In this interview, Stewart Townsend defines indirect sales channels for SaaS as any route that gets a product to customers through a third‑party entity, analogous to supermarket distribution. He breaks down the three main strands: referral/introducer partners who pass leads for a fee, resellers who purchase the product at a discount and sell it (often handling tier‑1 support), and technology partnerships that embed the SaaS solution into other platforms via integrations. Townsend discusses white‑label reselling, noting its suitability for agencies but also the brand risk if the underlying product is recognizable. He argues that companies typically should begin building a channel program once they have around 50 employees and $1 M ARR, because sufficient resources are needed to manage partners; smaller teams often fail due to unrealistic expectations and lack of dedicated partner‑management capacity. The conversation emphasizes partner enablement—providing training, co‑branded sales kits, onboarding sessions, and ongoing support—as essential for success, rather than relying solely on contracts or metrics. Qualification of partners is framed more around cultural buy‑in and executive support than specific LTV thresholds. Townsend compares indirect to direct sales, illustrating that a channel manager can leverage multiple partner salespeople, achieving exponential reach without the overhead of hiring hundreds of direct reps. He concludes that indirect channels complement direct teams, offering scalable volume, geographic reach, and reduced salary costs when properly resourced and enabled.
Chapters
And for those in our audience, can you just specify in more detail what exactly, you know, indirect sales channel is? I know you mentioned, you know, referral partners, affiliates, and then, you know, technology. But can you go a little bit more detail there?
Yeah, of course. Yeah, yeah. So for those that don't know, and you know, a lot of people don't, and it's the first question asked is exactly that is what is indirect sales. So it's just think of it this way: you go to the supermarket, no matter what country, and you go to that supermarket, and that produce has come from somebody else. So it has been sold to them, and that that produce has come from another party in the middle. So essentially, that's a distribution channel. So that's one way of looking at it. Indirect sales in SaaS is is that same thing. It's basically it's a way of getting your product out to a marketplace that's through another company, company sales force, or another person's network. And in layman's terms, a referrer or introducer is somebody that brings you a lead and says, hey, here's Bob, he's interested in buying your product, go meet Bob. You go then close it through direct sales as normal, and you pay that introducer a fee. And you may pay it one time, you may pay it over 12 months, whatever it is. A reseller is somebody that's got a larger sales team that says, hey, I want to take your product, I sell into customer service, I'll go and take it out. I've got 10 salespeople. Whenever they're in clients, they can position your product as a customer service platform. Great. And they buy your product at $70 and sell it $100 per seat, and they can add services on and that sort of thing. And they generally look after tier 1 support. And then you've got a third strand, technology partnerships, which is just where you're doing integrations with other companies and they'll say, hey, I've got an integration working with Zendesk and this is what it does. If you need a customer service platform, it's really great because it integrates well with our CRM system. So it's a complementary sale. Normally it's like an introducer or a kickback fee on there. So always think of it as a way of your SaaS product going out to a market through a third party. You still own the products, you know, the legal entity of it being deployed and all that sort of thing. They go and sell it.
Yeah. Yeah. So something like a HubSpot or like a Shopify, right? You got an e-commerce platform, you put it on Shopify, you leverage their network and their audience and, you know, you get some of that traffic right off the bat. Yeah.
Yeah. And you give some margin away for the privilege.
What's your thoughts on white label reseller processes there? Because I know, you know, rather than selling it under your brand, you can sell it under your own brand. People buy like a license, white label it, and then, you know, resell it. Do you think that's an effective way as well?
Again, it can, because, you know, if you're working with a— if you're positioning a product that would do well in an agency, an agency would probably want to position that as a white label product. So Stuart's Media Agency goes, hey, I've got this great platform for social media sharing. It does all this stuff. You log into a portal, actually have I've never built it in my life. I've bought it off Bob, whatever, and white labeled it, and it's perfect for some audiences. Again, depending on what position product you position in, how much control you want over the brand is is an entity that comes into play around that. I know you know some companies are very sort of wary of white labeling because suddenly if if it's found that at the back end is Zendesk in a sense, it's like well. Why is it Zendesk? And it can be detrimental to their brand and the outbound sort of activity. So there is a play there, just depends on the product and where it's going to go.
It makes sense. So you mentioned that SaaS companies, teams of 50+ and generally $1 million in ARR at the ideal stage of start investing in channel sales. Why do you think it's ineffective to start earlier than that, like when you first start off? And, you know, what can they expect, you know, better in terms of results at that stage of their startup versus, you know, at the early stages?
Yeah, it's not so much ineffective when it goes below that. It's more about the resources behind it and being able to deliver. So when you're around about 10, 20 people, you know, you could have, say, a couple of direct salespeople and you hand them over a channel partner or set of partners, whether that's referral or whatever, they treat them like the direct sales. And what tends to happen is the relationship just fails because they just think this partner is gonna wake up and come to them and just give them leads. Unfortunately, life doesn't work like that. Being a salesperson, it should do, but it doesn't. So the expectations are set incorrectly and they aren't resourcing there. So, so when you try to do it, when you're a little bit smaller, it can have a detrimental effect to you. So you may have 3 partners, you bring them on board, it's great. You give them to a direct salesperson to manage, they destroy that relationship because They just don't know how to manage it, and they haven't got the time because they've got a quota. And those partners could have introduced you into Vodafone or some large corporate; they're not going to now because the relationship's been destroyed. So not that it doesn't work; it's just having the resources and the capability to keep it going on. It's like anything; it's a partnership. The word, you know, the word explains exactly what it is. To get the maximum out of it, it's got to go both ways. It's a marriage. If you just think you're going to sit there and, you know, to enable your partners is giving them some access to one piece of document for training and tell them to go out and pass everything over and such, just doesn't work. So it's more that side than anything else. Once you get to 50 people, you've got resources, you're looking to grow really quickly.
Right.
It's like, right, okay, put somebody allocated to this, whether it's a consultant coming in, Or a headcount internally.
And is there any other metrics or filters you like to see at a point where this channel becomes more effective? Let's say, is there an LTV value that, you know, SaaS companies should consider this? Is there a certain market that it works better in or anything else you look at?
Not necessarily metrics as such. I think a lot of times with this, it comes down to buy-in and the mentality of the team. And that's no detriment. I don't mean that sort of in a negative sense. It's just, from previous experiences and going into roles, if at C-level or at a higher level or board or whatever it may be, hasn't bought into this concept of selling to third parties. So you always have this question of, I've lost control. No, you haven't lost control. It's your product. It's going through a contractual agreement, et cetera. Or why are we giving revenue away when we could do this ourselves? Well, if you could do it yourselves, you'd have a contract with Vodafone and XYZ by now, wouldn't you?
Yes.
So it's all these sort of aspects. So it's more, I push back and look at qualification around that rather than the metrics, because the metrics could mask other, other aspects around it. And again, it comes down to expectation play. If somebody's had a bad experience around dealing with an indirect channel, it's hard to get them back on board again and understand what the value is without spending a lot of time around it.
Got it. And is there anything else on the back end that a SaaS company needs to, you know, build out or make sure they have So they can start leveraging this channel more effectively?
Yeah. So it's essentially stuff or materials that they have already, but they don't think about. And I use the word enablement quite a bit. That's the key to a successful partnership. So think of it this way. You hire a direct salesperson, you stick them in the corner, you give them some training, they go out and start selling. You have to do the same with a channel partner. You can't just contractually sign an agreement and say, right, okay, Mr. Channel Partner, go and sell our product, you know everything about it. You have to enable them, give them the training material around that. And that doesn't have to be a fancy training portal. It can just be some stuff in Google Drive, but you need to treat them as if they're part of your organization, as part of the headcount. So I'd say in terms of, you know, what they need is the ability to expose their internal processes and the trust to do that with the partnership that's under agreement to go out there and maximize it. And then they'll have a sort of successful partnership and literally, You know, I started out, I didn't have a partner portal, I didn't have a marketing budget, but what I did have was some really good people inside Zendesk that had all that material. And I just went around and pulled things together and exposed it to a partner to get them to drive forward.
And what are they— what are you typically providing them? So you give them some, you know, maybe some training, some, you know, material, like, is this kind of just like design material, you know, pricing packages, you know, all that kind of good stuff?
Yeah, it's basically the toolkit you give a salesperson, you expose that to a partner. So it's literally, it's the same materials that the partner can then co-brand, put their logo on, but it's just exactly the same materials. What I did in Zendesk and other companies is where I could was bring the partners into onboarding sessions that were happening. So if we were onboarding 10 salespeople, let's onboard a partner at the same time, bring them into Dublin, get the same training. We take out some of the more sensitive material. But he was just treat them the same. And that, oh, that just works wonders because then they've got mates, then they know who the salespeople are for their territory. They're in Israel and they come over and they meet the salesperson responsible for Israel. And he gets it by sitting on his— I was going to say sit on his bum. And this guy will then start going doing things. And Israel is a relationship selling country. So, you know, he can then sit there and they can generate revenue for him. They're friends for life. They're done. So it's those sort of things. And again, you don't have to be a big SaaS company to do that. You just got to expose them to material, make some introductions, and let human sales components take its own course.
Makes sense. And so just comparing those 2 options, right? You're a SaaS company, you have the one option, which is direct sales, building out a sales team, right? You hire and build it out, and you want to scale your B2B SaaS company. Versus investing in this indirect sales channel. Can you kind of just compare those? Why? What is more effective than other? Where you see like the crossover break-even point of being one better than the other?
Yeah, of course. Excuse me. So I love direct sales teams, pod model, all of that works great. It's perfect. Indirect is complementary to that. It can actually just be the only channel, but it doesn't have to be. But thinking of it as a mathematical model. So you've got an indirect salesperson, they've got a quota, they get to a certain percentile, and then you realize you need to expand that headcount. So it's like, we need to hire another person that'll take 3 to 6 months, we'll onboard them, done. You've got a channel manager, he's gonna hire channel partners and get them onboard and contract them, and that'll take a little bit of time longer than that process. But once you bring those partners onboard, Well, they've got 1 salesperson or 10 salespeople or 15 they can allocate to sell your product. Whereas in direct, you've gone into all that effort and hired 1 salesperson. So suddenly you've got a channel manager that can manage 10 partners that may have 10 salespeople. So you've got 100 salespeople out there selling your product. So it's just, it's for me, it's the pure mathematics of volume scale if it's done correctly. And direct is complementary 'cause it's always, direct sales and, you know, it's a standard thing and it grows and expands. It's great. Indirect is complementary to that and can work together. So like I say, with Israel sort of aspect, it's you've got a rep that's selling to Israel. That partner can be his feet on the street, going to meet the customers, going talking to them, going around that and actually driving them. So that's the way I was sort of positioning it.
Well, also on top of that, you don't have to go out and manage those hundreds of people, sales rep that, you know, you have that one channel And on top of that, you're not paying for their salaries, right? I don't think you have to cover hundreds of people's sales team.
Yeah, no, exactly. It's the whole mathematics of the model and how it works is those people are getting paid no matter what, are hungry to go and sell products to make their quota. And if you do it right, they're going to sell your product rather than somebody else's. And they're out there and localized. And again, if you want to expand as a SaaS company and you're looking, you're based in the US and you're looking at Europe, You know, that try before you hire model again works the same because is Germany the right country? Okay, we're going to open an office in Berlin. We'll get headcount. That's really expensive. Or do we get a partner, go and test it out, and then find out our product doesn't sell in Germany, don't fit right, but actually sells really well in Italy and Spain and Southern Europe. So again, you can always use those sort of components as well.
