Jay BreakstoneCEO & Founder
I hope you had a chance to read my previous post on refining sales strategies for taking a new product to market. To recap: management alignment on go-to-market strategy is worth the difficulty that can come with it, and there are big risks associated with making bets on large customers that can strain your startup’s resources while making it difficult to find the team bandwidth to take advantage of new opportunities.
Today I’ll discuss how we are seeking to balance our go-to-market, pursuing strategically focused opportunities that drive product awareness in key verticals while preparing for the inevitable strategic changes in sales priorities that come with growth.
Diversity in your customer base not only reduces risk but also provides more predictable, consistent cash flow; this is something your board and investors will appreciate immensely. I’ve seen too many situations where a company whose largest customer drives 80% of its revenue gets hit hard because that beachhead marquis customer decides to send its business elsewhere. In the meantime, it’s a Catch-22: because all of your attention had to be allocated to that critical customer engagement, you couldn’t address new opportunities to drive customer diversity that helps eliminate situations like the one I just illustrated.
Another point to consider is that both OEM and direct sales approaches are high-touch undertakings. The former requires a series of procedures taken by a small company to comply with the regulated practices of a large global corporation, demanding additional resources toward achieving alignment with that OEM's best practices. The problem is each OEM has its own set of requirements. See where I am going with this? My small, early stage company already has a limited amount of resources; the pressure on those resources becomes acutely intense, effectively constraining the organization from making forward progress.
A direct sales model, on the other hand, requires the ability to optimize solutions for smaller deployments in specific environments, often on a case-by-case basis. This means developing a salesforce and engineering team that can provide meaningful support for those diverse environments as needed. Similar outcome: limited resources, high strain.
The teams built for each model look significantly different. For an early-stage startup that recently raised its Series-A, a fully direct sales force with multiple vertical specializations is often not a viable option. This strategy is often reserved for after a growth capital round has closed.
The balancing act
Ultimately, we made the decision to embrace a blended model that is equipped to manage opportunistic OEM agreements while building a diverse customer base through a targeted, yet leveraged, channel strategy. This is achieved by determining specific market verticals ideally suited for our solution (composable infrastructure) and targeting these verticals through system integrator and value added reseller partners. This requires us to cultivate a dynamic and seasoned team (avoiding the often common, spray and pray tactics) by having a handful of internal direct sales professionals to pursue a modest number of larger, marquis deals that are fulfilled through the channel while also coaching our partners to help drive sales through their existing customer base.
We’ve chosen to align resources to meet OEM qualifications and standards – and performance and reliability expectations – while implementing internal processes that mitigate the possibilities of consuming all of our resources.
Our small internal salesforce includes team members who have specific vertical expertise in enterprise, HPC, financial, government, and M&E and can fulfill orders through trusted channel providers. Customer confidence is paramount no matter the sales route, and the OEM/channel split allows for product development efforts that meet commonly shared requirements across a broad spectrum of verticals. The OEM and the channel providers, in turn, have their own agreements with their customers and can supplement Liqid sales support, training, and warranties.
Build for today, but understand tomorrow
It’s inevitable that our model will change as we grow. Its design ensures our present tactical needs are met while it lays the groundwork to meet future strategic goals. Balance will depend on market trends, which we constantly revisit to ensure we’re still executing for success.
A drive to continually improve while constantly evolving is, indeed, one of the most important things to build into any model for sales growth. Know your market, garner team alignment, execute, and succeed. Best of luck to anyone else who is faced with the ongoing challenge of building a go-to-market strategy for their early-stage tech company.