Product Market Fit With Partners

A company's go-to-market strategy defines whether it has a direct sales model, or a partner (channel) sales model, or combination of both, to sell its products. I use the word product to include products, platforms, services - anything that is developed and sold to the market as an offering.

Very few companies build products only for partners. The typical company builds it with a target customer base in mind. One miss I notice, especially with early-stage companies, is they do not define their go-to-market strategy in advance. They are focused on their target customer segment and build the product and even achieve some level of product-market fit for that segment. Then they realize they have not figured out how to sell the product. How to get the product in the hands of their target market.

For many companies that answer is simple. Sell the products one by one directly to their target customer base. That may be fine if the revenue per customer is high enough to justify the development and maintenance of a direct sales team. For many companies though, that direct sales approach turns out to be not enough. Especially if the product is being consumed in a "pay-as-you-go" or a periodically recurring revenue model.

The best approach, in my experience, is to create a go-to-market strategy during the product visioning and product market fit phase. Most companies will decide that they need a partner sales strategy along with a direct sales strategy. As an example, the company may decide that it is better to sell directly to large enterprises and through partners to the mid-size and smaller companies. Or it could be the other way round where the company may not have good access to large enterprises and so needs to partner with other large providers to bundle in their product.

Whichever strategy is adopted, the product market fit with partners has several nuances and additional considerations for the relationship with the partner to be successful. And these are a list of technical, business, commercial and operational considerations. Here are a few:

1. Technical: What are the specific partner tools and utilities available for the partner to sell the product, deliver the product and manage the backend interfaces for the product? These are important considerations that are not transparent to the user customer but important to the partner.
2. Business: What is the value proposition to the partner? Why will the partner even want to have a partnership and spend time and energy on it? Is the benefit significant enough that they will prioritize the partnership over other priorities that they have?
3. Commercial: What is the incremental revenue that the partner can target to make through this partnership? The incremental revenue could be a finder's fee, a margin on sales based on discount received, marketing dollars or other models. The product may open up new opportunities for the partner with their customer base and drive additional revenue indirectly.
4. Operational: What is the "onboarding" process? How easy is it for the partner to upsell or cross-sell the product? Once it is sold how easy and smooth is the delivery process so that revenue can be recognized quickly and efficiently?

This is just a small not exhaustive checklist to have a product market fit with partners. The singular focus for the product owner must be how to get the partner(s) excited enough that they prioritize the product as their top priority.

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