Vendors have never been blind to the benefits of selling their products through the channel – but they’ve never been blind to the costs, either. Historically, their relationship with resellers has required a substantial investment of time and money on both sides to be worthwhile, and it can sometimes seem like this investment isn’t worth the eventual return. For channel businesses, the learning curve of a new application (particularly in a complex area such as accountancy software) can be too steep to make selling it viable.
The rise of plug-and-play applications such as ours has dramatically reduced the learning curve for resellers (who can more easily achieve high levels of self-sufficiency, and higher returns), and thereby the costs for vendors. In fact, we have found that working with resellers and accounting practices alike has added a great deal to our product offering and our mutual end user experience alike.
The channel should adopt a pragmatic, long-term approach to vendors. Five years with this business model has taught us that recurring revenue streams are about cumulative income over time, not the one-off sales associated with perpetual licenses: the need to acquire new customers should be balanced with the need to keep existing customers on board for years to come. Because of this emphasis on customer retention, this software-as-a-service (SaaS) revenue model is much more conducive to high company valuations than the older perpetual license model.
A short-term approach simply doesn’t work for this revenue model: when a new sale generates only one 3rd of the revenue associated with a perpetual license/annual maintenance sale in the first year, a reseller naturally has to think ahead.
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