8 distribution channels to consider for your B2B startup
It’s better to think of distribution as something essential to the design of your product. If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business — no matter how good the product.
— Peter Thiel, “0 to 1”
When B2B startups approach distribution strategy, there are a few questions that pop up instantaneously. For example, how is it possible to reach big clients that are willing to try new technologies / approaches / solutions on their business? Or … Even though companies are looking for a competitive edge to their businesses, how to convince them to take the risk and trust a small company? … These are the questions to be covered in this article. Specifically, I’d like to share insights regarding B2B distribution based on our experience at Aggregion company.
Understanding Challenges
Before any activities associated with distribution, we had to analyse the blockers and assumptions that our most desired clients might have.
From the start our goal was to work with big enterprises, as it could help us win other clients down the road. After specifying our target, we put together a list of possible barriers that we had to address:
- Complex business of intellectual property licensing and how our solution fits there
- Risks associated with adoption of new platform in major business processes
- Small and “new” service provider
The best way to (at least partially) offset those doubts, was to have a successful track record preferably with reputable organisations.
Once we realised that, the next step was clear — we had to launch a Proof of Concept project to show decision-makers the benefits they could rip off by working with us. This way we planned to gain trust and use the chance to demonstrate the improvements to the existing process — thus destroying the barriers mentioned above.
But the toughest part was getting on board the first company. However if we can do it once, later on it’ll be a lot easier!
Determine Your Distribution Strategy
Our action plan included 8 channels:
- POC projects
- Networking
- Recognition and Endorsement
- Incubators and Accelerators
- Marketplace presence
- IT Conferences
- Investment Funds
- Traditional Marketing
Our goal was to make as much of those channels as possible to work. Or we wanted them to work in conjunction.
We’ll review how this plan worked for us — examining one channel after the other. I hope this overview will help you find new possibilities for distribution in your B2B product! So let’s get started!
POC Projects
Before we review our POC projects, let’s take a step back as it will help to understand how it was possible for us to reach enterprises we later cooperated with.
Prior to Aggregion our founder and CEO had another venture — selling tablets with preinstalled educational content, which was licensed via different copyright holders. Soon afterwards that business was acquired by one of the publishers. Then Aggregion was created to tackle problems associated with current IP licensing process — the ones that were discovered during “filling” the tablets with content.
The most valuable assets of the previous venture were the contacts in the educational sphere that were obtained. Essentially, that’s how we got on the radar of Intel and what helped us to initiate a discussion regarding a possible POC project. Thus Aggregion platform on Intel processors was tested as part of the Intel’s “Training For The Future” promotional campaign.
Education — is a big market and enterprises play a role there too. For example, Microsoft has various software that is installed and used as default in many educational institutions — Microsoft Office, Excel, etc. After some research as well as networking, we were connected with Microsoft’s BDM to learn about KPIs that the enterprise had — especially associated with Azure traffic. Since our platform potentially could generate that traffic — we attracted their attention. Soon afterwards we launched a POC project involving Softline — #1 software distributor in CEE. The project is still in production!
Those first POC projects were like stepping stones for Aggregion. Thanks to that we accomplished the following results:
- We involved in other projects with these companies — commercial ones too!
- We got media coverage
- We got new contacts with other companies
Contacts aka Networking
As a follow up of our successes with first POC projects, new opportunities presented themselves. Since Intel and Microsoft have a wide range of products and projects, they connected us with other interested parties. Their extensive partnership network contained companies of various domains, sizes, locations, etc. Therefore a few components like positive reviews, successful POCs and exposure to the network of companies created us more partnerships! That’s the beauty of working with large organisations. At least that’s how it worked for us.
Recognition and Endorsements
Credibility factors are extremely important when dealing with companies and trying to convince them to at least try your solutions as part of a POC project. Therefore now that we had a successful track record with reputable companies, we had a much better outlook and bold arguments.
But there was another aspect that added “weight” to our name. We earned official recognition — we were selected for Microsoft Partner awards:
- Partner in Cloud Application Developer, 2017
- Partner in Education, 2019
Another option for greater visibility and endorsements is participation in various awards. Interestingly, companies can nominate themselves and then committee selects shortlisted candidates and later on winners. For us it was TechXLR8 Asia conference in Singapore in 2018. We were shortlisted as one of the candidates for “Best IoT Connectivity Solution” category. Even though we were not chosen as winners, it helped us to get additional exposure.
Incubators and Accelerators
Enterprise based incubators and accelerators are also the channels to consider. They create somewhat like an insider exposure to the business processes and can serve as building blocks for nurturing a promising partnership, creating additional assets or gaining valuable experience. For example, being a part of Microsoft Partner Accelerator program resulted in:
- Solid partnership that grew from a POC project into numerous mutually beneficial commercial activities
- Exposure to the other companies within Microsoft partner network
- Promotional assets. Microsoft created marketing video about Aggregion that involved representatives of companies we ran projects with. It served us as an endorsement, which definitely was a great asset whenever we had discussions with possible partners.
Another example is our participation in AirBus BizLab Bootcamp. Even though we are far from building aircrafts, we believed that our technology and its applications could be stretched to new domains. Thus selection committee was intrigued by our solution and we were invited on site to pitch. It was a great chance to work on value proposition canvas as well as prepare our pitch after a few sessions with AirBus employees in different departments. Not to mention being inspired by other startups (for the most part focusing exclusively on aviation related technologies). Even though we were not selected for the 6-months program, it was a very motivating initiative.
Marketplace
Some of the largest technological companies create online stores that offer applications and services either built on or designed to integrate with given enterprise’s products. For example, we used to publish our solution on Microsoft Azure Marketplace. This cooperation created a win-win scenario for both — Microsoft and us.
Generally, marketplaces offer software companies exposure to the market of enterprise users and IT pros looking for technical building blocks. Thus creating a potential of reaching more businesses (≠leads/customers). Some other examples of marketplaces that are out there:
Make sure you get involved in marketing activities that are usually offered by a marketplace. For example, in our case Microsoft was sending out newsletters about new solutions published on Azure Marketplace, created webinars with their BDMs etc. Of course, it is a one time boost, so think of other activities that will help bringing traffic to your offer.
IT Conferences and Meetings
Industry specific events are also something to consider. However, make sure you measure ROI of this channel carefully, as participation in conferences, summits etc. can be quite costly. In other words make sure that lifetime value (LTV) of attracted clients or funds raised is greater than your expenses or customer acquisition cost (CAC), otherwise it doesn’t make financial sense to exploit this distribution channel.
Some of the additional benefits of events include exposure to the useful contacts, learning about the trends and objectives of companies — potential clients. Below are just a few of the events that we attended and value we got out of them:
- Global Education Partner Summit (GEPS)
This private event, organised by Microsoft, provides an opportunity to spend one-on-one time with Microsoft industry experts. Additionally, there is a chance to meet other companies in the partner network with a potential for some interesting cooperations. Our CEO attended quite a few of them and it is definitely one of the greatest channels for companies working in education and building solutions on top of Microsoft products. As for us it turned into new leads and then commercial projects. - RISE Conference
One of the largest tech events in Asia, organised by the same team that also produces Web Summit and Collision — two other quite large IT conferences. This one was especially successful for us, as we raised our first external investment there!
- TechXLR8 Asia
During the event we interacted with potential investors, companies and possible partners. As a result, we signed a deal with an investment fund, expanded our network, learnt new insights related to Blockchain (now that we adopted that technology, it was our direct topic of interest) and got new promising contacts.
Obviously, just going to an event is not enough. Every time we prepared an agenda, specified our goals and got in touch with participants we wanted to talk to in advance. The objective — is getting as much as possible from the event and it’s entirely dependant on you! Reflecting on our experience, we had minimum amount of sleep, were packed with meetings and tried to talk to the maximum number of people.
Good luck and go get ‘em!
Investment Funds
It can’t really be called a distribution channel, however often times investment funds offer access to their very valuable network. For B2B segments, that’s definitely something to consider. Let me elaborate. Usually it’s quite difficult to reach a decision maker in a big enterprise. The chances to present your product are quite low — it’ll take a lot of time and effort to climb up an organisation’s structure from one professional to the next. Still at the end you might not be able to book a meeting with a desired individual. Thus it’s always better to have a trusted contact, who has an access to the decision maker, can delicately make an intro, leave the needed impression and at least win you a chance to have some say. Those kind of contacts are usually available at the disposal of reputable investment funds. And hey, startups turn to investment funds not just for money, but other resources too!
Traditional Marketing
Even though traditional marketing like advertisements and PR, can be used for B2B companies, compared to B2C sphere this distribution channel can’t organically win clients. However definitely work on your online presence. Below are two demonstrations of how our clients and partners created some quality articles and what we got out of it.
- Softline — one of our beloved clients made a press-release about our collaboration, in fact they were among the first clients who adopted blockchain solution of our platform. But publishing an article on top of that, clearly demonstrates not only the fact that we do run a project together, but what is more important trust and confidence in our solution.
- This next example is in Russian, please use translation extension. This press release demonstrates an announcement of two large Russian companies cooperating with a smaller and younger company — us Aggregion. What more it is written in the press centre of Microsoft — again showing credibility. Note, that this one is talking about a new turn in the growth of our company — we have entered a new domain of big data and digital advertisement management. Announcements like that positioned our business in the new industry, demonstrating our potential and capabilities.
[update] English version:
Summary
It was our story. It doesn’t mean that the same strategy will work in the same way for your company. But I hope it will give you some ideas or thoughts on how you can approach the complex task of B2B distribution strategy.
Reflecting on the channels we tried, I think the top three most effective channels for us were:
- Good old classics — network. For us the people that we met provided the assistance with all the grand projects and new initiatives that one way or another created us new opportunities in the market.
- Collaboration with Microsoft and winning them as partners opened new business horizons for Aggregion. In other words, cooperating with large enterprise can be a win-win scenario.
- Trying new projects in new domains. For us it meant the new market fit, another application of our solution and new experience to learn from.
What about you? What distribution channels you used for your B2B company? What were the results? Feel free to leave a comment and share your experience.
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