IT Channel Lead generation
IT Channel Lead generation
If you’ve worked in B2B software for a while, you’ve probably come across the IT channel. The reseller channel is critical in B2B technology, both for end customers, who often purchase all of their technology from a reseller, and for software businesses, some of which sell exclusively through the channel.
And, like nearly everything else in technology, the channel is evolving. Fast.
The IT Channel: Managed Service Providers Versus Value-Added Resellers
As consultants to our portfolio companies, many of which sell partially or entirely through the channel, The Point Company has spent a significant amount of time speaking with resellers of all shapes and sizes to learn about (among other things) the services they provide, why they provide them, and their value proposition to end users.
We discovered in our research that the historical distinction between the two major kinds of resellers, Managed Service Providers (MSPs) and Value-Added Resellers (VARs), has blurred with the introduction of cloud and SaaS technology. In this article, I’ll discuss the differences between the two groups as we view them. This understanding will enable you to (a) focus on the group that is most appropriate for your company model, and (b) approach them in a manner that is consistent with their way of doing things.
Ultimately, the idea is to establish a symbiotic relationship, which begins with understanding how they work.
We’ll share this expertise by asking a series of questions:
What is the definition of a managed service provider?
A managed service provider (MSP) is a company that operates and maintains your technology for a certain amount of time in exchange for a regular charge.
They often provide a variety of services like as network maintenance, hardware repair, help-desk support, email management, and anything else that requires a daily administrator to maintain going. They may need to purchase technology from a third-party source, which is then bundled with their services and passed on to the end user.
What is the definition of a value-added reseller?
A value-added reseller sells third-party software and hardware to end users at a premium, as well as some mix of procurement consultancy, configuration, and customisation services.
They sound quite similar. What is the difference?
The most significant distinction between VARs and MSPs is the extent of their participation with the end user. VARs typically operate on a transactional basis (per license or seat), or on a six-month contract or less. MSPs, on the other hand, work on longer-term annual or multi-year contracts, with no expiration date. They expect to stay indefinitely. In other words, VARs are focused on specific events, such as implementations or migrations, but MSPs deliver services in a consistent manner.
Who do VARs and MSPs serve?
MSPs are sometimes advertised to small organizations as a fully outsourced IT department. Some specialize in a certain industry, vendor, or software group, but the majority divide themselves geographically. There are some huge MSPs, but the majority are quite small, with 20 or less staff. VARs typically serve larger corporations and are larger businesses themselves. They are also more specialized, typically by vendor or customer industry.
How has the SaaS business model impacted this landscape?
As more programs transition from the perpetual license model to SaaS, less and fewer are sold in a single transaction. This implies that VARs have had to adjust in order to remain relevant in the SaaS space. Some have achieved this by transitioning to an MSP model and providing continuous support for apps they assisted in implementing. Others get a portion of the customer’s original SaaS contract. Others try to capture some of the customer’s lifetime value by compensating for renewals as well. The specific model is determined by the VAR, the software they sell, and their negotiation strength.
So, do I sell my product through MSPs, VARs, or both?
The short answer is that it depends on your software. Where can a service provider create the most value? If the product requires significant up-front configuration or modification, you’re definitely better off with a VAR. If your product is a well-thought-out purchase with a lengthy buying cycle, as is common with core corporate software, your clients are more likely to hire a VAR to assist them with the purchase and implementation. SMBs do not typically have large IT staffs, so if you’re targeting small businesses and your product requires continuing technical support, MSPs may be a better channel.
If you have a large number of non-technical end users, your clients may benefit from continuing support from an MSP. Installed applications that demand high availability may benefit from an MSP’s 24/7 support.
What is the value proposition that will appeal to them?
MSPs and VARs share three common goals:
- Making their customers happy.
- Generating revenues
- Keeping costs low
To form a partnership, you must convince them that your product will accomplish all three goals. Making their consumers happy is quite simple: sell them like you would a customer. Resellers often maintain good ties with their clients and are continually polling them to identify unmet needs. If you can tailor your product to one of those end-customer requirements, you’re likely to secure a partnership.
However, the deal must be economically viable for the reseller. MSPs are often less upfront about their pricing, therefore they must be able to justify the cost of your product to their end users. VARs typically use a more straightforward function of contract value. A reseller will also evaluate the services that can be sold alongside your product. Finally, the reseller must pay a fee to become a reseller of your product. An MSP’s principal cost is the time spent by its technicians. As your product’s de facto customer support department, the more seamlessly your product functions for end customers, the less money it costs the MSP to maintain.
For VARs, the cost is primarily the opportunity cost of selling another product. Every breath they take while selling your product is valuable time that they could spend selling your competitors. If your competitor’s product is easier to sell or has superior economics, they’d rather keep it simple and advocate just one product.
Bottom line.
Selling through the IT channel, like selling directly to end customers, involves a grasp of who they are, what they want in a partner, and how they earn money. Before approaching a reseller, research the specific services they provide and the clients they represent.
Approach for Generating IT Channel Leads
Strategy Development
It is vital that your plan be based on tried-and-true approaches, adapted to your market, and designed to track and monitor outcomes.
Addressable Market Analysis
An in-depth examination of the total addressable market yields practical information into segments, trends, and prioritizing tactics.
Messaging Strategy Development
To design meaningful messaging that is relevant to your target market and ideal client profile, you must first have a thorough understanding of the market.
Target List Acquisition & Enhancement
We will create, acquire, and enhance the corporate and contact information required for effective targeting.
Advanced Lead Generation Program Tactics
A proven structure yields the most predictable results. The Point Company has created a formula for lead generation success based on thousands of client engagements.
Sales Development Playbooks
The sales development playbook serves as the strategic foundation for creating a repeatable, scalable lead generating strategy to drive your business growth. It is the foundational tool that underpins all other sales operations and serves as a guide for your products and services.
Program Metrics and Performance Management
Failure to measure and analyze the operational and strategic activities of your lead generation campaign will have a significant impact on its success. How else will you know if your approach is on track and where to make necessary changes?
Start Getting IT Channel Sales Leads