Channel Partner Recruitment in the Software Industry – 2

 In Building Successful Partner Channels, Industry News

business model channelThis series of posts discuss the best approach for recruiting channel business partners in the software industry. Click here to read the first post.

We are focussing on the most difficult scenario where the software vendor has neither customers nor business partners in the territory. We call this the “bootstrapping” phase.

This series of posts recommend what to prepare for being successful with the recruitment process itself and it also discusses what it takes to find and sign-up those partners who are most likely to become successful in winning new customers in the market.

A successful partner recruitment activity for a new market is estimated to take approximately 9 -12 months including an initial market assessment performed prior to contacting any potential partners.

The posts conclude that successful business partners are made by dedicated and committed professionals. Until you have met your potential business partners in person you will not be able to make the right choices.

The Three Steps to Market Leadership

The road to market leadership in the software industry goes through three major steps:

Growth StagesBootstrapping

How do you get the first customers in a new market? How do you convince potential customers to engage with you when you have no references or if all your references are in faraway countries and maybe even in other industries?

This is the “Pre Crossing the Chasm” stage that any company must go through first. We call this stage “Bootstrapping.”

Predicting how long the bootstrapping stage will take and how much it is going to cost is very difficult[1].

Building Bridgeheads

Building Bridgeheads is the stage where the software vendor establishes his own representations. From this base the software vendor will work to systematically cover the entire geography of the market and drive past the tipping point[2].

Few software vendors are prepared to establish the bridgehead prior to having successfully bootstrapped the first 5-10 lighthouse customers and secured a stable revenue stream. This is certainly understandable, but unfortunately not always possible to avoid.

Certain markets (e.g. Germany, France, the UK, Brazil, China, Japan and the USA) are known for being reluctant to deal with “offshore” software vendors. Thus, depending on your value proposition, you may have to take the investment in the bridgehead up front or you may be wasting your time and money in a premature channel building and bootstrapping effort.

Irrespective of channel strategy you will never make it to market leadership if you are not prepared at some stage to establish your own presence in a market.

Scaling for Market Leadership

In this phase the software vendor pushes beyond the geographic coverage and starts mapping his market into horizontals and verticals ensuring continued potential for growth.

What do the three steps mean in a channel recruitment context?

Why do we mention the three steps to market leadership in a channel partner recruitment context?

Crossing_the_chasmThe three steps are important because channel partners have exactly the same behaviour as the market in general.

Channel business partners have the same behaviour as the rest of the market – they shy away from anything that is new.

The rule of thumb that only 15% of the market is available to a newcomer also applies in the business partner channel.

We will explain how to compensate for this disadvantage in the next posts. However, please remember that having something new and revolutionary may be a prerequisite for breaking into a new market, but it does by definition also mean that most of the market won’t listen to you (or your business partners) simply because you represent something new, which they consider too big a risk.

In the rest of this series of posts we will assume that you are in the bootstrapping phase. If you have managed to get a few customers through a channel of independent business partners, but don’t grow as fast as you had expected, then you may also find value in our recommendations.

Please check my book Building Successful Partner Channels

To be continued…

Business Model illustration courtesy of the Business Model Foundry GmbH

[1] For any type of product requiring sales people calling on potential customers the time for bootstrapping is seldom less than 12 months.

[2] The Tipping point is the market share where demand dynamics change and the market starts pulling the products.

Recommended Posts
Most Recent Projects