Introduction To SaaS Partnerships
Partnership is an agreement between 2 entities to work together for a specific purpose. Different purposes of partnership:
- Marketing: Joint GTM, Cross Promotion
- Revenue: Multiple types (will be covered in detail in the subsequent slides)
- Implementation, and training: For products which requires handholding and assistance (Eg: CRM)
However, in this specific presentation we will cover only the revenue partnership types.
Revenue Partnership Types
- Ecosystem Partners
- Reseller Partners
- System Integrators Partners
- Technology Integration Partner
- Cloud Service Providers
- Affiliate partners
Ecosystem Partners
Any product or service used by your customers as in the process of using your product.
For Eg – For an online event product.
- To execute an event esp physical or hybrid predominantly they use event agencies to conduct the event
- When conducting external facing events to attract customers etc, they use lead generation agency to get attendees.
- Another example: For a video sales call analytics product potential ecosystem partners could be outsourced / business development agencies, digital marketing services, contact information database selling companies
Requirements:
- Understand the partner sales cycle, sales team’s capability to sell a tech product, % of additional revenue on top of their core revenue
Benefits of Ecosystem partner type:
- This could be the first partner type. Can even bring the first few customers, as they understand the use case, customer persona very well.
- Objectives are aligned. Can expect good logos based on the partner level
- Easy to onboard and train the product
Demerits:
- No stickiness – by nature they partner with the competing products. They will sell the least priced / higher margin products which is fitting in to customers’ requirements. But by giving a complete packaged offer to the partner (scale based discount, leads, visibility, recognition, help on sales closure), stickiness can be created.
Reseller Partners
Partners who primarily resell other products for commission (box movers). Primarily they sell with the same customer persona they operate.
- Resellers of other sales tech / mar tech products – CRM resellers
- Zoom resellers
- Any other relevant category as we go along
Requirements:
- Clearly identified ICP which is matching with that of reseller, established sales process, a proper partnership program tailored to reseller, ability to share leads initially, conflict management (when it scales)
- Good brand (inherent pull for the product after the demo) in the early days
Merits:
- Vast network; can quickly scale, if it works
Demerits:
- Significant and frequent training on product, use case for the entire team
- Less attention span, mental bandwidth till they see money
Technology Integration Partners
It is a partnership where both the products are integrated to give value to each other’s customers.
For eg: For the video sales analytics product
- Cloud calling tools – Eg Air call, Zoom
- Sales productivity tools – Toggl
- Scheduling tools – calendly
Requirements:
- Separate tech team for integration which might take a long time
- Clear understanding of what is expected out of the integration
Merits:
- Huge value addition to clients without recreating the features. Saves time, money, effort
- Ability to make revenue without getting in to sales (if the other product is a big brand)
Demerits:
- Huge gestation period, early stage startups can not afford
- Unclear integration will not add any value but will destroy time, resources
System Integrators (SIs)
SIs are software service providers. They work with F2000 customers to mid market players. Established SaaS products having deep pocket can work with SIs to onboard large enterprises.
Requirements:
- Dedicated team to work with SIs with gestation period
- Integration service revenue opportunity – if it is GSI it should be above USD 2 mn. If it is smaller SIs should be USD 200-500 K. If the product is fully self serve, SIs will not be interested as they are not resellers
- Matured product with enterprise level compliance for the industry and geography in which they operate
Merits:
- Ability to attract best logos in the world
- Long term revenue as the SIs normally sign for long term contracts
Demerits:
- No direct access to customers (least till some stage), if it is white labelled products then no accreditation
- Regular demand from SIs for free POC, demos to customers which may not result in to anything
Cloud Service Providers(CSPs)
Since the predominant part of new software development is moving to the cloud partnering with CSPs is critical. All the CSPs have market making budget, growth programs dedicatedly for SaaS products. Depending on the amount spent in the cloud opportunity to showcase product on events, introduction to enterprise customers, visibility campaigns will be provided. It is important to establish relationships with the SPOC over a period of time to expect any result. Since there are plenty of competing products already listed on their platform, no result will come immediately.
Merits:
- Opportunities to showcase to the customers, present the product through case studies
- Vast amount of customer base and less physical effort to sell
Demerits:
- It takes considerable time to get results
Affiliate Partners
Primarily they influence the audience to buy the product, seek demo etc
Requirements:
- Product should be completely self-serve
- Low transaction value and vast application (Eg: communication tools)
- Product should have pull power
Merits:
- Direct conversion to revenue, cash flows
- Ability to get market share in short time
Demerits:
- May not work for products with high touch, high ACV
- Conflict management – should have a robust system to identify, map, intimate and award the partner for their contribution
Benefits of Partnerships
Low CAC: No need to spend money to acquire every customer, if include marketing expenses, team cost of demand gen, GTM, Sales team will be far higher than partnership team cost along with commission.
- Higher retention: Partner is incentivised to earn revenue, so retention ratio is higher
- Negative working capital: Unlike marketing expenses which should be paid upfront (not sure whether it will yield result or not), partnership commission is paid after revenue / cash collection is done.
- Reach & expansion: Partnership can penetrate deeper because of relationships with clients. And wider where you do not want to go Eg: Language sensitive countries, compliance heavy industries like BFSI, life sciences
- Brand building: More people talk about your product in the absence of your team
Factors Influence Partner Type
- Product type (new category, established), frequency of usage (real time, daily, occasionally)
- Customer size (SME, Mid Market, Enterprise), customer persona / role,
- Geography – regulations, industry
- Revenue opportunity – ARR / ACV, high demand
- And various other factors mentioned earlier
Steps
- Identify a couple of partner types to go after – based on the above factors and also based on resources available
- Select a region based on objectives – sometimes having a few exclusive partner only regions for language sensitive, high cost, high entry barrier markets like Japan, South Korea and some European countries
- Fix up a few meetings with the targeted audience and get their feedback
- Reiterate the message, offerings based on the feedback
