What Is a Partner Program? The Guide to Building an Ecosystem

General

In SaaS, a partner program is like the electrical grid: the oft-overlooked backbone that makes our modern life possible.

Any time you use an integration, a plug-in, or an extension, you are taking advantage of the web’s partner ecosystem – a system of bidirectional connections that enable you to move your data between the products you use. Think of when Twitter automatically tweets your next newsletter from Mailchimp or when you use Giphy to quickly pull up images in Slack.

What is a partner program?

We take for granted that many of our SaaS tools work together, but building that partner ecosystem is the work of partnership professionals who spend their working lives building alliances between their organizations – and all of the meetings, strategy, and preparation it takes to align sales and product organizations at two fast-growing tech companies.

Some of the most successful SaaS companies such as Salesforce, HubSpot, and Stripe have built massive businesses leveraging partnerships. And yet advice on how to build your own partner program is hard to come by.

In this post, we’ll tackle the basics you need to know to kickstart a partner program at your own company.

Why partnerships are the future of SaaS

Years ago, software was a monolith. All of the tools you used were made by the same company. Your company was an “IBM shop” or a “Microsoft shop” and. Your email, word processor, and payment solution were all made by the same company that likely charged your company a massive yearly bill. This was an all or nothing approach; choosing your software provider was a massive commitment and changing vendors was an arduous and expensive process.

Today, business customers have a bit more flexibility. You can choose best in breed tools that do a handful of things well and connect them with one another. Your technology stack is fully customizable. For example, if a better payment processor comes along, you can switch and connect it with your existing tech stack.

In a modern business, you can use one tool to send emails, another to close deals, another to communicate with our teammates.

What changed? Consumers have the expectation that all of their tools work with one another. It’s a shift to the “era of the ecosystem”. Ecosystems are filled with bidirectional APIs. Data moves freely between the services as opposed to the ”All-in-one platforms” of old where data never leaves. Think of a train terminal (platform) vs the train tracks (ecosystem).

 

The data above shows that the most successful companies will be the ones that embrace an ecosystem approach.

3 types of partnerships

For simplicity’s sake it’s helpful to think about SaaS partnerships as falling into three buckets:

  • Tech partners: These are the partners that send data between their service and yours. Sometimes called “integration” partners.
  • Channel partners: These are the partners that sell and service your product on your behalf. These are sometimes called “resellers” or “service integrators”
  • Strategic partners: These are the partners with long-term partnerships that spans across several efforts, projects, and departments.

Most companies have some sort of combination of the above.

 

Let’s explore them one at a time.

Integrations and tech

Tech partners work together by exchanging data, creating workflows, triggering events, enriching data, and/or creating go-to-market strategies. They make money by co-marketing and co-selling their integration to mutual leads and customers.

Additionally, user retention rates tend to be higher among those companies who utilize an integration. After all, you are less likely to stop using a SaaS product if it already works with the rest of your workflow. Why bother?

 

Tech partners use this API data to help fill gaps in their use cases. If you work at a SaaS company you know your company can’t meet all of your users’ demands. In some cases you will choose not to build in the functionality and instead partner with a company that can help. This is often referred to as the “buy vs. build” question. In some cases, a SaaS company will build the functionality themselves. But increasingly, companies are opting to allow partnerships to fill their use case gaps.

For example, HubSpot doesn’t have a robust survey feature, so they partner with Typeform to feed Typeform responses directly into HubSpot CRM functionality.

Some examples of tech partnerships:

  • Typeform automatically loading survey answers into HubSpot.
  • Mailchimp automatically tweeting new newsletter links on Twitter.
  • Zoom generating a call link in a Slack message with a simple command.
  • SalesLoft automatically sending call recordings to Gong for faster transcription and analysis of conversations.

Channel

A channel partnership is when a vendor, usually a SaaS company (also referred to as an independent software vendor (ISV), has their product served by a third party. This is often referred to as “indirect” sales.

 

Companies use channel partners to quickly grow their reach. SaaS companies often hit a growth ceiling when selling their service using their own sales team. Enter channel partners, who can be in more places and handle the heavy lifting in exchange for a cut of the sales.

Channel partners can cover geographic areas, market segments, or types of customers your direct sales can’t serve efficiently.

Example: Your U.S.-based company is ready to expand into Japan. Rather than staffing up an office and negotiating distribution deals with Japanese companies you can find a channel partner there. They handle your rollout in exchange for 30% of the yearly contracts they close. You grow faster with less investment, and they can get a new revenue source. Everyone wins.

Some examples of channel partnerships:

  • The web development firm that installs and manages a content management system for clients as part of a website redesign project.
  • The managed service provider (MSP) that sells and manages an installation of an office software suite for a mid-sized company and charges a recurring management fee.
  • Deloitte acting as a value added reseller (VAR) to resell and implement SAP products to their clients and customers.
  • Best Buy reselling Apple hardware and providing repair services in its stores.

Strategic

A strategic partnership is a bit more loosely defined than our previous buckets. A strategy partnership is a broad agreement that aligns the strategic efforts of two or more companies with overlapping products or markets towards a common goal.

 

These are often long term arrangements that can sometimes result in one company acquiring another.

Strategic partnerships can (and often do) involve elements of tech and channel partnerships, but tend to be recurring, long-term commitments. They can also include co-branding, product roadmap development, and/or public relations.

Some strategic partnerships examples include:

  • IBM partnering with Vodafone to create a joint venture that delivers cloud capabilities and faster connectivity to their customers.
  • Slack partnering with Atlassian to transfer all Hipchat users to Slack.
  • Uber partnering with Checkr to scale up background checks for drivers.
  • Adobe partnering with Microsoft to facilitate data standards for sharing between their solutions.

Things you need to know before launching a partner program

Here’s the tricky part about building a partner program: there’s no guidebook for partnerships. Good advice is hard to come by – especially when each partnership hinges on the unique offering, culture, structure, and maturity of each partner company.

Hear from dozens of partnership professionals every week and with these learnings and others in the Partner Playbook – free to you. Some universal advice and key learnings we’ve learned in that process:

Optimize for common customers

You’ll eventually need to compare lists of customers, prospects, or opportunities using account mapping. The exact lists and comparison depends on your specific strategy. However, account mapping is often the first step in a partnership – think of it as a “getting to know you” dinner.

In short, account mapping is taking a list of your pipeline and cross-referencing or “mapping” it with a partner’s list of current or potential customers. For example I can take a list of my opportunities and “map” them to your customers to see what accounts you can introduce me to. You can use this “account map” to learn more about the contacts in your CRM, accelerate deals in motion, or start to co-sell. A simple benefit matrix may look like:

 

For example, if you are considering an integration with a partner, compare customer lists. The more overlapping customers you have, the more likely your integration will be successful as more shared customers = more possible users.

Partnerships take nine to 12 months to deliver revenue

Because of the nebulous nature of partnerships, if you are starting from scratch it’s going to take a while. At minimum you’ll see to decide:

  • What your company’s business goals are
  • What kinds of partnerships work best for those business goals
  • How much internal support and resources you have
  • What companies share these goals and can execute on a timeline you can manage
  • Establish workflows to scale partnerships beyond the first
  • Processes for continuing to engage with partners

Whew. That’s a lot of hard work that involved research and candid conversations with internal and external stakeholders. And even when you do have alignment on goals, you still need to find the right partners. Veteran partnership professionals will tell you that they spend a lot of time going to events and taking calls that don’t result in a partnership.

Starting a partner program is a commitment of one to three years and you should expect not to see any revenue until around the ninth month at minimum. If your executive team can’t give you this runway, you won’t be successful. This is why so many partnerships professionals demand that they report to the C-suite.

It’s best if your C-suite understands the commitment and that the partner program may take some time to bear some fruit.

You need executive level buy-in

Partnerships require long-term thinking and alignment with business goals. Shifting priorities and strategy could render your partnership efforts moot, which is especially frustrating if your sales cycles are long.

 

If you can’t report to the C-suite, you should have regular meetings with your C-suite. And if you can’t do that you need to ensure your manager is advocating for partnerships at the executive level.

Get your data in order

No matter your partnership strategy, you will be exchanging data with your partner. Channel partners exchange leads, contact lists, and opportunities. Integration partners also exchange product data via bidirectional APIs.

You will need a handful of tools to help facilitate these exchanges, such as:

  • Partner relationship management (PRM) tools help channel sales managers and channel marketers, connect and automate all the pieces of their partner management process within one tool.
  • Partner ecosystem platform (PEP) is a SaaS product that allows you to manage, track, and share data with your partner ecosystem. A good PEP will typically also include tools to attribute revenue to your partners, track ecosystem qualified leads, and keep your data secure.
  • Customer relationship management (CRM) is a tool that tracks where customers, prospects, and opportunities are in your sales cycle.

A modern partnership professional uses all three of these tools in concert to scale a partner program. And in true “meta” fashion, these tools often integrate with one another ensuring your sales team can get the partnership data when they need it to help close deals and avoid conflicts.

Conclusion

The new giants of B2B SaaS have all embraced the partner ecosystem: Snowflake, Slack, HubSpot, and Zoom, to name a few.

Your place in your market will be defined on how well you integrate with the other solutions used by your customers. While it may seem daunting, see it for what it is: a career opportunity. Advocating for and building your company’s partnerships strategy is one of the best ways to positively affect its future. Who knows what kinds of doors that will open for you?

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