Breaking Into the Channel: Expert Insights on Getting It Done

Locus Health is a six-year-old startup company that specializes in in-home remote monitoring software for pediatric patients that allows them to be treated outside a hospital while staying in touch with their doctors, nurses and health care facilities. The company’s goal is to find channel partners that would help them shop their iPad app directly to members of the medical community, so it would be used more widely and grow the company’s business and revenue.

But so far, the Charlottesville, Virginia-based health care company hasn’t been able to get in the door of many channel partners to talk about their application because they haven’t sold enough and don’t have enough users and proven buyers. Complicating that, the channel partners they have been talking with are focused on technology leads within hospitals and medical offices, rather than on the clinicians who would actually be using the app with their patients. Locus Health is trying to create a broader market for in-home patient monitoring while also working to make their app the preferred tool in the marketplace.

It’s a Catch-22 for Locus Health and for many startups that have not yet been able to connect with the channel on a wide scale.

Locus Health’s Lindsey Koshansky

So far, all of Locus’s business is through direct sales to medical professionals, Lindsey Koshansky, a registered nurse and the company’s vice president of clinical innovation, told Channel Futures. Locus Health has only three full-time salespeople and four nurses who support app demos and meetings with health care professionals.

“As in-home care monitoring becomes more popular, we hope to get into the channel model,” Koshansky said. “Clinicians are hesitant. They have to believe that in-home monitoring may be as effective as being in the hospital,” she said, adding that clinicians must also seek justification for the monitoring, because medical insurance reimbursements for the technology don’t provide clinicians with the same monetary reimbursements as hospital stays.

Right now, Locus Health is continuing to work on producing some early patient outcome examples that the company can use to seek partners to help expand its sales, said Koshansky. “That is a game-changer,” she said. “Until valid and data-based results are there, no one wants to see it. Now we are getting there with some numbers. Once this is seen, our scalability will change and partners will want to engage.”

Competitors, including Philips and Vivify Health, are already in the marketplace, which also makes it harder for Locus to get serious traction. Once in-home monitoring apps are seen as standard care tools by more clinicians, there will be a trigger point for partners to get into the market, said Koshansky.

Several hundred medically complex patients a day — mostly pediatric cases, but some adults as well — report their conditions to their doctors through their iPads and the iOS-based Locus app so they can be monitored at home. Several thousand patients have used it over the last few years. Some 20 children’s hospitals across the country are using it.

Created in 2016, the Locus app is…

…built specifically to monitor children, who have different health care monitoring requirements than adults. The company also manages the delivery of the iPads to patient families and the pickup of the devices when the family is finished with them.

“I think that getting to the channel is all about the right time and place for us,” said Koshansky.

Cyxtera’s Tina Gravel

Locus Health’s conundrum is not uncommon, said Tina Gravel, the senior vice president of global channels and alliances for data center operator and cybersecurity vendor, Cyxtera.

Gravel, a longtime IT channel veteran, said that smaller companies that want to establish relationships with channel partners have several options for making it happen. Companies that have some money to spend on the effort can pay to work with a distributor or master agent who can help them find interested partners that are a good fit and get them trained and up to speed, she said. For companies that don’t have money to spend on this, they need to first analyze their needs and desires to determine if they are actually ready to be in the channel. Then they need to define their ideal customer profile and talk to similar customers they have already done business with so they can ask for customer references, she explained.

“Have you figured out the sales motion so you can transfer it to a partner so they can help sell it for you?” asked Gravel. “If a company hasn’t figured this out for themselves, the channel will never be able to absorb it.”

The idea, she said, is to figure out on your own who your ideal partners could be to start with, said Gravel.

“Then what you’re going to do is call those partners and say you were talking to hospital A and that they suggested that partner would be a good target for them,” she said. “That will pique the partner’s interest because you are talking to their customers. They can’t help but be interested in what you are doing.”

Inside large partner companies, some poking around needs to be done to find just the right people to talk with about becoming partners, Gravel said. “At smaller partner companies, you start with the CEO. You call them. You start as high in the organization as you possibly can to speak with someone.”

If a company does have the ability to pay to work with a distributor to gain channel partner relationships, it can be worth the money, said Gravel.

At Cyxtera, which today has a successful and growing channel partner network, they didn’t initially have any relationships with global systems integrators, so they talked to some of their established early customers and got the names of some of the channel partners their customers were already working with, Gravel said.

“We still do that,” she said. “We do a lot of work in the channel and we want them to tell us who they want to work with.”

The process of finding and establishing those initial channel partner relationships won’t happen…

…overnight, she said. “This will take at least a year. You might get an opportunistic sale, but it won’t be truly up and running until the partners are trained to sell your product. Only then can they go out and sell to your customers.”

And on those first visits, Gravel said that companies should send out their own salespeople to go on those initial calls with the partners. “I advise you to go out with them because you know how to sell your product,” she said. “I would not expect for a brand new channel partner to sell anything of any large degree in the first year.”

The work toward that goal, however, is worth it, she said, because in a crowded marketplace, companies need the leverage of the channel to find broad success.

“Most companies can’t hire enough salespeople to get their products out there,” said Gravel. And the cost for the average salesperson can be about $200,000 a year in salary, benefits and more, which can be money saved when working with channel partners.

Another way to connect with the channel starting from scratch is to poach a channel professional from a company that is in a market similar to yours and put their experience to immediate good use, said Gravel.

“If you really want to go after the channel, you are going to have to hire someone to do this project,” she said. “That should come first. You should have someone who works for you who knows how to do it. Then you start approaching the customers and approaching the partners. A channel person is going to know best how to do things with a third party. There has to be trust there. There has to be training there, to create these relationships.”

Mirantis’s David Van Everen

David Van Everen, the senior vice president of marketing for open source cloud application services vendor Mirantis, said his company followed a similar path in creating its own partner program in the last few years. Most of the company’s business is direct today, but the channel operations are continuing to expand.

Mirantis brought in its first vice president of alliances in 2015 to help establish its go-to-market strategy, including a channel partner program that was started from scratch, said Van Everen. “He had worked with channels for a decade,” which helped the program immensely.

“The challenge for Mirantis was navigating the channel partners that we could actually work with,” he said “As a provider of software to large service providers, like cloud hosting companies, we had to be careful not to compete with those partners.”

When starting to seek out channel partners, the key is to pitch a group of target partners and give them compelling reasons for them to be partners, said Van Everen.

“You have to look at the channel the same way you look at customers,” he said. “Think about what your value proposition is. Going through that will help focus on what channel partners you need to work with in your case.”