“Are you sad because you’re on your own?
No, I get by with a little help from my friends.”
– The Beatles
Software-as-a-Service (SaaS) startups don’t have to work on an island, alone.
While nobody is going to hold your hand or build, market and sell your product for you, partners can be a huge asset in terms of amplifying your reach and message, and broadening your addressable market. Of course, they will only do it if there’s something in it for them as well, be it in the form of a revenue sharing program or some other less tangible benefit.
Whichever the case, and whatever form your SaaS partnerships take, the truth is that there are numerous benefits for a startup in having a partner program: gaining access to a new ecosystem of potential clients, leveraging strategic collaborations, and directly feeding new leads and new business to each other. The downside is that because it’s not an immediate line to revenue, partnerships become a much more long-term strategic play. For that reason, many early-stage startups focused on the near-term may shy away from investing in a formal program.
But when you find the right time – that sweet spot when you’ve established product-market fit, have your sales and marketing cycles down pat and have started making money selling your software – a partner program can be a great asset.
Here’s how a partner program works, and why you’d be crazy to not get a little help from your friends.
How SaaS Partner Programs are Unique
The unique thing about a potential SaaS partner program, compared to traditional channel programs, is that there isn’t just one type, but a myriad of options based on how “partners” want to interact. While most SaaS companies are not suitable for the most traditional channel of a Value Added Reseller (VAR) – where another company actively helps you sell your products for a profit or commission – they will have partners under one of the following umbrellas:
- Advocate partners – a low-touch partnership, where they might recommend your product and company generally to their customers, when it makes sense.
- Referral partners – they pass leads to you in exchange for commission remuneration, either per lead or per sale
- Strategic partners – a high-value relationship, working together for common goals (not necessarily revenue-share incentives) and aligned around the same values and messaging
Whichever type of partner program and relationship you seek out, the important thing is that it has to be a partnership, meaning both sides get value out of the relationship, either in tangible forms or not.
I would rather find outside-the-box ways to strengthen the partner relationship beyond revenue share.The most tangible give in a partnership is money, plain and simple. Some partner programs work on a revenue-sharing agreement – if a partner provides you with a lead or a referral that ends up converting to a deal, they will receive 15% (or some other agreed-upon commission percentage) of the deal. But that is not what the best strategic partnerships are formed around.
- Heather Mason, InsightSquared Channel Sales Manager
“If we sold traditional software, or software with a high price tag, revenue share is easier – give them more margins, and they’ll sell more,” said Heather Mason, the Channel Sales Manager at InsightSquared. “When you’re selling to the SMB or mid-market space, and the ACV is lower, that margin percentage isn’t that exciting just by upping it, especially if there are no services that can be added on.”
“I would rather find outside-the-box ways to strengthen the partner relationship beyond revenue share. When potential partners try and negotiate the 15% rev-share figure or emphasize it as their priority, I wouldn’t consider them a serious strategic partner, but would support them as an advocate or referral partner.”
For further context, take a look at some of our partnerships, in various forms.
SaaS startups will typically look to form partnerships with companies much bigger than them or of a comparable size. The benefits of partnering “up” are obvious – you get to leverage a more well-known name with more sales and marketing resources behind them, and a much broader network than you presumably have. For example, InsightSquared is fortunate to count Salesforce as one of our data and strategic partners, but we value our consulting partnerships with much smaller companies – such as Salesforce consultants OpFocus and RelationEdge – just as much.
Our SaaS product pulls from your Salesforce data to give sales leaders better analytics, metrics and actionable insights, with customizable reports and filters. Since we sell primarily to Salesforce users – and because they were an early investor of InsightSquared – of course it makes sense for us to partner with Salesforce. But where’s the value for them, one of the biggest software companies in the world, in partnering with us?
Salesforce recently launched Wave, an analytics and business intelligence product. Unfortunately, it was designed for the GE’s of the world – companies with massive software budgets – and is ultimately cost-prohibitive for the SMBs we sell to. If an SMB is asking about Wave but it’s ultimately outside of their budget, their Account Executive at Salesforce might suggest looking at InsightSquared instead, since we’re designed with their budget and functionality in mind.
For the AE to provide that alternative solution to one of their clients – even if its not directly beneficial to Salesforce’s bottom line – can significantly strengthen that relationship and prove to the client that when working with Salesforce, they are working with a company who genuinely cares about their business’ success. Additionally, if a customer is unsatisfied with using Salesforce, but InsightSquared can help address some of those gaps, that AE might have just warded off a churn risk just by suggesting a solution that also happens to be a partner.
Partnerships with smaller or similar-sized companies are a little different, in that they require a bit more of a ‘give’ than a partner like Salesforce might ask for. You always want to give before you get – if one of our customers has a complicated Salesforce configuration issue we can’t solve, it makes sense for us to refer them to Salesforce consultants and pros like OpFocus or RelationEdge.
As we prove our value as a partner to them by giving them business – and as they ramp and become more engaged with us – it comes back to us in the form of referrals from people we know are heavy Salesforce users, which is right in our customer wheelhouse. A great partnership is a neverending circle of wins for both sides, assuming it’s executed correctly. This means proper training, onboarding, and full alignment around consistent messaging and likeminded values.
Ultimately, the key to a successful SaaS partnership is to find companies that make sense – either in your target vertical or in your target market – with sterling reputations, and then coming up with an arrangement that delivers real value to both sides. To do that, you might have to give first before you get, but once that value has been made abundantly clear, both sides should thrive from this relationship.
Now that you know how partner programs work and why SaaS companies, check back on our blog to learn about how to kick off a partner program and what metrics you should measure your partner program on.