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Don’t Jump Into the Channel

Posted on October 17, 2006 by Glenn Gow

We recently met with a client who shared their “channel opening” strategy with us. I’m hoping you can learn from their mistakes.

They are currently successful at selling a complex, high-end solution directly and through a few strategic alliance partners. Their solution has been designed for high-end enterprise customers, with a complex set of requirements to support massive numbers of users. They have been successful at the high end because they’ve engineered their solution for the high end user.

Their market has a pyramid shape to it. They are enjoying current success at the high, thin part of the pyramid. Because of enormous pressure to increase sales, they are looking at the larger number of customers available to them as they move “down market” into the wider part of the pyramid.

As it turns out, these customers have less complex requirements, and are willing to pay a lot less for their solution. Enter the channel. Because of reduced price points and an increased number of potential customers, they feel (correctly) that they should move into the channel to help them enter the market (let’s call it the middle of the pyramid). They are quite excited about the opportunity available to them, so they are launching their marketing channel program now.

Here’s the hitch. They acknowledge that they have not created a product to address the specific requirements of these new prospective customers. However, they feel that since it will take many years to successfully build out their channel infrastructure (correct again), they should start now, and get the product ready for that market in about eighteen months.

I hope it’s obvious to you that this is a mistake. Not only will they waste an enormous amount of money attempting to sell a product to customers that don’t need it, but they will completely torpedo their opportunity to build a channel program once the products are ready for market.

Glenn Gow

Glenn Gow is an expert in marketing performance, Coach, Board Advisor, Author, Speaker, Podcast Host and Founder & Advisor of Crimson Marketing. Follow me on TwitterLinkedInGoogle+. To get a free copy of Crimson’s One-Page Marketing Metrics Funnel, visit here.

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