November 13, 2015
[Podcast] Maintaining Partner Trust with a Channel Only Model
“If you want to be part of Datto, you have to be channel only,” said Austin McChord. McChord, CEO and founder of Datto, decided to utilize the channel-only sales model in 2008. Why does Datto sell through the channel? Why is Datto sticking with this? How does the acquisition of Backupify impact Datto’s channel-only sales model?
Listen to Rob Rae, Datto VP of Business Development, and Austin McChord, Datto CEO, discuss the Channel, DattoCon and a November-only sales promotion that partners will not want to miss. Listen to the full interview now on iTunes.
How did Datto formulate and develop into a channel only company?
“Originally, actually,” Austin says, “Datto was not a channel only company when I started the business. It was, in fact, the channel that came and found us. Originally, I sold the first devices, which we call the Datto Classics, or they were just called Datto 100 and 500 at the time. I sold through Amazon.com and through a web store that I created. Shortly after getting our first press in Engadget, which actually caused us to begin selling these products, different channel partners came to me and they said, “Hey, do you guys have a channel program? What do you have to help us on the channel?” This and that. We didn’t have a channel program at all, and it turned out that after getting many of these calls, eventually I respond to them, “We don’t today, but check back tomorrow.” Datto’s original channel program was created over the course of an afternoon. Then we had a channel program in coexistence with our original program, and it didn’t take very long for those same partners, who were now part of Datto’s new channel program to go, “I really wish you guys didn’t sell direct. I wish you didn’t have prices posted on your website.” It was in late 2008 that we made the decision to go channel only, and actually switched from selling direct to selling entirely to the channel. We closed up our online store, and it was the single best decision we’ve ever made at the company. What it did is, it gave us tremendous focus. Prior, we were trying to sell to all small businesses, and were literally making calls from a basement out to random small businesses, trying to convince them that they needed our DR products. By changing that focus to being channel only, we realized now the job was to bring on new channel partners ... It’s a much easier story to tell. It gave us focus because it was what media does channel read, what shows does the channel go to? It’s much easier to understand that and understand those needs. What ended up happening is that channel program really ended up building itself into a partner program as we got so much feedback from our channel partners about how to make the product better, what features they needed, what pieces they had, and really is an enormous part of Datto’s success, is that partnership relationship that we have with our MSPs.”
How and why do you continue to resist the temptation to sell to End-users?
“I think it’s pretty easy,” said Austin, “The channel feedback loop that partnership is truly what’s brought success to Datto, and has been such an important part of that. It’s the same thing of you could discount your product to potentially do really well in short term standpoint, but isn’t the right thing to do long term. It’s really easy to understand that the long term relationship that we have with our partners is what brings value to Datto. It just doesn’t make sense to circumvent that. Almost always, it’s very easy to get this person in a relationship with a channel and say, “Hey, I think you should actually work with this partner to fulfill this. They’re going to be much more helpful than we would be directly. You can build and tell that story very easily. It’s very rare that you really have to give up the deal. You sort or redirect it a little bit, and I’ve been very successful at that.”
Datto now has a presence at End-user tradeshows. We recently attended VMWorld. Can you explain why we’ve begun to do this?
Austin says, “A lot of our partners have asked us to do this, so this is us bringing value to our partners, trying to make it easier for them to close the deal. When we go to an End-user show, we’re taking all these leads, and we’re distributing them out to our partners. When we do branding events, we want to get all of that brand awareness, we want to be able to distribute that down to our partners to make it easier for them to close the deal, to give them more value. That’s entirely what it’s for. Many partners have come and they’ve asked, “Hey ... It’d be a lot easier if you guys were at VMWorld,” or, “It’d be a lot easier if when I pitch Datto to this customer, they had already heard of Datto before they knew who we were.” We’ve taken that feedback, and we’re applying it and doing it. There’s no other reason than we’re doing it for our partners, and to help them be more successful. Again, it’s our partners’ drive of value. We’ve gotten an enormous amount of value out of the relationship. It works both ways. We get great feedback about what we need to do, and how to make our products, our technology better, as well as how to make it easier for them to sell. We’re in service to them, and we’ll never forget that. That’s what built this business.”
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