Updated: Jul 27, 2021
Dassault Systèmes had a record year in 2019 with revenues of €4 billion thanks to a well-executed international indirect sales strategy. Thanks to that, Dassault Systèmes, the French software champion, expands its offering for further development to enter the healthcare field by developing digital modeling for pharmaceutical laboratories and medical device manufacturers.
Indirect sales: a distribution method that a company chooses to use an intermediary to sell its products or services (sale by an agent, a distributor, a partner...).
Direct sales: a distribution method that a company sells its products or services itself (sales in stores, online, ...).
Why choose indirect sales?
Any new service/product offer has the cycle of maturity: introductory stage, growth stage, maternity stage, decline stage. (See Diagram 1.0 curve a)
Figure 1.0 - Maturity cycle of a service or product
Once the service/product meets the maturity stage, companies will need to find a new strategy for promoting the offers (see Diagram 1.0 curve b). There are several solutions for this stage, including
Evolve the offer organically by carrying out Research & Development (R&D), which could be an expensive process with no guarantee of results.
Responding to market demand by buying companies with strong EBITDA or by taking them on as a white label partner or as a brand representative
In the meantime, when launching a new offering, most companies start with a small customer base. So they have to choose between :
Develop their sales force. (Direct sales)
Create distribution partnerships. (Indirect sales)
According to @Singularity University, and especially its co-founder @cofounder, technology is growing exponentially. As a result, there are more and more offers with shorter maturity cycles.
Indirect sales have become necessary. Indeed, by grouping with many partners and accessing a larger customer database, companies can easily develop and promote new offers. Therefore, indirect selling can generate revenue in a more efficient way.
Indirect sales in the B2B SaaS market
Statistically, a new SaaS offer takes between 3 and 5 years to generate annual revenue of 1 million euros. After that, following with two possible situations:
This offer quickly generates 125 million euros.
This offer does not take off because of too much competition.
Indirect sales allow you to take advantage to access to an efficient distribution channel in terms of both quantity and quality.
In the case of Dassault Systèmes, it has doubled the turnover thanks to indirect sales within few years.
The case of Dassault Systèmes
The sales strategy
Dassault Systèmes is a 3D design software company that sells SaaS in B2B. Like Silicon Valley, Dassault Système has chosen the indirect sales model, a global VAR* network adapted to its offer and target country.
Thus, the offers from Dassault Système have been distributed by partners who have a privileged relationship with their customers in their target country. In return, this partner was able to add its own offer to the sale and distribute them as a package solution.
Obviously, this process is a win-win for both sides. One hand, it allowed Dassault Système to have access to the market, and on the other hand, with its credibility in the industry, it allowed local partners to combine and promote new packed offers to extend the full growth stage of the maturity cycle.
As a result, the revenue of Dassault Systèmes has grown from €2 billion to €4 billion in a few years.
*Value Added Reseller = partners will sell the solution to their customers by adding their own offers (software, training, or services).
An indirect sales system allows to sell and distribute offers to a large and well-targeted customer base efficiently. But to do so, you need to create solid and adapted partnerships.
Arkanna offers you an online platform with artificial intelligence and provides a list of well-targeted partners within a visualized landscape, we are here to help you manage your partnership relationship.
Contact us to know how to manage your partner relationships.