A channel strategy is important for both stimulating fast growth and diversifying revenue streams. But to be effective, the strategy has to benefit your company, your partners and your target customers.
Amy Guarino built the channel program for Marketo. She joined the nascent marketing automation vendor at the beginning of 2009, when they had less than $1M in revenue and only 25 people. They had already established a sales and marketing engine. Amy was brought on to figure out how to diversify their revenue stream through a channel strategy.
The strategy was ultimately very successful. Marketo launched its first product in 2008. By 2015, their revenue was $209.9 million. They went public in 2013 and were bought by a private equity firm in 2016 for approximately $1.79 billion.
I had the pleasure of interviewing Amy about how she went about developing the channel program at Marketo. In this podcast, she describes their early goals, how she corrected a strategic misstep that created unintended channel conflict, and the surprising way the channel helped Marketo penetrate large enterprises.
Transcript for the Channel Strategy Episode
Candyce: Amy, thank you for joining us. I am so excited to be able to talk to you on the podcast today.
Amy Guarino: Thanks Candyce, happy to be here.
Candyce: A lot of companies in the mid-market need to find a channel strategy and a partner strategy to help them scale and really grow. What are some of the keys to actually launching an indirect sales channel?
Amy: I think the biggest thing that companies need to think about is what do they really want to get out of the channel? In most cases, CEOs say, “Well, I want to be able to get access to an additional customer set and move more quickly to close those deals, and use the trusted advisor status of those channels,” which is great.
The piece that a lot of people don’t think about is, “Okay, so that’s what I want to get out of it as a company, but what does the partner want to get out of it? What value do they get? Then, most importantly, what value does the customer get by having this combination of the partner and the vendor coming together?” When you figure that out, and can put together that triangle, that’s when you really start to identify what you want to get accomplished with a channel strategy. Then you need to figure out the right strategy in terms of finding the right partners that can help get you there.
Really the key to getting started is figuring out that triangle. What’s the value for your company? What’s the value for the partner? Then, most importantly, what’s the value for the customer?
Candyce: How did you start that?
Amy: I joined Marketo back in the beginning of 2009. At that time we had 25 employees. We had less than a million in revenue. The good news is that Bill Binch had really figured out direct sales in terms of a process, and Jon Miller, on the marketing side, had really figured out our marketing engine in terms of how to bring leads in that Bill’s team could close. Phil Fernandez, our CEO and one of our founders, is a big believer in having a diversity of revenue streams. He didn’t want to be 100% dependent on Bill’s direct sales, and he didn’t want to be 100% dependent on Jon’s marketing team for leads.
So he told me, “What I really need is for you to figure out how to get more organizations spreading the word about Marketo and providing us with leads. It will diversify on the marketing side, and then also, more partners and folks that can actually close deals on the sales side.”
His theory, which I absolutely believe in, is that over time then as you have these different sources of revenue streams, when one isn’t working one month or one quarter, then the other ones are, and life is good. It creates a much more healthy business. That was my task.
At the time it was a rather curious conversation, I think. As soon as I joined Marketo, after we’d had all these discussions, Phil’s first request of me was, “Okay, you build these indirect channels, I want you to go out and give me a list of all of the SaaS resellers that we can target.”
I looked at him, and I said, “Are you serious?” He said, “Yes.”
I said, “I guess we had a little miscommunication somewhere down the road. There’s no such thing as a SaaS reseller. They just don’t exist. It’s not like the VARs of the old times. They just don’t exist.” He said, “You’ve got to be kidding.” I said, “No.” He said, “Then what’ll we do?”
I said, “Well, what we need to do and what I did at a prior company that sold to marketers is identify who the marketers buy from. Those are typically marketing agencies. Then we’ve got to go and identify the marketing agencies that were very forward looking, but also marketing agencies that had a little bit of a technical bent. In terms of my strategy, I sought out marketing agencies that typically either had a CIO or that they had been doing some work with other marketing automation platforms (at that time it typically was Eloqua partners) and that had a decent understanding of the space.
We initially tried having them be resellers. Very quickly, I think, it was probably about a month or six weeks later, I realized that in my triangle of the value proposition, having them as resellers wasn’t working very well for them because of the way we did business.
Marketo, as you may know, does a very good job identifying behavior that shows somebody is sales-ready. So if a partner went out and talked to their client about Marketo and mentioned our name, typically the client would Google “Marketo” and then visit the Marketo site and start exhibiting behaviors that looked like they were sales ready. Very quickly, our sales team would identify that lead through the lead score, and call them. It created a lot of channel conflict and so we realized that that wouldn’t work.
Again, thinking about how do I make this valuable for the partner, but also create value for the customer, and accomplish what we wanted to do. We developed a partner strategy what we called the Agency Program or the Managed Services Program, where we would sell essentially a large instance of Marketo to the agency, and then allow the agency to provide a fully outsourced service, essentially marketing as a service powered by Marketo to clients.
Our initial need from a customer perspective was from smaller clients that didn’t have the head count to really manage a Marketo instance on their own. They were probably venture backed, had money, and needed to quickly put in a strong foundation in terms of their marketing efforts. So for those folks it worked out extremely well. Instead of buying Marketo and managing it themselves, they could go to one of our agency partners, pay them a retainer, and get that expertise, as well as a very powerful technology enabling that.
It’s very similar to outsourcing PR. They just outsourced their demand gen. What was interesting about that time, was Marketo was selling primarily to SMBs. About a year-and-a-half into it, I started getting calls from some of my agencies, saying, “Can you help us? We’ve got a large enterprise client that’s very interested.”
I thought that was rather curious since we weren’t selling that much to large enterprises, and wanted to find out why. They gave me names of these large enterprises, and those companies were actually customers of some of our large competitors. I said, “I don’t understand. Why in the world do they need to use you guys to run these campaigns? I know they have a platform internally.”
The response was, “Well, this particular division, or this program, doesn’t have access to the company platform because it’s a corporate asset, or they don’t have priority. But they still have money that they can spend on a program. It makes it very easy for them to outsource that to us, while it would be impossible for them to go to their IT organization and say, “I want to buy my own platform.” It really worked out very well. It was a great way for Marketo to get clients early in the enterprise space.
Candyce: It’s interesting that you would say that because I was personally involved in a couple of those situations. One was an enterprise data center that had us deploy Marketo for them as a pilot. Another one actually had Eloqua internally, and they asked us to deploy Marketo and launch a lead conversion strategy where they were generating cold leads, and we would go through a nurturing process and try to book meetings for them off of those cold leads. It was interesting because, sometimes we wouldn’t necessarily get the meeting booked because we had the same kind of conflict that you were having when you tried the reseller approach. The inside sales people would notice that a prospect had hit their website from the list that we were calling. Then they would call up and book the meeting. Because of our outbound outreach, we were touching that prospect a lot, so they visited the client’s website. We didn’t have access to the website visitor traffic. It was an interesting problem for us. Frustrating for me, but wildly successful for the client.
Amy: It is interesting, but clearly what that tells you is that the power of having active engagement with a customer and being able to provide relevant information, ultimately from the customer’s perspective that was very successful. But it does get frustrating in terms of determining what influenced what.
Hopefully, you had an enlightened customer that didn’t just measure the success in terms of the “meeting.” Because you’ve got all the operational marketing data, you would be able to look at the information to say, “Look, marketing or my agency touched this guy 17 times, and then sales swooped in and got the deal. But you can clearly see the touch points in the engagement.” You just have to have an enlightened customer in terms of how they’re thinking about it.
We see the same struggle that happens in all organizations in terms of who gets credit — Marketing or Sales. Within Marketo, they have a great report that actually shows that. It’s especially [important] as we get into more of the account-based marketing when you’re touching lots of people within an organization. Being able to take all of that operational marketing data and share with the sales organization to say, “Look, I know you guys are excited because you feel like you took the deal home. You were able to take this guy out golfing, and that’s what’s caused this deal to close. But let me show you what happened in the nine months prior to that. Marketing was engaged with 12 different people. It really wasn’t until one of these people who works on that guy’s staff who you took out for golf, really got engaged. Then all of a sudden it bubbled up to a point where your guy was warmed up enough to have a conversation and start to engage with the sales part of our organization.”
That continues to be a constant battle, but having the data really helps. I think it helps them substantially in terms of marketing be able to articulate the value or a marketing agency be able to articulate the value they’re bringing.
Candyce: Yeah. I would agree. We were very fortunate in that we were working directly with the head of sales, and the CEO. They did see that direct value, because they knew which accounts they had sent to us to work. If a lead came up from that account, they knew. That was in the early days, way before people were talking about ABM. They all knew that you sell to accounts, not to leads.
Amy: The funny thing about ABM these days, everybody’s talking about it, but it’s just the way people have historically sold from the beginning of time. Certainly from the beginning of my career at IBM, that’s the way we sold. It’s just now having the systems in place to be able to afford it, and having the ability to orchestrate marketing and sales in terms of approaching ABM. It’s really interesting.
Candyce: Yeah, it really is. I wish that we could talk forever, but I’m realizing that we’re actually running out of time here for our 15 minutes, and for your schedule. Is there anything last on suggestions or tips on channel strategy that you want to offer before we sign off?
Amy: No, I think that really the biggest thing is focus on value, and focus on it for you as the company, but also for the partner, and for the customer. If things are starting to go a little wacky, and you can’t figure it out, come back to that objective. Sit down and think about, talk to your partners, talk to your customers, and understand what you’re trying to accomplish. If you do that, and then if you keep an open mind in terms of thinking about all different options of what could be partners, then I’m sure you’ll come up with a great solution.
Candyce: This has been fantastic. Thank you for giving us a real case study of what happened at Marketo. It’s so helpful to have real stories of how this worked. Thank you so much for joining us, Amy. This has been fantastic.
Amy: You’re most welcome. Thanks, Candyce.
Candyce: Have a great day.
Amy: Thank you. You, too.
Amy is now the Chief Operating Officer at Kyndi. You can reach Amy at the following links:
You can learn more about Marketo here.
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