Why Building a Channel Partner Sales Team Early is Essential for SaaS Growth

Building a channel partner program should be a top priority for any SaaS company looking to scale customer acquisition and revenue growth quickly and efficiently.

According to Forrester research, over 80% of SaaS companies leverage channel partners as a key component of their go-to-market strategy. The reasons why are simple – recruiting and enabling a network of resellers, affiliates, integrators and other strategic partners significantly extends a SaaS provider’s sales reach into new markets. This allows for faster acquisition of new customers at a lower overall customer acquisition cost.

Given the immense growth potential unlocked by an effective channel strategy, SaaS companies should make building out their channel team a top focus early in their life cycle, ideally within the first 1-2 years of launching. Delaying channel development too long can stunt growth and make it exponentially harder to play catch up later on. The companies seeing massive scale through sales partners are those who made it a priority from the start.

In this post, we’ll explore why constructing your channel partner program and recruiting partners as soon as possible needs to be a core part of your SaaS company’s strategy for customer growth. We’ll look at the range of benefits partners can provide, from increased revenue streams to higher customer lifetime value. You’ll also learn the optimal timeline for building your channel team, tips on structuring it, and key takeaways on getting your channel initiative started strong right out of the gate.

Let’s dive in to why channel partners are so critical for SaaS companies aiming for scalable, efficient customer acquisition and revenue growth in the years ahead.

What are Channel Partners and How Do They Help SaaS Companies Grow?

Before diving into why channel partners are so valuable early on, let’s briefly define what exactly channel partners are.

Channel partners (also referred to as resellers, affiliates, integrators, distributors, etc) are external companies or individuals who partner with a SaaS provider to sell, promote or integrate their software to end customers. Partners can tap into their own networks and markets to find new customers for your products.

The most common types of channel partners include:

• Resellers – Partner companies who purchase your software to resell to their customers for a profit
• Affiliates/Referral Partners – Promote and refer your SaaS software to prospects in exchange for a commission
• Integration Partners – Integrate your software with other tools to enhance functionality
• Managed Service Providers – Sell ongoing management of your software as a service

No matter their specific business model, all partners ultimately serve as an extension of your sales team. By tapping into their existing customer bases and networks, channel partners can significantly expand your market reach.

This enables faster acquisition of new customer logos compared to relying solely on your direct sales team. Partners also typically have pre-established relationships and credibility with prospects in their networks, which helps accelerate sales cycles.

By leveraging partners’ sales bandwidth and connections, SaaS companies can scale growth more quickly and cost effectively. The additional revenue generated by partners also improves gross margins compared to selling only direct.

Given these customer acquisition benefits, it’s easy to see why locking in great channel partners early on needs to be a top priority for SaaS companies aiming for scalable, efficient growth.

The Power of Channel Partners for Customer Acquisition

One of the biggest struggles for early stage SaaS companies is scaling new customer acquisition. Building out your own skilled sales team takes significant time and investment.

Channel partners provide a force multiplier for customer acquisition that allows you to ramp up growth much faster than relying solely on direct sales. By tapping into partners’ existing prospect networks and leveraging their sales bandwidth, you can achieve exponential reach.

Some key advantages partners offer for new customer acquisition:

• Extend Reach Into New Markets – Partners already have customers and connections in markets you likely haven’t tapped yet. This allows you to scale into new segments and geos faster.
• Reduce Reliance on Direct Sales – Partners take on some of the sales burden, decreasing dependency on just your own sales team for growth.
• Leverage Existing Relationships – Partners have trust and credibility with prospects, accelerating sales cycles.
• Shared Customer Acquisition Costs – Partners self-fund their own demand gen activities to drive pipeline.

According to SaaS industry benchmarks, top performing SaaS companies acquire 60% or more of new customers through sales partners. Clearly, channel partners are a proven high-velocity driver of customer growth.

Prioritizing recruitment of channel partners and creation of a strong partner program in your first years lays the foundation to fully leverage partners for scale. Delaying channel development too long causes you to miss out on their acquisition power.

More Revenue Opportunities from Multiple Sales Channels

In addition to accelerating customer acquisition, channel partners can significantly expand revenue opportunities beyond what your direct sales team can achieve alone.

Rather than only having a single direct sales channel, strategic partners enable you to generate revenue through multiple partner-driven channels simultaneously.

Here are some of the ways partners increase overall revenue:

• New Sales in Untapped Markets – Partners extend your reach into net new markets and segments your direct team hasn’t covered. This expands your potential customer base.
• Additional Partner-Influenced Pipeline – Well-enabled partners will proactively drive new sales opportunities and pipeline you wouldn’t have sourced yourself.
• More Closed Deals – With partners’ added sales bandwidth, you can close more total deals by covering more prospects across multiple channels.
• Recurring Partner Sales – Ongoing partner sales earn you incremental revenue month-over-month as they continually land new customers.

According to SaaS industry metrics, 25-30%+ of revenue for high-performing SaaS firms comes from channel sales. More revenue sources through partners equals faster growth and reduces reliance on any one channel.

The key takeaway is that to maximize revenue opportunities, you need to diversify across both partner and direct sales channels. Relying solely on direct sales leaves money on the table that strategic partners can help unlock.

Improved Customer Lifetime Value and Retention

In addition to driving more new customers and revenue, channel partners can also increase customer lifetime value and improve retention rates.

Local channel partners often provide enhanced service and support to the customers they sell to. Having a partner who understands the local language, business customs, and regulations can improve the customer experience.

Other partner benefits for customer retention and LTV:

• Ongoing Support: Partners provide continuity of service to customers in their geography. This improves retention.
• Specialization: Certain partners focus on niche verticals or complex use cases they support well. This increases customer success.
• Custom Integrations: Partners customize integrations between your software and other local tools, tailoring solutions to each customer’s unique needs.
• Lower Support Costs: Partners reduce your internal customer support costs by being local product experts.

According to Forrester, the renewal rate for SaaS customers acquired through partners can be 15 to 30 percent higher compared to direct sales.

The net result is higher lifetime value and lower churn for partner-sourced customers. Focusing on channel ecosystem development early maximizes these customer retention benefits.

When is the Right Time to Build a Channel Program?

Given the range of benefits we’ve covered, when should SaaS companies aim to start building their channel partner program?

The short answer is – as early as possible!

Here are some key considerations on channel program timing:

• According to Forrester, over 75% of channel programs fail due to delays in launch of over 15 months. Don’t fall into this trap.
• To drive material revenue impact, partners need time to ramp up sales activity. Starting too late inhibits their contribution.
• Early recruitment of partners allows for more time to test and learn what partner models work best.
• Your software needs enough product-market fit to appeal to partners’ existing customers. This usually occurs within the first 1-2 years.
• You want the sales processes and internal infrastructure in place to effectively support partners at scale before recruiting them. This takes some ramp up.

Given these factors, the ideal timeline is to build your initial channel program within the first 1-2 years after launching your SaaS company. This gives you time to establish product-market fit and build internal capabilities to support a channel.

It also allows 2-3 years for partners sales efforts to start meaningfully impacting revenue. If you delay starting your channel initiative too long, you miss out on years of potential growth.

How Should SaaS Companies Structure Channel Teams?

Once you’ve decided to make channel a priority, how should you structure your channel team and program?

Here are some best practices on getting your channel initiative set up:

• Recruit a Channel Manager – Hire an experienced channel leader to develop your strategy and recruit/manage key partners. This is not a junior role.
• Build Partner Sales Support – Add partner account managers or sales engineers to support partners with technical/product expertise.
• Develop Channel Marketing – Create dedicated marketing content and campaigns to support partners’ sales efforts.
• Create Partner Portals – Provide partner-specific portals, tools, and resources partners need to sell effectively.
• Define Partner Processes – Establish clear onboarding processes, sales workflows, and programs like deal registration to drive consistency.
• Set Revenue Targets – Define quarterly channel revenue targets to focus the team and ensure accountability.
• Refine Channel Programs – Continuously get feedback from top partners on how to improve your channel programs over time.

While organizations will evolve their channel structure over time, putting the core roles, processes and infrastructure in place early on ensures you can maximize partners’ revenue impact.

Key Takeaways on Developing Channel Partners Early

Developing a strong channel partner program needs to be a top priority for SaaS companies looking to scale customer acquisition and accelerate revenue growth. Here are some key takeaways:

• Channel partners provide immense reach through their existing prospect networks. This enables rapid scaling of new customer acquisition.
• Partners increase revenue by driving new sales opportunities in untapped markets direct sales can’t cover.
• Customers sourced by partners tend to have higher retention rates and lifetime value.
• Building your channel program and recruiting initial partners should occur in the first 1-2 years after launching.
• Prioritizing channel early gives you more time to refine programs and maximize partner impact on growth.
• Structure your channel team to provide sufficient support and resources to effectively enable partners.

While challenging to get right, early investment in your channel strategy sets the foundation for leveraging partners to rapidly scale your SaaS business in the years ahead. Evaluate your current channel initiatives and timeline to ensure you are capitalizing on partners early enough in your growth journey.