Entering US Markets by Building Channels
Entering US markets by building channels can be very lucrative for non-US companies but there are many things that the software vendor has to think about from a strategy perspective. US software markets are huge seen from any perspective and it would be a big mistake to ignore it especially if the software vendor has a product that is both competitive and provides true value-add to the selected target market segment.
US markets are receptive for technologies that make them more competitive, but a foreign-owned software vendor has to understand the rules and expectations of the US markets and organizations that it will be selling to. What works in the local markets for the software vendor can not just be replicated to a foreign market and this is where many organizations fail. The ones that understand the velocity and sales motion in the US markets will become successful even if the success is achieved by trial and error approach. Too many organizations with good technology fail by not putting enough effort in the operations to ensure good customer experience in the buying process.
KEY CONSIDERATIONS WHEN BUILDING A CHANNEL IN THE US
Define your sales strategy
Define your strategy in respect to direct and indirect sales (channels). Far too often I see software vendors being confused about this and it always leads to channel conflicts that will eventually tarnish the reputation of the software vendor. If the software vendor wants to build a channel, its needs to have a “channel first’ approach in its actions and build that as part of its DNA when executing its strategy. The channel expects the software vendor to “show by example” how deals are closed and how to make money.
Ensure your business model alignment with the channel
Ensure that your business model is aligned with the channel business model. For every channel partner there are hundreds or even thousands of software vendors approaching the same channel partners to resell its solution. What has to happen is that the software vendors has to build its business model using for example Business Model Canvas and then do the same thing from potential channel partner perspective and see if they are aligned. It is an eye opening experience for the software vendor management when it realizes that it is proposing a business model that is not a win-win for the channel partner. Keep in mind that a potential channel partner is expected to invest in building a business and there are many others wanting them to do the same thing.
Ensure selection of right market segment
Define the market segment that has the best fit for the solution. Far too often we see software vendors dreaming of attacking any market segment which is not only unrealistic, but also blocks the software vendor of having a clear focus on where it wants to be successful. We use Business Model Canvas to demonstrate what kind of impact market segmentation strategy has on all of the other building blocks in a Business Model Canvas.
Define roles and responsibilities with your channel
Define the roles and responsibilities between the software vendors and a potential channel partner. Have you mapped out how what you expect from the channel partner from an execution perspective? If you have a SaaS solution, who is going to provision and invoice the end user organization? What will happen if the customer runs into issues and really wants help and your channel partner is not able to help the end user customer? What happens if the customer stops paying for the subscription? Will the channel partner be reliable for the payment for the software vendor and when can the software vendor shut down the service? These and tens of other questions are crucial when setting up a business in the selected market like US .
Ensure that you have a support model that works
Do you have a support model where your channel partners can get help when trying to close a deal with an end user customer. Software vendors that do not have a legal entity in the US need to understand that any US customer will have concerns about the support model that the software vendor has for the US markets. Some of these customers will test the support before they buy the service. I have seen happening tens of times during my career in the US. If the end customer “smells” that there might be issues with the support, they will go somewhere else even if you solution would have the best technology and address the customer jobs, pains and gains that the customer expects to cover.
I will be talking about these and other topics in an upcoming Microsoft Worldwide Partner Conference 2015 July 12-16 in Orlando. The session “Successfully entering the US market: practical strategies for bringing your business to the United States” will be in room S230A Tuesday July 14th from 01.00-02.00 PM EST. If you are visiting WPC15 and Orlando, you should definitely consider our session especially if you have plans to enter US markets.
