Zoho still does most of its sales direct, but the channel presence continues to grow, and Zoho is encouraging partners to pursue larger opportunities, especially by leveraging the Zoho One suite.

AUSTIN — Cloud software suite vendor Zoho has historically done most of its business direct. The company’s channel business continues to increase incrementally, however, with the growing importance of Zoho One increasing the channel play. At their Zoholics conference here, Zoho emphasized the opportunity for partners to gain new markets, particularly upmarket.

“Our revenue though channel partners continues to grow,” said Vijay Sundaram, Chief Strategy Officer at Zoho. “It has picked up in the last five years. Now 31 per cent of business goes through partners. When I started here [in 2014] it was 16 per cent.” The increase continues to be consistent and incremental. The channel business was 28 per cent last year, and 24 per cent the year before. Zoho has around 1400 partners globally.

“Right now, the channel is mostly generalists,” Sundaram said. “About three years ago, we launched the notion of vertical partners, which came on the back of making our CRM a platform. We don’t get deep into services ourselves, so we need to grow the channel for this, especially for the day when we get to larger customers.” The channel, particularly systems integrator partners, is a key part of Zoho’s new enterprise initiative.

Sundaram has responsibility for the channel in addition to his C-level role, making him essentially the company’s channel chief.

“Having the Chief Strategy Officer also run the channel is valuable because it  shows a lot more commitment to partners,” said Purvi Ruparel, who is the Strategy and Marketing Manager for the Partner Program as well as the U.S. Partner Program Manager. “He is responsible for our strategy, and that also gives us a direct pipeline into the executive team. People always wear multiple hats at Zoho, so his having the dual roles is not uncommon.”

Shaun Banta is Director of Business Development at Cloudbakers, which has offices in Chicago and Denver and a dual focus on Zoho and Google, which he said combine to make perfect product suites for the midmarket.

“It’s very important for us to know Zoho’s executive-level vision, and we receive that working with the Chief Strategy Officer,” Banta said. “It helps us align with their strategy, which is something that we so with all of our partners. But that’s just the framework. Where the channel is starting to pick up is through people who he has recruited, like Purvi. We have a deep alignment with their sales management and our account reps also align with theirs.”

Zoho’s overall business strategy has been impacted by their move beyond their core CRM product offering, with the CRM Plus suite, and especially with the emergence of Zoho One as the company’s flagship offering. Zoho One combines over 40 separate business apps, including the CRM, at a flat price of $30 per user per month. Zoho One also has a major impact on how and where partners are able to sell Zoho.

“We used to focus on CRM, but it is mainly focused on sales, so just implementing CRM was hard to get licenses for everyone,” Banta said. “Other applications in Zoho One can get others to enter information about a customer.”

“Zoho One changes how we position and sell Zoho, because it makes Zoho a much more strategic platform,” said Susan Clark, Owner of Cornerstone Solutions, a Houston-based consultancy that has worked with Zoho for seven years. “It enables us to configure a solution based on that strategic process.”

“We were entrenched already in consulting for multiple applications,” said James Converse, the CEO and Chief Solutions Architect of Pasadena-based ZBrains. “Zoho One has, however, changed the pitch in terms of selling to the whole company. It makes it easier to execute a bundled sale, with one pane of glass. Zoho One is also more about selling more to CEO, rather than the IT department.”

“After the economic collapse in 2008, the logical positioning of Zoho was bringing value for less money,” Banta said. “Zoho One has changed the way that we position it.”

Zoho One also makes it easier for partners to sell upmarket.

“We can reach much bigger organizations with it, which have 50-100 users,” said Lucy Beck, Managing Director at Wiltshire-U.K.-based A2ZCloud, which is Zoho’s largest partner in the UK. 50-100 users just on Zoho in a company can be enterprise level.

“We are talking with one customer who will have 6000 users in the system,” Beck added. “We can only do that because Zoho One takes us upmarket, because it changes the nature of the relationship with the client.”

That’s the case even though most customers don’t buy the whole Zoho One platform out out the gate.

“Most clients start with a single app and later convert to a bundle,” said Natalie Söll, who runs a 40 person consultancy in Bavaria which is exclusively focused on Zoho, and serves clients with between 1 and 500 users.  “Zoho CRM Plus is still the preferred option for many clients. There’s about a 50-50 balance between single app sales and Zoho One.”

“Customers are almost giddy about the pricing, because they expect charges on the backend,” Clark said. “Things do tend to revolve around the CRM though, so it makes sense to start with that. It is our focus.”

Whether licensing is the core of the business model, or heavily supplemented with services, depends to some degree on the partner, but also on the geo. Beck said that her U.K.-based company was more focused on services than licenses.

“For non-English speaking companies it is different,” Söll said. “People look for solutions and a partner. They purchase with us and need someone who holds their hand through the whole project.

“Our sales on Zoho alone are mainly professional services, but if you add in our own IP, it’s about 50-50,” Converse indicated.

Channel conflict is usually an issue in any company with a hybrid go-to-market strategy, and that has been the case here, although the partners said that Zoho has made changes to deal with it.

“Channel conflict was an issue a couple of years ago,” Banta said. “It’s the norm with vendors. That’s why when we select a vendor partner, it’s important that reps are comp-neutral. In one case earlier, Zoho tried to kick us out of an account. Since then, they went to a comp-neutral strategy so it wouldn’t happen again. That has made a big difference because their reps were no longer disincentivized to work with us. They didn’t just bring us in in a very specific situation, which was the case before. It’s been a big reason why our business is growing.”

“We haven’t had channel conflict issues ourselves,” Converse said. “There have been times where there was a direct sale but Zoho needed help with implementation, where there was some fear in sending those to a partner because they will quote on implementation as well and drive up budget. But I would call that an unqualified lead.

“The things I hear about are usually cases where a partner doesn’t have the specific capabilities, or the customer is a multinational with offices in three countries, and the partner is only in one,” Converse added. “It’s not like Netsuite, where they take the deal away from you.”

Zoho kicked off their Zoholics event with their Partner Day.

“The Partner Day focus this year was high value sales opportunities, and how to work to get enterprise deals,” Ruparel said. “We are also introducing more and more training. The training isn’t baked into the program yet, but we are getting there. We will eventually completely integrate it. We have recently started introducing certifications. That is very new.”

Banta commented on the certifications at Zoholics as well.

“They had different tests to get certified,” he noted. “This was the time they’ve had that.”

Converse also emphasized the value they get from these shows, which is networking first and foremost.

“We do networking on multi-partner deals,” he said. “We don’t do marketing services, so we can send that business to another partner. We also just created ten new opportunities by meeting with existing clients.”