So now you’ve been able to achieve the difficult task of building a reseller network. Many kudos are flowing your way from leaders within your organization. You get to travel, this time business class, to visit and wine & dine those key resellers who are bringing in sales. You’re doing it! You’re really bringing in sales in a low-cost and magnifying way. You’re now having visions of sandy beaches and fruity drinks as you think about your year-end bonus.
And then a call snaps you back to reality. Your reseller in Atlanta has gone rogue on you. They are promising things you’re not set up to deliver on, giving discounts way above what they can or should, and it sounds like the product they’re selling doesn’t resemble your actual product.
This is a common scenario for those who have set up reseller networks for their SaaS companies. While resellers can be an invaluable boost to your sales revenues, they come with their own set of issues. Chief among these challenges is maintaining consistent messaging, pricing, and customer expectations. So now that you’ve built a reseller network it’s not time to kick back, plug into Spotify, and cruise Reddit all day. Your work has just begun, and here are two key pieces we’ve found to be helpful in guiding your herd of cats.
One of the oldest sales tactics in the book is offering discounts and incentives to close a sale. Every SaaS company does it, and for the most part it actually works in helping push prospects closer to sales. But what happens when a reseller starts offering pricing discounts? Let’s look at this in terms of incentives. A reseller’s primary goal is to sell software, and so their incentive is to close as many deals as possible, even if the deal size dips down a little. Because at the end of the day, they can take a small hit on the commission, but if it means a much shorter sales cycle and more closed deals, they’ll discount your product very quickly in order to close that sale. It’s very similar to the scenario the Freakonomics guys outline in their segment about real estate agents.
The solution is in the legal nitty gritty. Creating pricing requirements within the reseller contract is critical. In these provisions, you need to ensure your resellers stay within your acceptable range of pricing. In this agreement, there should also be penalties for resellers that sell your product outside of those pricing restrictions, in the form of lower commissions on those sub-priced sales. So that’s the first half, the second half is communication. You need to consistently communicate your own internal sales team’s pricing schedules and strategies with your resellers, so that they are operating on the same wavelength as your internal team. This communication needs to happen every time pricing or discounts or incentives change. So the onus is on you to make sure they know what they can and cannot do with pricing.
The most difficult challenge in managing resellers is ensuring consistency across your network. This is true of product offering, value proposition, messaging, and customer expectations. In the absence of information and context, people begin to create their own and substitute that into their experience. So if a prospect asks a reseller about potential features, and the reseller does not know if Feature A is on your development radar, they will say something like “It’s on the Product Manager’s radar, and our team is working on it” just so they can keep the prospect happy and advance the sale. Now, suppose Feature A has been looked at, and the team decided not to pursue it. Now you have a potential customer that is expecting Feature A in the near future. This is a recipe for an unhappy customer, and who’s to fault? The short answer is: you are. As the manager of your reseller channels, you are responsible for all product knowledge within your network. And without thorough and consistent information, your resellers can’t really be as effective as they could be.
The solution to this challenge is a comprehensive, responsive, and nimble communication strategy. At every point in building a reseller network, your role will change from a hunter of opportunities to a cultivator or communicator. Your resellers need to know what your team knows, so they can make adjustments at the same time your team does. You should implement weekly 30 minute conference calls, monthly individual calls, as well as a tactical support team that can help your resellers quickly troubleshoot issues. Also, taking advantage of tools, like CONSENSUS™ (shameless plug), to ensure consistency of messaging across resellers, is critical to lowering the burden of managing so many different organizations. If you ever think you’re reaching the point at which you’re over-communicating, just know that you’re just getting to where you need to be.
Your reseller network requires just as much, if not more, attention and TLC as it did when you were first searching for resellers and building out. If you can maintain your pricing and have consistent messaging throughout all your resellers, you’ve got a great start to…well, something great.
Check these out if you missed the previous posts on building your reseller network: