A Unique Channel Partner Sales Strategy Expanding Opportunities for All
Many industries rely on indirect sales channels and channel partners to take their products to market.
In this same manner, vendors, suppliers, manufacturers, and others in a variety of industries often partner with solution providers, integrators, value-added resellers (VARs), and distributors to become the critical link between the enterprise and its customers.
Engaged channel partners are critical to overall success; their level of engagement is a reflection of the strength of the enterprise brand. Often, however, there are barriers to success. Enterprises sometimes have insufficient visibility into the channel, are challenged by managing partners, and think in terms of selling to their partners rather than with their partners. It is common for channel partners to need more support for the work they do on behalf of the enterprise.
There is a sales strategy that can address these challenges, support a healthy channel sales environment, and unleash growth for all. It can accelerate and expand growth by identifying revenue growth opportunities and multiplying the power of scarce sales resources. It can help channel partners sell more to the enterprise’s customers and open up new routes to market. This sales strategy creates a shift to a broader yet engaged network of partners and establishes a focus on customer relationships vs simply implementations.
Hub-and-Spoke: A Model That Produces a Sales Powerhouse
Cloud hosting providers have built an ecosystem of Independent Software Vendors (ISVs). ISVs make and sell software products that run on one or more platforms. Cloud providers that make the platforms, like Apple, AWS, Salesforce, and others, promote and support the ISVs because the more applications that run on a platform, the more value it offers to its customers. Telecommunication Service Providers (SPs) have developed ecosystems of their own where large numbers of channel partner arrangements are established to resell and augment the solutions provided by the SPs. We can think of these very large partner relationships in terms of a hub and its spokes—the large cloud hosting providers, telco SPs, and others are the hub, while ISVs, telco channel, and other partners are the spokes.
In this hub-and-spoke model, the hub benefits from sales of its products made by the spokes; and the spokes benefit when the hub positions them for optimal opportunity for success in reselling their products. Likewise, the spokes may also benefit from one another when they offer different but complementary products or services and stand to gain when they are invited to participate in a deal. When executed correctly, sales are completed faster and in higher volume for both the channel partners and the larger enterprise. It’s a reciprocal selling relationship which provides symbiotic sales growth and market expansion potential.
MarketSource’s Hub-and-Spoke: Integrated Partner Sales Center
MarketSource developed a hub-and-spoke model with its Integrated Partner Sales Center, or IPSC. It is built on close partnerships with a supporting portfolio of partners with goals that were tightly aligned and mutually beneficial. MarketSource designs a sales strategy and recruits, trains, and manages a dedicated sales team that serves the multi-client hub-and-spoke model. For example, a large managed service provider (MSP) or product distributor that typically works closely with several supporting vendor partners is positioned as the hub. The supporting vendors who market and resell that company’s branded products and services along with their own—usually complementary—products, are the spokes.
The model resides within the hub’s ecosystem and allows the spoke companies enhanced access to leverage things like the hub’s corporate brand, existing channels to market, sales and support personnel, and various systems and processes, and even their current customer base. The spokes fund the model, and because they can take advantage of the premium access and best practices from the hub, they often uncover opportunities to sell more of their own products and services as well. The arrangement, governed by the IPSC’s agreed-upon scope of work, creates an exciting synergy that optimizes the partnership. In simplistic terms, the spokes fund sales resources within the hub, which then emulate being badged resources of the hub. The spoke’s resources leverage their elevated access within the hub ecosystem and their heightened ability to control the sales effort to focus on driving more sales of their products through the hub.
Explains Aaron Williams, Director of Client Services, “When our clients invest in MarketSource, we supply them with a highly motivated team of contracted salespeople. They gain traction by selling under the auspices of the larger company, but behind its firewall. And, because the hub company is ‘plugged in’ with vendors who sell complementary products or technologies that enhance usage of their own products and build their brand, they are advantageously positioned, too.”
The IPSC is equipped to manage sales activities ranging from transactional to more complex solutions, often with extended sales cycles. The common denominator is that the IPSC enables the hub to transact and resell more of the spokes’ products, quicker. This strategic engagement creates a win/win scenario for all, strengthening existing business partnerships and driving sales results.
The IPSC spans all business segments and includes many well-known worldwide brands. The model tends to be well suited for a larger enterprise that has agreements in place with a portfolio of supporting businesses to resell their products and services as a supplement to their core business. Large telecommunications carriers, managed service providers, cloud marketplace solution companies, and major product distributors with a well-established major market channel stand to attain the best advantages of the value proposition.
The IPSC helped a global company build an integrated sales team comprising 14 unique vendor partners, each with a fully enabled sales group.
In calendar year 2020, the company generated a cumulative $120M+ in revenue, the majority of which was incremental, while its vendor partners subsidized all the associated staffing expenses. The vendors realized an average 10:1 revenue-to-expense ratio within the IPSC, which was an obvious win-win for all.
Enterprise Companies—the Hubs—Grow Volume Sales
Large companies that focus on selling and reselling an array of products and services may have a broad base of customers but are often still unable to meet all of their customers’ needs. The service may require complementary technology, such as a software application or hardware, for full enablement, which may be primarily sold by various partner companies. MarketSource’s highly motivated sales staff serve as brand advocates and representatives of the larger company. The Hub wins because more product is being sold on their paper, through their systems, to their customers.
Channel Partners—the Spokes—Gain a Competitive Advantage
“Smaller vendors cannot always rely on a large hub company to resell their products, as it just doesn’t work to scale,” says Williams. “However, if you have your own dedicated sales team working behind the hub’s “firewall”, and you have an elevated ability to oversee and shape the sales effort, it’s easier to transact business and you can sell more of your product. The real root of the success of the IPSC is that it helps vendors differentiate their product, which is particularly helpful in situations where they are competing with many companies that provide similar products. They don’t have an expansive presence in the marketplace, so they need a means to differentiate themselves and be more proactive in selling. They need a more aggressive sales stance.”
Essentially a company like a small OEM can fund a dedicated program in the IPSC under the umbrella of a large MSP and immediately expand their access to markets and prospects not previously realized. The IPSC sales team basically emulates the vendor’s own sales reps and enables vendors to have more control of their own destiny. The IPSC leverages best practices to implement fully customized solutions designed to optimize investment.
Says Williams, “It’s a beautiful model because it can slingshot a business into a whole new level. The return on investment can be quite impressive.”
The MarketSource Difference
The challenge of recruiting, hiring, training, and coaching a qualified and highly motivated staff of sales reps who are comfortable working in a targeted high-tech marketplace, is too much for many large central product and service distributors. And it can be exorbitantly expensive for both the hub and the “spoke” suppliers. This is where the MarketSource IPSC excels. Says Williams, “We’ve been doing this for more than 30 years and we know our solutions work. Our experience and expertise set us apart, but there are other reasons why businesses continually rely on us. We ensure that everyone who works under the MarketSource umbrella abides by our core values: Relationships, Open Communication, Work Ethic, and Serving Others. These values are the foundation on which we continue to meet and exceed our clients’ expectations.”