पाठशाला Pathshala · वृद्धि Vṛddhi, Growth · Lesson 16 · Build

Partnerships and channel sales: distribution through others

Partners sell what pays them best for the least effort. Structure resellers, implementation partners and co-marketing so that selling your product is the most profitable thing on their desk, and count their margin as what each customer cost.

Pathshala, The Founder Library · 11 October 2026 · 7 min read

A white goods truck travels along an expressway near Deeg in Uttar Pradesh. — Photograph: Shantum Singh · Pexels

A Kolkata startup signs agreements with forty IT resellers in a quarter and announces a channel. A year later three of them have sold anything, two of those sold once, and the founders conclude that partners do not work in India. Partners work very well in India. They work for whoever makes it worth their while.

Indian business software has one of the clearest examples of distribution through others. Tally, which its site says serves nearly 2.7 million businesses, lists on its partners page certified partners in two tiers, three-star partners for basic accounting, inventory, banking and compliance needs and five-star partners for complex requirements; associate partners who distribute the product across the country and handle new licences and renewals of its software service; and partners for government and very large accounts. Its site also names a community of chartered accountants. That is a channel built over decades, with tiers, roles and a renewal stream. This lesson is how a younger company builds the first version of one.

Five kinds of partner

Zoho’s partner programme is a useful map because it names the types plainly and reports more than 2,000 partners, more than 9,000 affiliates and more than 2,500 marketplace integrations built by partners, across over a hundred countries. Reduced to what each partner does for you, there are five kinds. Referral partners and affiliates recommend the product and earn a commission; in India the most valuable are advisers who already have the buyer’s trust, such as chartered accountants for finance software or consultants for a vertical. Resellers and distributors buy and resell, often bundle with their own services, and own the customer relationship and the invoice. Implementation partners and system integrators set the product up, connect it to other systems and train users; they may or may not resell. Technology partners build integrations or list in your marketplace. Co-marketing partners share an audience with you and promote each other.

Each kind needs a different agreement, a different margin and a different person managing it. Start with the one that matches how your buyer already buys. If owners of small manufacturers buy software on their accountant’s advice, start with accountants as referral partners. If mid-sized companies buy through the IT vendor who sold them their laptops and their antivirus, start with resellers. If enterprise buyers need the product connected to an ERP before it is useful, start with an implementation partner.

Why partners sell, or do not

A reseller in Nehru Place or on Lamington Road has hundreds of products it could sell and a sales team that will sell whichever makes the most money with the least work. Signing an agreement changes nothing about that; it adds one more product to a list nobody reads. Partners sell a product when four things are true: the margin is worth the effort, there is services revenue around it that the partner keeps, the product is easy to sell and does not generate support calls that land on the partner, and customers already ask for it. A new product rarely meets the fourth condition, which is why the first partners are usually brought business before they are asked to find it.

A shopkeeper sits in a small market shop among sacks of onions and stacked boxes. — A shopkeeper stocks what turns over and pays. A partner decides about your product the same way. Photograph: Aravind P.S · Pexels

The investors who write about this are sceptical for the same reason. David Skok’s map of sales complexity puts channel sales in a red zone: hard to build and dependent on deep commitment from the partner. Christoph Janz, writing about companies selling at around $10,000 a year in Five ways to build a $100 million business, notes that channel partners could earn commissions but that he has rarely seen this work in SaaS. Neither says partners never work. Both say they do not work by default, and that a company with no proven direct sales process will not find one through partners.

Margin is a customer acquisition cost

The most useful reframing is to treat whatever the partner keeps as what the customer cost to acquire. A reseller margin of 30 per cent on a ₹3 lakh first-year contract is ₹90,000, and a 10 per cent share of each renewal over three more years adds ₹90,000 more: the channel has acquired the customer for ₹1.8 lakh, paid over four years. Compare that with what the same customer costs to win directly, from the [CAC and payback](/library/cac-ltv-and-payback-the-three-numbers) arithmetic. The channel is attractive when it is cheaper per customer, or when it reaches customers your own team cannot reach at any price, such as owners in fifty towns where you will never open an office.

Two consequences follow. A channel that is more expensive per customer than direct sales is justified only by reach, so measure it on customers your own team would not have won. And because the partner is paid from revenue rather than from your budget, the cost is easy to ignore; it should appear in the board pack as a CAC line beside paid and direct sales. The figure makes the comparison for any contract value.

A partner agreement does not create a channel. A partner who has made money from your product three times does.

Structuring the agreement

Write the agreement around the behaviour you want. Deal registration: a partner who registers a prospect first gets the protected margin on that deal for a fixed period, such as ninety days, so partners are not undercut by your own team or each other; without it, channel conflict ends the programme. Margin tiers: a higher margin for partners who are certified, who reach a quarterly volume or who take on implementation, so the best partners earn the most. Renewals: a share of every renewal for the partner who keeps the customer live, so the partner has a reason to care after the sale. Training and certification: a short course and a test before a partner can sell, because one incompetent implementation in a district loses the whole district.

Then the commercial plumbing, which in India decides whether a partner stays. Say who invoices the customer: a reseller buys from you and invoices the customer, and each of you issues a GST invoice for your own supply; a referral partner invoices you for a commission. Fix the payment terms both ways and keep them, because a partner paid late stops selling. State who owns the customer relationship and the customer’s data at the end of the agreement, in line with the [DPDP Act](/library/dpdp-act-what-it-requires-of-your-product). Agree what happens to renewal commissions if the partner leaves. Put co-marketing money, if any, against specific campaigns with a report of leads generated, not as an annual fee. The [contracts lesson](/library/contracts-ten-clauses-that-decide-disputes) covers the clauses that decide disputes.

System integrators and co-marketing

For enterprise products the partner that matters is often the integrator who is already inside the account. A large Indian enterprise rarely buys a new tool without the firm that runs its ERP or its cloud migration being consulted, and that firm can recommend a product into a dozen accounts in a year. Integrators want three things: a product that makes their projects more profitable, a role in the implementation they can bill for, and no risk to their relationship with the client. Give them a sandbox, a technical contact who answers in hours, a joint case study after the first project and a referral fee or margin on licences. Skok observes that strategic partners can carry a field-sales company to a better position; the integrator is usually that partner.

Co-marketing is the lightest partnership and the easiest to waste. It works when two products sell to the same buyer, do not compete and each has an audience the other wants: a payroll product and an attendance product, a GST filing tool and an accounting practice software. Run it as a campaign with a date and a number, a joint webinar, an integration launch, a bundled offer for a month, and measure the customers each side gained. A logo on each other’s websites is not a partnership.

The quarterly partner review

Every quarter, one afternoon, the founder and the partner manager. List every partner with four numbers: deals registered, deals won, revenue, and renewal rate of their customers against your direct customers. Sort by revenue. The top fifth gets a call from the founder, a joint plan for next quarter and leads you pass them. The middle gets training and one co-marketing campaign. The bottom, partners who have sold nothing in two quarters, gets a letter ending the agreement, so the list stays honest. Recompute the channel CAC from actual margins and renewals and set it beside direct CAC in the board pack. Then decide whether to recruit more partners of the same kind or to stop; ten partners who sell are worth more than a hundred who signed.

The margins in this lesson are illustrations, not market rates; agree them from your own economics. Nothing here is legal or tax advice.