Should you white label?
White labelling your product might sound like a great way to have a second revenue stream and make some fast cash, but it is hard, a big distraction and often just means you’re not strong enough yet.
Ideas in no particular order:
Focus – If you want to be a direct to customer business AND a white label business when you’re a startup you are going to find it very very very hard. It’s two different businesses. Different customers, different products, different marketing, different all round. White label is a great business model – so if you want to do it, do it, but close down your direct to customer business and focus on White Label.
Not ready – often times when you speak to potential customers early in your life as a business they will ask if you white label. What they are really saying is “You’ve got a good base idea here, but our brand is stronger than your product and our skills can finish it off.” That’s fine, it just means that customer is not ready for you yet. Don’t bust your gut to look after them because most likely they still won’t be happy. When someone wants a white label product they expect it to really work. Most likely you’re not going to be able to give them this and you’ll spend a lot of time trying to keep it going.
Scale – white labelling can get you a small number of large customers, but often not a large number of customers. Make sure you’ve got your market worked out and pricing else you might sell yourself into a corner.
Customer contact – you also lose contact with the users. There is now someone between you and the daily usage. This is harder earlier on when you’re still concocting your magic and need lots of good feedback.
Brand – you’re brand is now a behind the scenes brand, not an in-front brand. That’s fine, lots of great companies are like this, but just be aware.
Got any good/bad white label stories to share?
Mick,
Good points. It is often hard, because the needs of the WL partner are different. They are looking for you to add value to their offering, whereas as a startup you sometimes make the mistake of thinking it is just extra revenue. It never is – adding value means understanding how you can help them sell more of their stuff. This often means tight integration with their marketing strategies, sales force education, co-calling on deals etc. All the things you do when building out a channel strategy. It can however be very rewarding if done well.
Brendan
Yes, offering a white label solution is hard. I tried with TaskArmy but didn’t focus on the white label marketing enough and the people who were contacting me were not serious candidates.
Another mistake I made was to see white labeling as a marketing channel. I wanted people to run TaskArmy variations so that they would focus on marketing while I focused on technology.
Affiliate marketing is a good channel for marketing, white labeling wasn’t for me.