We’ve heard for years that SaaS applications will disintermediate traditional marketing channels with it’s direct to consumer and viral uptake – many were envisaging a future without traditional media usage. The truth however seems to be somewhat different – the number of SaaS vendors I’ve spoken to recently who are embarking on “traditional” approaches is legion.
Many are embracing channel partnerships with “old-school” services companies – witness NetSuite’s (see disclosure) new SP100 reseller model (I analyzed the move here). Witness also Intacct (see disclosure) partnering with the AICPA to sell/market/endorse their product through US CPAs.
I recently spoke with CEO of Acumatica (more on them here) Ezekiel Steiner about their channel strategy specifically, but more generally channel strategies for ERP vendors.
Accumatica is 100% committed to a channel strategy and sees a significant conflict with vendors who embrace both a channel and a direct sales approach. In fact Steiner went so far as to call the NetSuite moves a “gimmick” given previous comments they’ve made about the validity (or otherwise) of a channel model. Steiner believes that, for mid-market ERP products at least, a channel strategy is the only way to make money. This belief is gained from experience seeing just how much implementation help customers want – price points on mid-market ERP products are such that a direct sales and support channel isn’t viable for a vendor to establish and maintain.
My analysis isn’t quite as stark as that of Steiner – while I’d concur that the channel is important for existing customers looking to transition to new products, there is a large number of greenfield opportunities such as businesses growing out of a lower level accounting product, and they are still likely to be amenable to the direct approach.
I would say that a clear delineation is required between reseller prospects and direct sales prospects – resellers are feeling very fragile right now and any dual-channel approach is going to be approached with caution – it’s vitally important for vendors going down this route to have a clear demarcation in place so resellers can feel secure in the partnership.
SaaS sales strategy, and in particular channel approaches, is an intensely interesting topic (well, to me anyway) – I’m keen to hear other vendor’s thoughts about this – flick me an email at [email protected]