Building world class partner programs that drive long term revenue success

How I built one of Cannatech’s fastest growing partner programs.

In early 2018, Cannabis-specific Point of Sale (POS) Flowhub had a small, yet confident customer base (business to business dispensary customers). Two and a half years later, the Denver based cannatech company signed on more than 700 of the nation's leading cannabis dispensaries as its customers. In November 2019 after a year of intense customer acquisition outpacing all other POS providers, Flowhub landed it’s Series A funding round in the amount of $23m.

Q: How did this happen?

A: Creating Flowhub’s successful partner program and producing the “Network effect” 

The partner program was so successful that over the next two-and-a-half years, Flowhub partnered with dozens of Canna-tech related businesses from all over the nation who were instrumental in signing on its over 1k dispensary retail customers. 

If you want to know how to design a similarly successful partner program stay with me...

Before we start, let me briefly explain what exactly is a partner program.

A partner program is a strategy to motivate and engage partners to create more value for your end users and help you drive new customers together (paramount, to any VC funded tech startup).

Partners can create different types of value. These include:

• Integration Partner – Ancillary Canna-tech related solutions (CRM, loyalty, etc) and businesses that provide value through consumption of dispensary data via API. 
• Reseller / referral Partner – A local presence who can conduct physical visits and offer local support. These are useful especially if you are a company who wants to establish yourself in a new market but want to lower the risk. A reseller partner leverages their local expertise to help introduce your solution to the market. 
• System Integrator and Consultants – Create a full solution where your solution is fundamentally integrated. For example, a company that helps another company to implement a new CRM (customer relationship management) system that is uniquely modified to fit the relationship management needs.

Some of the world’s biggest tech companies use partner programs – Microsoft, VMWare, Oracle and eBay are just a few of them.

In my opinion, partner programs are an extremely useful way to expand into new markets if you have a technology that is finding product market fit. 

But what everyone should know about creating partner programs is that it takes time and effort. For it to be successful, the company’s top leadership must be committed to the project. This is because you will need to heavily invest time and other resources in your partner and you won’t know if that investment has paid off until nearly 6-8 months later. 

Any good partner program must be designed to ensure that your partners are on the same page as you. This will ensure it will be successful, boosting your sales, which is one of the objectives of the entire exercise (besides providing value to the B2B customer and the end user).

This is why all partner programs I've created so far – including Flowhub's – include detailed sales and marketing resources for partners. I have virtually hand held partners through the entire sales process so that there was absolutely no scope for any confusion.

A story of rapid growth

In early 2018, I read about this unique Point of Sale company in the heart of the legal recreational cannabis epicenter that was tackling compliance and reporting challenges for Colorado based Dispensaries, Flowhub was listed as one of the top 3 fastest growing POS companies the last 18 months. 

That growth was exciting and real. 

After spending an hour over breakfast with CEO Kyle Sherman, I remember walking away knowing that Flowhub was at the cusp of something big at that time because it had designed a point of sale software, ready to exploit fragmented integration retail atmospheres. It offered a robust point of sale with access to it’s API program making technology gaps in supply chain connected retail dispensaries, far less of a hassle. Selecting the technology to power your retail and supply chain operations can be a daunting task. The industry is early, and without large tech giants that have spent years building traditional retail and supply chain software (think ERP), this luxury, was limited. 

FUN FACT: there is a reason SAP and Oracle yet to participate in the highly attractive, albeit, early cannabis space - these big guys are waiting on the sidelines ready to pick up technology in the future for bargain deals. You see, funding is slow in cannabis (smaller market and limited TAM that can only grow with legislation) and this presents narrower runways resulting in less resources to expand and evolve the cannatech ecosystem. 

The retailer’s and operators in the cannatech space suffer from this lack of technically integrated solutions. 

Consider this, in 2019, 85+ cannatech companies were notably acquiring customers, in 2020 under covid and a new way of life, it’s even higher. All of these companies still exist while trying to grow out of infancy to better support their customers through data, and access to it. 

These 85+ companies and access to their end users (retailers) was a gold mine to Flowhub. No other POS’s at the time had created an incentive structure and aligned with other cannatech companies to deliver integrated solutions that addressed the common challenges of non-integrated technology stacks. 

At that time, Flowhub was under 40 employees. Like any other start-up, it had a great solution but lacked the resources, process, employees and time – to expand integrated solutions via other cannatech partners, to other retail companies all over the US. 

That was when I implemented the new customer acquisition through partnering with a handful of great and necessary ancillary technology partners that made them part of the “Flowhub preferred tech stack”

How I created the network effect in 4 steps

Step 1: It’s all about the customer. 

If there is one thing I have learned over the many years I have worked as a Head of sales, VP of sales, Director of Sales, Growth consultant, etc: Most companies know NOTHING about their customers – be it their B2B customers or their end users.

To design a super successful partner program, a company must first understand every aspect of all its customers.

Identified who our ideal customers were and used an "ideal customer profile" framework to detail profiles of each of them.

We found that our customers were of three kinds:

1. Cannabis Retail dispensaries Who would power their operations business via the POS
2. Solution providers: other technology solutions that were dependent on accessing API to power their own IP. 
3. End users People who use the POS on a daily basis They were:

• Dispensary owners
• Management
• Bartenders

To understand all of them, I conducted detailed analysis by:

1. Talking to a lot of prospective dispensary customers and potential partners.
2. Reading up on all kinds of reports about the industry and their specific challenges to better understand them.
3. I also investigated POS solutions in a variety of other industries. 

We then created detailed user profiles, which defined the following:

• Jobs to be done, pains, gains by role for bud-tender, GM, Owner, Inventory manager, etc. 
• The purchase process.
• Competitive POS and alternatives.
• Buyer persona.

Here are some things I found while putting together these detailed profiles.

• Solution partners: Potential partners specialized in setting up business deals with mobile network operators and used the customer base of these operators to launch and sell their services. Because of this they were constantly looking for new services to be launched. What they wanted most was to create business deals with high revenue outcomes.
• Dispensaries: Most of these locations by state were experiencing more and more compliance slowing their operations down. They had a large customer base and what they wanted the most was to add new services to increase revenue streams and create customer stickiness.
• End users Most users often found the check out process lengthy as executing a sale via the POS, inputting Loyalty information and running a debit transaction was a cumbersome process. These employees wanted a faster transaction and the ability to focus their time on helping the customer, not fumbling with technology. What they wanted the most was to simply to spend more time with customers and selling more new products expanding their weekly and monthly revenue goals.  

The industry still lacks education, insights and intel on what’s working vs. not working on the technology software front. 

And the program I created had the solution to a lion-share of these challenges..

All this information helped me draw up a strategy for how Flowhub should act and position itself to attract partners, increasing new dispensary customers and end users. 

Step 2: Created a kick-ass sales presentation

We created a great sales presentation that emphasized connectivity and the positive business outcomes of having a tech stack that was integrated and easy to understand. 

I created about 4-5 iterations of it, depending on the size of the customer and/or partner. 

The sales presentation served two purposes:

1. I used it to convince integration partners that our sales team were in fact selling the tech stack and would include them as part of our pitch. 
2.  Partners used it to better educate customers on the why of integrated solutions and the current market condition. This helped them offer a much more consultative and educated process with the market. 

In my presentation, I made sure to deliver a story of selecting the “right tech stack” can be the difference between reporting and revenue generation nightmares or, ideal outcomes. 

Step 3: Re-designed website to capture the different partner categories often leveraged in a retail function 

Retailers wanted, and still want clear ability to understand which technology solutions work in their unique atmosphere and processes (which can widely vary by state and compliance reporting policy)

We made sure that our website evoked the same sense that our presentations evoked: of being high quality, and peppered with insights on how to drive revenue. 

STEP 4: Designing details of the partner program

My strategy was to give our partners all the tools that an internal sales person would have so that they could assist us in delivering value to all customers.

These resources were of two kinds: pre-sales tools and post-sales tools.

Pre-sales tools included step-by-step sales resources such as presentations and training videos that would allow partners to deliver a polished pitch to the cannabis dispensary owners by region. The tools were designed to enable partners to easily convince these companies to move on to signing a contract with their own solution, and Flowhub’s (you need a strong POS integration to power a loyalty solution like Springbig - telling this story from the perspective of a Springbig sales rep was very compelling to the dispensary owner). 

 Partner Pre-Sales Tools:

 Partners had access to sales training videos to help them do the best sales presentation

Post-sales tools were for after the partner signed a contract with a dispensary customer and we started working together to deliver value to them. These tools focused on helping our partners deliver the "right" solution that would be extremely successful.

Incentivize the Program - a one time referral fee kept it simple with partners and would handsomely reward partners who helped us drive a new customer. Most often, it was not the financial reward our partners were motivated by (although they appreciated it) - they were confident in our direct sales team ability to counter-sell our partners' offering back to customers. This developed trust and a culture of relationships based on doing the right thing for the customer. 

Special tip for your own partner program

If you are planning to build your own partner program make sure that you really work hard to build amazing tools for your integration and partners. 

Just so you get an idea of the effort it took me to create per-sales tools, here are some details:

• We created a LOT of slides in the standard sales presentation that could be used to answer any questions the dispensary customer may have. I also created educational videos to help partners train themselves to share the correct integration story in parallel to our direct sales process. 
• For post-sales material, I created a ton of slides and documentation explaining how the dispensary could be successful leveraging key reports the partner had access to via our integration. For instance, one of them was an on-boarding guide and webinar training program on how to leverage payments, loyalty and the better in store experiences to drive revenue. See that here

With a lot of work and diligence, you can too can create a killer partner program

Sell first, partner agreement later

During the partner recruitment process I decided NOT to start with a detailed partner agreement. Instead my process was to sign such an agreement with the partner only when they were close to finalizing our first deal with the dispensary customer. 

This was the typical process I followed:

1. Held web meetings with prospective integration partners where I held my own sales presentation that "wowed" them and discussed API capability as well as what data they could access. 
2. After the meeting, I sent them an email with a doc-send of the deck, demo of our service, information about our partner program, our non-disclosure agreement, links to some nice blog articles, customer success stories and a request for them to review all material.
3. I also encouraged them to test visit Flowhub powered locations to see the end user experience first hand. 
4. If they expressed an interest in partnering with us, they registered their deals with Flowhub, and we both signed a mutual non-disclosure agreement at that point.
5. We then pushed them to go out and test sell and pitch s/ support from our direct sales team. 
6. I followed up and helped the best way I could. Often, I went on dispensary visits in the field with our direct sales team where I met partners and helped them pitch to prospects. This is a good way to meet interesting prospects and also establish deeper relationships with partners and their sales staff.
7. As soon as we were close to signing our first deal with the dispensary customer, we signed a formal partner agreement with each other. The reason for signing the deal so late in the process was to ensure that we got into sales pitching much faster. This was great because once there was a hot deal on the table, the partner agreement between the both of us could be executed swiftly.

The visible outcomes of the Partner Program

In just two and a half years, Flowhub has been able to build a customer base of over 1000 customers in over 15 states and growing. In 2019, involving partners in our pitch, and teaching partners to include Flowhub in their offering allowed both sides to create the “network effect” where dispensary owners started suggesting Flowhub’s solution to other owners which saw an increase in demand gen and inbound leads. All of this momentum culminated in Flowhubs series A raise of 23m in late November of 2019. 

Thanks to its local partnerships, Flowhub was able to expand markets in places never imagined. Folks like Dave Calkin in Michigan who supported Scott Serrano in the NorthEast expanding Flowhub’s footprint by more than 100 dispensary customers. 

In doing so, the local partner demonstrated that they were serious about the opportunity and were committed to invest in marketing, selling Flowhub’s solution, and managing the relationship with the local Dispensaries in Michigan. 

There was another remarkable fact about the whole program, generating top end revenue at an accelerated rate. CFO Craig Gomulka, specifically appreciated this kind of revenue (all CFO's love money, that doesn't take large amounts of money to produce) This proved helpful in the inherent large costs to acquire customers specifically being in Saas/POS.

You don’t have to look far outside of Flowhub to see the lasting impact and success either. Ross Lipson w/ Dutchie closed a series B round in the amount of 35 million and Jeff Harris Springbig who closed their series B of 11.5m in August of 2020 - were part of the Flowhub partner program and both accelerated their business partnering with our revenue team, creating the network effect. 

Partner Programs for Cannabis - Four pillars of success:

While working closely with this whole process, I concluded that four core elements would determine the success of any partner program. It’s paramount in getting these right the first time. 

1. Motivation of Partners: No matter the type of partner, identifying what will motivate them is key. Remember that money is not always a core motivator. To belong to a community, build something cool or even the ability to be able to sell other value-added services along with our solution were good examples of other motivators in this case.
2. Clear and direct communication: The ability to be able to communicate clearly is generally an important skill to have. With partners it is extra important. You are always competing with other things that can catch the partner’s energy and time. Make sure that everything you say and do is extremely clear. This includes all types of information such as sales training, information about features and functions, information about implementation. Yes, everything. 
3. Tools to close deals: The partner needs to have access to the same resources as your sales team. Make sure that you create detailed sales tools such as presentations, articles, documents and videos that your partners can use to help you close deals and deliver more value to end customers. 
4. Removing blockers: Don't make a partner program more complicated than it needs to be. You need to ensure that you remove any type of blocker that makes the relationship between you and the partner more complicated. We made things very simple. Partners signed a non-disclosure agreement and were then able to go out and pitch our solution along with their own in a solution approach. The best part was that we made it super simple by offering them all the presentations and demos they needed to get going immediately. There were almost no blocks at all and we could reach the market faster.