and you're sitting down with a channel leader and they're talking you through the channel design, there's a really key and easy way to test them on the architecture ask them why they made a very specific Decision.
• 10:37
  Alex: If they are and are and they're not sure on it, they haven't thought properly Around the architecture.
• 10:43
  Alex: Whereas if you go why we going distribution they very clearly say because we need wide access to lots of partners that we don't know the name of.
• 10:49
  Alex: Here's the incentives we're putting in place for the distributor to help us recruit and enable partners.
• 10:53
  Alex: That's going to give us the depth and the breadth that we need like excellent.
• 10:57
  Alex: Okay, they fully understand, they fully thought about decisions when so often I find that channel leaders have just skipped that step and because a previous business we did direct or a previous business we did distribution, or previous business we did referral, so we're building that again.
• 11:12
  Alex: Why did we choose referral?
• 11:14
  Alex: And are we confident that's a better dishes and the resell?
• 11:17
  Alex: Are we confident that this is a better decision than that?
• 11:20
  Alex: And how did we get to that conclusion?
• 11:22
  Alex: If you really test someone on the way they got to that conclusion, then they've got a well thought out plan and they're really thinking properly about the architecture of the channel that you're building.
• 11:32
  Rick: I think it's actually a good time to dive into an example.
• 11:35
  Rick: And let's take resell.
• 11:36
  Rick: That's what you and I know both most about as well.
• 11:39
  Rick: And then from there, okay, we've decided now, like, after all the strategy work, after thinking around the, the parking type, we've decided resell is going to be our model.
• 11:48
  Rick: Then we need to start looking at, okay, what is the architecture around that looking like?
• 11:53
  Rick: And I know I've got this from you, so I'm going to let you explain it but always with, like, the four pieces of your channel Architecture that need to be there.
• 12:01
  Rick: What are the four pieces?
• 12:02
  Rick: And also like, once again, what?
• 12:03
  Rick: Why are they so important?
• 12:05
  Alex: Sure.
• 12:05
  Alex: So any channel can be broken down into those four pieces, which is your sales strategy, your marketing strategy, technical strategy and your operational strategy.
• 12:13
  Alex: Fundamentally, you've got to have a key understanding what the end user needs in each of those four pillars, what the partners going to deliver in each of those four pillars when the distribution will be involved at all, and what the vendor is going to deliver.
• 12:26
  Alex: And you've got to have a very clear Throughline through to the end user around what they need in each segment and then the division of roles and responsibilities between you, a distributor and a partner.
• 12:38
  Alex: If you fundamentally understand that in each of those four categories, you've got a program that is ready to launch.
• 12:45
  Alex: If you do not understand an area and there isn't clarity, two things will happen.
• 12:50
  Alex: One, your channel team won't deliver the information effectively and two, deals will die as a result of it.
• 12:56
  Alex: You know, operationally you can't fulfill a deal, technically you can't support a deal, you won't close the deal or you won't open up opportunities because the partner thinks you're doing it, the vendor thinks the partner's doing it and it all just falls through.
• 13:07
  Alex: So as long as you've broken your whole channel strategy and architecture into those four pillars and we can give a real live example of the thought process you need to go.
• 13:14
  Alex: Then you can have a channel architecture that will work.
• 13:17
  Rick: Yes, so the marketing strategy is indeed for finding the opportunities, sales, for closing the opportunities, the technical, to actually implement and deliver the value that's promised.
• 13:26
  Rick: And then I think operations maybe to clarify is really the whole backbone of everything.
• 13:31
  Rick: That it's like you need operations in terms of a good contract with the partner before they can start working with you, the whole billing engine behind it, making sure that everyone gets the right commissions, etc.
• 13:41
  Alex: How do you ship and fulfill deals?
• 13:42
  Alex: If it's hardware, the operational strategy, if the ops don't work, nothing works.
• 13:46
  Alex: That really is the logistical and infrastructure backbone to make the deals work, and it's the thing that is, in my opinion, the most boring, but it is the thing that absolutely just kills channels if it doesn't work well.
• 13:59
  Alex: We see it time and time again renewals are super important, but the billing entity is not set up properly, so auto renewals don't work.
• 14:06
  Alex: Through the channel Bang, suddenly we've got 40% churn and it's an absolute nightmare.
• 14:11
  Alex: So these are the fundamental things that you really need to consider, and you've got to have someone who's very program minded to take you through those four pillars very, very cohesively so that you can drive that properly.
• 14:25
  Rick: And if you look at those four pillars, which one would you advise to start with?
• 14:29
  Alex: So I'd always start with the sales methodology, because then the marketing and the technical methodology are the bits that support the sales infrastructure.
• 14:37
  Alex: Because, depending on what your sales plan looks like, marketing and tech are going to play a massive or a minor role, depending on what you're trying to achieve.
• 14:47
  Alex: And then the operations is the table.
• 14:49
  Alex: Without the table, everything falls down.
• 14:50
  Alex: You've got to make sure it works.
• 14:52
  Alex: But always start with your sales strategy, because it's the most complicated to get right and then view marketing in the technical way as the way to support the sales happening.
• 15:01
  Rick: Yeah.
• 15:01
  Rick: So let's say we've decided now we're a resale model, we're going to recruit and onboard resellers.
• 15:06
  Rick: Then the first thing you're really going to focus on and we did that actually a little bit already in the channel strategy, it's okay how are we going to sell with those partners, how are we going to support them, what's the value proposition into those customers?
• 15:18
  Rick: But also what are the mechanics, what does the sales process looks like?
• 15:22
  Rick: And very clear roles and responsibilities.
• 15:24
  Rick: What is the partner doing and what are we doing in the sales cycle?
• 15:27
  Alex: Exactly so.
• 15:28
  Alex: You'll find that in some channels the vendor and the partner work very cohesively together.
• 15:34
  Alex: The partner opens up the opportunity right through their existing network and then the vendor joins in.
• 15:40
  Alex: If it's a deal over a certain value, or maybe all deals or maybe no deals.
• 15:44
  Alex: You've got to have a very clear understanding around.
• 15:46
  Alex: Does the partner understand when to escalate into the vendor and do they understand that clearly?
• 15:51
  Alex: Are they doing that?
• 15:51
  Alex: How are we tracking deal Reg?
• 15:53
  Alex: But fundamentally, just explaining to partner what's your responsibility and how are we going to support you.
• 15:59
  Alex: In the sales motion and we did touch upon this in the last episode, but I will readdress it you want your partner to be cracking into existing end users that they already have a relationship with.
• 16:10
  Alex: That's the lowest hanging fruit and it's the bit where the partner should have their trusted advisor already and it should get you into those opportunities nice and easily.
• 16:19
  Alex: And then ultimately you support that partner in closing those deals.
• 16:25
  Rick: Yeah, and if you're working on that plan as a channel team, what kind of things would you need in place?
• 16:31
  Rick: Is it like a short slide deck towards the partners, or what would you say there in terms of materials before you can launch?
• 16:37
  Alex: Yeah.
• 16:38
  Alex: So you want the value into the partner and the value into the end user.
• 16:41
  Alex: So in the last episode we discussed a reseller targeting European banks.
• 16:46
  Alex: Right, that's your go-to-market motion and you attach into a CRM tool Excellent.
• 16:52
  Alex: So you want to explain to the partner why the end user will be interested in it and want to send it for the partner.
• 16:58
  Alex: And you explain to the and then you give them the collateral to be able to have those conversations.
• 17:03
  Alex: If the partner is only responsible for the intro call right, booking the vendor in then you give them just enough collateral to be successful, versus a much deeper strategy which we won't get into today, but how they open and close and manage and find that opportunity.
• 17:18
  Alex: That's a lot more enablement and we've done another series on what you need to do to enable those partners in detail.
• 17:25
  Alex: But if the partner has to do a lot more work, there obviously has to be a lot more supporting information for the partner to really be successful in that motion.
• 17:33
  Rick: Yeah, I agree there.
• 17:34
  Rick: And then I think, if you got the sales piece in place, what would you do then?
• 17:37
  Rick: As the second one, is that marketing, marketing.
• 17:39
  Alex: Yeah.
• 17:40
  Alex: So, as we've touched on from a sales perspective, we're targeting existing end users.
• 17:45
  Alex: So you might think, oh, there's no value for marketing.
• 17:48
  Alex: Absolutely not true, right?
• 17:50
  Alex: One of the things that can help grease the wheels and find opportunities is how is marketing going to support very specific information?
• 17:58
  Alex: And the way I like to think about marketing is you market to the end users, but you're also marketing through the partners.
• 18:05
  Alex: Because if I'm a partner and I'm seeing, you know, marketing information, let's say, come out from my company, linked in around how this tool helps banks into this CRM, well, I'm seeing that information, I'm going to digest that information.
• 18:19
  Alex: I'm, as a salesperson within the partner, going to feel more confident.
• 18:22
  Alex: Guess what I'm more likely to talk about?
• 18:24
  Alex: Right, it's really simple All the marketing that you do to an end user, make sure the partner see it because they can reference it, they can follow up on it.
• 18:32
  Alex: It's a warm entry in.
• 18:34
  Alex: You're just really trying to make the sales life as easy as possible for the partner.
• 18:39
  Alex: Make that fruit even more low hanging.
• 18:43
  Rick: I like that split between two partner and through partner, because I think that's where we're really marketing plays a big role.
• 18:49
  Rick: Be very specific.
• 18:51
  Rick: Let's say you have your in the, your sales proposition, completely ready.
• 18:54
  Rick: Then you're going to think about okay, how can we extrapolate what's in that full proposition and get the right type of information to the right partner and the right end user at the right time?
• 19:04
  Rick: So therefore, indeed, really looking at, this information is going to the partner, but then we have like a part where we fully explain to the end user why this is the solution for them.
• 19:15
  Rick: That's what we want to distribute via the partner to the end user.
• 19:19
  Rick: You help your partners to generate demand in such a way, but also think around tactics.
• 19:23
  Rick: How can we help partners or how can we together break into that customer base?
• 19:28
  Rick: So maybe host an event together or do other co marketing activities where you're going to activate the existing partner and therefore really help your partners, and where your channel is a bit more developed but we're talking more around building the channel right now then you can start thinking about how can we help partners generate net new business.
• 19:46
  Rick: That's oftentimes where marketing plays a crucial role.
• 19:49
  Alex: Yeah, what I love about when you give someone a very specific remit is much easier to drive success.
• 19:54
  Alex: Right, build a marketing channel strategy for partners Okay, that's very complicated, but build a marketing support mechanism for partners into existing end users that have already bought this CRM.
• 20:05
  Alex: Oh, suddenly we can get very, very specific on the messaging and then we can just have discussions around the right vehicle to take that messaging to market.
• 20:14
  Alex: Is that linked in direct mail, is whatever that looks like?
• 20:16
  Alex: Right, we can have a discussion, and that might vary channel to channel, partner to partner, but because we've got a very specific partner type, a very specific end user type and a very specific sales approach, marketing has a very focused capability to deliver success.
• 20:32
  Rick: Yeah, 100%.
• 20:33
  Rick: And then I think we actually get to the third pillar already where it's technical enablement, where first you need extreme clarity again on that customer journey and what is the partner doing and what are we doing in every area.
• 20:44
  Rick: But then you really have to think about how can we best enable our partners to do the implementation successfully but also give continuous support, because if you go for a resale model, this means that your partner owns the end end user relationship and therefore also does the support to that end user.
• 21:01
  Rick: And there you really need to rethink again or not rethink.
• 21:04
  Rick: There you need to think how are we doing that right now, how is our direct sales team doing and how are we going to teach that to the partner?
• 21:11
  Alex: Yeah, I never know how you pronounce this words.
• 21:13
  Alex: Is it racist, is it rocky?
• 21:14
  Alex: But you need a, a racy document between your end user, your partner and your vendor.
• 21:18
  Alex: Who is doing what in terms of implementation, pre and post sales support?
• 21:23
  Alex: Who is supporting from a solution engineering perspective, maybe in terms of designing the solution?
• 21:28
  Alex: You just need very, very clear escalation protocol between the end user, the partner and the vendor so that there is absolute clarity who is doing what in terms of pre and post sales.
• 21:40
  Alex: As long as you've got that very clearly mapped out and the expectation has been set internally to the partner and to the end user, then everything can work.
• 21:48
  Alex: But you have to really think about this, because nothing will kill a relationship faster than the partner thought you were supporting it.
• 21:55
  Alex: You thought the partner was supporting it.
• 21:56
  Alex: Now the end users annoyed.
• 21:57
  Alex: Guess what?
• 21:58
  Alex: Your whole architectures messed up.
• 21:59
  Alex: So while it might might never be the most interesting thing, especially for sales minded people to focus on, it will absolutely ensure the continuity and the success of your channel over the long term.
• 22:10
  Alex: So when you're thinking about architecture, ensure you're thinking very, very clearly about the technical infrastructure.
• 22:18
  Rick: And this is also where we oftentimes see training and search certification coming in.
• 22:21
  Rick: So really think about again, what does the partner really needs to know?
• 22:25
  Rick: Let's maybe look at your own organization and like divided in three expertise levels that you could have around the product and then think, okay, what does the partner need to know as a baseline to be able to implement it with some customers?
• 22:37
  Rick: And then what's the second level, what's the third level?
• 22:39
  Rick: And and you don't have to have it like completely finished when you launch the program, because of course that's something you learn along the way but having some point of you there that really helps you to get to get the partners drive the right behavior because you want them to do that.
• 22:53
  Rick: Trainings and usually how we humans work, we love to get gratification, like when we do something.
• 22:58
  Rick: So, if you like, give a certification and things like that, that's just what works in terms of that.
• 23:03
  Rick: The partner has something to prove that they are actually certified in implementing your product as well.
• 23:09
  Alex: Yeah, and I think you raise a great point when we're talking about the architecture evolution, right.
• 23:13
  Alex: Phase one of your channel design might be hey, give everything to us.
• 23:17
  Alex: You know the example that we've used previously.
• 23:19
  Alex: We've already got a direct go to market motion.
• 23:22
  Alex: We're selling to these end users already.
• 23:24
  Alex: So we have the technical infrastructure clearly to manage and support and deploy this.
• 23:28
  Alex: These solutions, great, but over time, version two of your channel, version three of your channel, the whole value of channels that you can scale far wider.
• 23:36
  Alex: You also want to scale your technical resources, but have a very clear vision as to what you're scaling today versus what you're going to scale in a year, two years, five years right, and so your technical infrastructure very early on.
• 23:48
  Alex: I would always recommend don't let the technical infrastructure be the reason that it's very difficult to scale your channel.
• 23:54
  Alex: Keep as much in house as possible, but then over time find the partners who want to add their services, margin and do whatever else.
• 24:01
  Alex: Right, because there's a lot of inherent value there for the partner.
• 24:04
  Alex: But scale that over time right.
• 24:06
  Alex: Technical can be the reason that the channel fails to progress and so hold that internally until there's enough value built within the channel where partners are clamoring take on the technical burden.
• 24:17
  Rick: Yeah, I think that's that's indeed a very good point, like if the sales is flowing in with partners.
• 24:21
  Rick: They are very motivated all of a sudden to do all the training etc.
• 24:25
  Rick: So that's always good to not try to really push partners too hard in the beginning on training etc.
• 24:30
  Rick: But get some traction with them and then you much more will get a pool effect to that part as well.
• 24:35
  Alex: Yeah, which leaves us on to the operational mechanism.
• 24:38
  Alex: For me, the operational mechanism comes down to can we bill and have we got the sort of operational infrastructure to really drive these deals at volume?
• 24:49
  Alex: What do you see in the market in that area?
• 24:52
  Rick: Yeah, I think with operations and it's much more okay.
• 24:54
  Rick: What is necessary to do business right?
• 24:56
  Rick: So I think it starts with how can a partner become a partner?
• 24:59
  Rick: Usually your legal has something to say about it, your procurement, etc.
• 25:02
  Rick: You need to make sure that you have those things in place.
• 25:05
  Rick: And then, secondly, is, I think, what you always say how can we make it easy for partners to do business with us, which is, on the one hand, in the stuff we just spoke about, which is indeed make it easy to sell, to market, to implement, but there's also the practical part, right.
• 25:19
  Rick: Whereas, how can they most easily buy the product, how can they make quotes for their customers and things like that?
• 25:25
  Alex: I don't know if you have other examples, but yeah, to me, the one that you want to spend a bit of time thinking about is tooling, right?
• 25:30
  Alex: So are we going to use a partner success platform?
• 25:33
  Alex: How are we tracking deal-raged?
• 25:35
  Alex: What's the data in the metrics?
• 25:36
  Alex: Right?
• 25:37
  Alex: All of that, to me, becomes the operational backbone of how we scale our channel.
• 25:41
  Alex: We've touched on it several times.
• 25:43
  Alex: Build your technical infrastructure, build your operational infrastructure for your five year plan, right.
• 25:49
  Alex: So often I see businesses make a mistake where they go oh, we'll invest in the tooling once we've got 500 partners, Excellent.
• 25:59
  Alex: Well, the problem is then you haven't tracked any level of data properly, so you don't know what you should be measuring.
• 26:05
  Alex: And now you've got a critical mass and you're having to throw people at it.
• 26:08
  Alex: It's not working properly.
• 26:09
  Alex: Get the tooling and the operational infrastructure in place early so that you can scale, even as stuff, as you know, digital contracts, right, the very basics.
• 26:18
  Alex: Because what you'll find is oh, it's not much work when there's three partners, Brilliant.
• 26:22
  Alex: What happens when you start to see success and now you need 30, 300, 3000, right?
• 26:27
  Alex: You don't want to be hitting that hockey stick and suddenly having to look back and go oh my God, our operations are a nightmare when it's simple get it designed and implemented early so that when you start to scale, it's already there.
• 26:39
  Rick: Yeah, that's a great point to do.
• 26:40
  Rick: The earlier you start with it, the better it is.
• 26:42
  Rick: An example that I see time and time again is a lot of large vendors are struggling with their partner tiers.
• 26:47
  Rick: So they have the bronze, the silver, the gold, the platinum, and that is usually tied to how much margin a partner makes.
• 26:54
  Rick: But if you automate that early on, like if you don't do that, it's a disaster later on, because usually it's always based on what revenue that the company is, what revenue that the partner do last year and what certifications do they have, and you really want to have a clear view of what partner is where and then also automatically tick the right margin in, let's say your sales force or whatever, because otherwise it will become an operational mess when you scaled.
• 27:16
  Alex: it Sounds like someone wasn't thinking about that architecture soon enough.
• 27:20
  Rick: Amen.
• 27:21
  Rick: I think that's a great way to finalize this podcast.
• 27:25
  Rick: We spoke about the architecture of your channel and the today where you first decide what partner type are we going to facilitate?
• 27:31
  Rick: Big, important point for listeners you can have multiple channel architectures if you are working with multiple type of partners there, because it does change.
• 27:40
  Rick: But then indeed really look how are we going to support and create the right strategy for sales, marketing, technical and operations?
• 27:47
  Rick: I think thank you for sharing again today, Alex, around this topic.
• 27:51
  Rick: I hope our listeners enjoyed it as well.
• 27:53
  Rick: If they want to read more about it, they can view the, read the descriptions and see you next week.