As more channel partners shift from transactional to service provider models – fed in large part by the rise of the cloud – their approach to sales must shift as well.

And in the quest for more recurring revenue, it's becoming increasingly important to not only land new customers, but to manage the relationships with existing customers.

"Now, more than ever," it's important to address business impact with a customer or prospective customer and the "pain" it's feeling, said Carl Gersh, director of sales and marketing with Forthright Technology Partners, a solution provider in Miramar, Fla. Compared with the more product-oriented transactions of years past, "that requires us to approach the clients differently."

To bring in more customers, solution providers are leaning more on marketing to help generate greater brand awareness. A survey taken at last month's Best of Breed Conference, hosted by IT Best Of Breed's parent, The Channel Company, found that more solution providers depend on a combination of sales and marketing to attract more customers compared with 2015.
"As you become a service provider … profitability is really, really dependent upon a high volume of customers, … less so than it is in a transactional model," said Carolyn April, a research analyst with the nonprofit technology education and training organization CompTIA. "So you’ve really got to be feeding the pipeline."

Recent CompTIA research in its 6th Annual State of the Channel report found that channel partners are beginning to up their game in sales and marketing. In last year's survey, only 32 percent of companies called sales and marketing efforts in the channel "highly effective." But this year, that has climbed to 41 percent.

At Cpak Technology Solutions, based in LaGrange, Ga., sales and marketing are working more in tandem, owner J. Wayne Abbott told IT Best Of Breed.

Cpak has tried to coordinate sales efforts with such marketing strategies as social media, email newsletters and trade show appearances.

"They've got to go hand-in-hand," Abbott said.

And the switch from product- to service-based sales has also changed the sales skillset, according to Abbott. "You’ve got to have a stronger sales force with some technical ability," he said.

For companies that consider cloud to have had a positive impact on the channel, 60 percent of respondents to the CompTIA survey called sales and marketing highly effective. (But the report cautions that some of those firms may have been "born in the cloud.")

CompTIA underscored that shift to a sales-marketing balance in its recent survey. The survey found these three strategies topping the channel's list of sales and marketing priorities: creating incentives to drive sales in new business area; rebranding their businesses as service providers, and increasing marketing budgets.

Those efforts may be paying off. Over the next two years, 46 percent of channel firms in the CompTIA survey believes the largest percentage of revenue will come from net net-new customers, with 39 percent saying existing customers. But when they were asked for the same question about the last two years, 46 percent said the largest percentage of revenue came from existing customers, and 37 percent from net-new customers.

"Volume matters a lot in a recurring revenue model, and thus it will be imperative to drive margin and sales by adding ever-more new clients to contracts," the report stated.

"As product sales become less of the revenue pie and managed and cloud services a bigger [part], the importance of selling and promoting their own brand vs. a vendor's grows," the report said.