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Starting a New Cloud Service? Get Back to Basics

From a basics perspective, you should have documents that outline your value proposition, pricing and why a reseller should join your program, as well as contractual agreements.

With the advent of cloud computing, and especially the potential of the Windows Azure platform, we're starting to see more and more services hit the market. Because of the cloud, more and more channels are now naturally being created. There are some basic things one must do in order to effectively build a prosperous channel. The next few columns will highlight some of the key areas. More importantly, the discussion will bring us all back to the basics, as this is where we truly need to start in order to maximize revenue. Let's begin.

Financial Basics
Any initiative requires a firm understanding of the financials, both cost- and revenue-related, and a channel is no different. You have a product or service and you want to push it into the market. Now what? Start by answering the following questions:

  • What is the pricing of the product or service?
  • How many do you want to sell?
  • What is your target revenue number?
  • How long is the sales cycle?
  • How many deals can a salesperson realistically sell of your product over the course of a year?
  • How will a potential reseller of your product or service make money selling it?
  • Is there enough profit potential and volume in it for the reseller?

Based on all this information, you then need to be able to answer this question:

  • How many resellers do you need to support your financial goals?

Program Basics
Once the financials are drafted, your work is not done. You now need to draft a rock-solid program. When drafting a program, always look at items from the perspective of the reseller. For instance, will the margin levels you put in place be appealing and achievable to the reseller? With a program, try to be as simple as possible by covering items such as revenue thresholds and associated margin structures, training requirements, and expectations and rules of engagement -- this will minimize any potential conflicts.

Additionally, make sure you have some sort of answer on lead generation (whether you will do the heavy lifting or the reseller should do the lifting). From a basics perspective, you should have documents that outline your value proposition, pricing and why a reseller should join your program, as well as contractual agreements. Again, these are the basics.

Recruitment Basics
Now that you have the program sketched out, you need to start thinking about the process of actually getting folks to sell your product or service. It's not that easy because resellers receive lots of calls per day, so you need to be able to articulate why you're different. With recruitment, the key is focus. You need to be like a laser and key in on the resellers that fit your profile exactly. Recruitment is also multi-pronged, in that everyone within your organization needs to participate. Your Web site needs to invite potential customers and you need to do proactive calling. I could write a few books on recruitment, but the building blocks start with these topics.

Enablement Basics
Let's assume you find a few resellers and they're really interested in your product or service. Now what? Well, I've seen a lot of channels fail at this juncture. Folks seem to think that once you find the reseller, the hard work is done in that the reseller will simply -- and magically -- sell. This couldn't be further from the truth. Basically speaking, create a mechanism whereby you're continually training and enabling the reseller. By doing so, you'll create loyal, active and productive resellers.

If you're a reseller seeking to represent more products or services (cloud or non-cloud), then view these basics from the other side. Look for programs that honestly have these sorts of things in place, and don't be fooled -- people will tell you they do, but in reality manydo not.

Next Time: Basics of Sales, Marketing and Operations

About the Author

Keith Lubner is managing partner of Channel Consulting Corp., a N.J.-based global consulting organization focused on channel strategy, design, enablement, outsourcing and training for growing companies.