B2B Partnerships Are More Science Than Art: An Interview with Jay McBain

Change is the only constant in business, especially in the continuously evolving B2B SaaS world. Expectations are that?the SaaS industry will be valued at $171.9 billion in 2022, up from 31.4 billion in 2015 . This whopping increase means there will always be stiff competition within the B2B SaaS industry. Always.?

So, you have two options. Be like the Road Runner, who always found a way to be one step ahead of Wile E. Coyote.

Or…

Be like Tom, who was always on the losing end with Jerry.?

C-Suite execs have many solutions to choose from for their tech stacks. That’s why you need B2B partnerships; they help you remain a forerunner because they position your solution as the best choice. In fact, these are the partnerships many of the big SaaS players use to increase their revenue.?

For example, Microsoft has?a strong partner network? that consists of more than “400,000 partners in more than 100 markets across 11 languages ”. Microsoft?spends billions of dollars ?on its partner program each year. It’s anticipated that “Microsoft’s partners will?generate $1.2 trillion in revenue in 2024 ?related to creation, sales, and delivery of Microsoft technology.”

I?chatted with Jay McBain ?recently about B2B partnerships and how they’re paving the way for the future of B2B Saas companies. Jay is the Principal Analyst of Channels, Partnerships, and Ecosystems at Forrester, and this lively discussion covered topics such as:

• How to view B2B partnerships for maximum impact
• The key features of a B2B partnership strategy
• The evolution of partnerships from pure reselling to full-fledged partner ecosystems

Guest at a Glance

Name:?Jay McBain

Role:?Principal Analyst of Channels, Partnerships, and Ecosystems at Forrester

Noteworthy:?Jay has been working in the partner channel space for about 26 years. He has worked for large companies such as IBM and Lenovo as a leader of their partner channels. That experience helped him get first-hand knowledge of partner channel software and other elements of the partner experience.?

Key Insights

????1. B2B Partnerships Are No Longer Purely Transactional

“There are 175,000 SaaS companies today. That's up from 10,000, 10 years ago. I get to talk to a lot of them, and I get to spend a lot of time with some of the major SaaS companies that have had channels for a while and are really building out the model.?

From what we know at Forrester, upwards of 30% of these 175,000 SaaS companies are talking about channels at the board level. They’re building out programs and really building out an ecosystem.?

And we know that about 10% are actually executing right now. They're hiring people. They're investing in technology. They're building out the program. So, 10% of 175,000 is 17,500 firms that are actively looking at channels as a keyway to go-to-market and building out their roads to market.”

This quote from Jay shows that more companies are embracing B2B partnerships as complete?partner ecosystems ?rather than purely transactional reseller relationships.

Companies that fully understand the value of these new partner ecosystems are hiring people to fill partner-specific roles, investing in the right technology, and fully building out their partner programs.

Here, we’re defining partner ecosystems as a network of B2B SaaS companies that help each other find and create sale opportunities. This collaborative effort is what makes many of the existing partner ecosystems highly successful.

For instance, Salesforce has created a partner ecosystem that is predicted to provide 9.3 million jobs and bring in $1.6 trillion in revenue by 2026. As Mara Berg from Salesforce states, “Partners make an incredible impact across Salesforce and are involved in some way with almost every Salesforce customer. In fact, nine out of 10 Salesforce customers rely on partner apps and experts.”

In other words, these partners help Salesforce strategically build relationships with their target customers. Through collaboration and mutual support, Salesforce’s partner ecosystem has become the gold standard for the industry.

?????2. Tech Execs Aren’t The Only B2B Tech Buyers

“So, in traditional software, the buyer was, and is today, the CIO or the CTO or the CSO, or, you know, somebody in a related role. Well, we know today in cloud 65% of cloud and SaaS decisions are made outside of it. So, if you start studying, for example, the Head of Marketing in many companies, the Head of Marketing spends more money on tech than the head of IT.

So if you study that buyer, you studied the head of sales, the head of operations, the head of finance, the head of HR. You look at all these different categories where SaaS is going into how it's sold.”

Partner ecosystems are now more about building relationships with multiple decision-makers within an organization. Traditionally, the approach was to focus on tech execs since they were assumed to be the people responsible for tech stacks in B2B companies.?

Now, multiple decision-makers are purchasing tech for their departments. So, it’s important to create a partner ecosystem that helps you build relationships with multiple decision-makers in an organization. As Jay says, “You need to get in early and often to earn a spot in that seven-layer cake the customer is about to bake. That becomes a channel strategy, which is different from that past transactional strategies.”

????3. Successful Partner Ecosystems Rely on 4 Elements

“I look at B2B partnerships in four different ways. There's a people element, which is always the most fascinating. There is a programmatic element. The average program has about a hundred elements from onboarding training through to incentives and motivation, co-selling, co-marketing, enablement, et cetera, through the journey. I look at the processes and the workflows and automation around that. And then number four, that links to technology.”

Successful partner ecosystems rely on 4 elements: people, process, programs, and technology. All of this helps form a culture within your organization that supports the partner ecosystem.?

Jay uses the McDonald’s franchise as an example. McDonald’s couldn’t have opened multiple restaurants globally without making it efficient to create hamburgers and fries at scale. Similarly, you have to figure out your product, customer, sales, and marketing so that you have a repeatable process you can scale with the help of partners.?

Also, the network of partners within your partner ecosystem helps create a multiplier effect. In this instance, you and your partner are cross-selling each other’s products. The more partners you have, the greater the multiplier effect.?

????4. Partner Ecosystem Roles Will Become More Standardized

Partner ecosystems are going through stages similar to what happened with sales and marketing. Sales started out based on gut instinct. Sales reps would go door-to-door cold pitching their way to a sale. Then sales technology matured and brought with it various metrics to deeply assess the impact sales had on revenue. Sales leaders typically have to understand sales metrics before being granted top positions.?

Marketing went through a similar renaissance. Initially, it was thought that 50% of marketing dollars were wasted because it was difficult to measure the direct impact marketing had on the bottom line. Things have changed. There’s now marketing technology that makes attribution possible. Marketers now have to know their numbers to get top positions.?

Partner ecosystems are generally still in a state of infancy. Smart sellers have been doing it this way for a long time but it has yet to be adopted as an industry standard. There’s still work to be done on partner ecosystem technology so that there’s clear revenue attribution. But, like sales and marketing, partner ecosystems will evolve. People who hold ecosystem roles will have to be on top of their numbers if they want to secure their jobs.

Also, there will be more mergers and acquisitions in the partner ecosystem space. Think something similar to?Adobe’s acquisition of Marketo . Marketo became part of the Adobe Experience Cloud. As partner ecosystems continue to evolve, there will be more acquisitions of smaller partner ecosystem companies by their larger counterparts.

????5. There’s A Bright Future Ahead for Partner Ecosystems

“This 76% of CEOs think their future is wrapped around ecosystems. You know, how you sell a forklift, how you sell a paperclip, and how you sell B2B SaaS software, is all going to be wrapped around how you run an ecosystem. So, every company, we're talking millions and millions and millions of companies, all come flooding in and they add value in that multiplier in different ways.”

The winners in this evolving partner ecosystem framework will be those companies that:

• Leverage the most influential people within their target organizations
• Best serve their customers
• Provide the best customer experience through their partners

As Jay says, “You're going to see big companies that we know and love today, and you recognize their logos, go away because of the lack of partnership execution. And you're going to see companies that you don't recognize their logo today become superstars and maybe join the DOW 30 ten years from now because of their successful use of partnerships. And, I think this decade, as we look back on it, 10 years from now will be written in that way and in terms of how all this came together.”

Conclusion

Partner ecosystems are the way of the future. So, if you want to ride the wave and stand tall like Jerry, you need to be clear about the people, processes, programs, and technology necessary for your partner ecosystem to work. There’s so much to gain from having a well-developed partner ecosystem.?

Check out the full podcast episode ?to learn more about the future of partner ecosystems and what you can do to ride the wave.?

This article was originally posted at https://partnered.com/post/interview-with-jay-mcbain