Understanding The Components of Channel & Technology Partnerships is Critical for Success

In today’s SaaS environment, strategic partnerships contribute a high and ever-growing share of overall revenue to businesses, companies typically get more than 20% of their revenue from their partnership channel.

With this, it is important to understand the core components related to the technology and channel categories for a more accurate reflection of why they drive success. With this knowledge, you’ll ensure that your program does not become part of the partnership failure rate that often hovers between 60% and 70%.

Channel Partners

Channel programs can get complicated very quickly, with references to indirect sales, resellers, value-added resellers (VARs), agency partners, and referrals, but we are going to focus on a simplified view of things.

The main thing to remember is channels can quickly help increase your revenue and market capital without the typical overheads associated, essentially getting your product into the hands of more customers in regions and industries that you may not have had exposure to.

Referral

Referral partnerships are typically the simplest to understand. Another company or individual partners with your brand with the intention of passing along qualified leads. Every time a deal closes from a referral, the outside source takes a cut of the sale—typically around 5-10%.

These partnerships are common because of their simplicity and speed of execution. The referring organization comes out ahead thanks to their percentage of the profit, while you benefit from a new lead channel with little to no internal effort required. Customers acquired through referrals typically have a retention rate that’s 37% higher than normal organic sales.

Reseller

Reseller partnerships are seen as an extension of your sales team. They resell, manage, and/or deliver your product, enabling you go to market faster. They make money through selling your product at a markup along with at times, complementary services like integrations, training, or consulting.

The reseller gets to expand their inventory and capture a cut of each sale, while you benefit from an almost effortless sales channel. Reseller partnerships work especially well to give you exposure to prospects you might not have reached with your own sales team due to how established they might be.

To understand the scope of this channel, Dell Technologies and its channel partner business grew by 27% in fiscal year 2022, and its partners brought in a whopping $59 billion in order revenue.

Co-Marketing

Co-marketing is usually a component offered under a channel program, and it might include an MDF (marketing development fund) where your partner will contribute funds for you to promote their content. This option will typically focus on content, webinars, events, or marketing campaigns. The benefit here is that both companies increase their reach by tapping into the additional audience, which can be a great lead generator.

The more aligned the two companies’ audiences, the more successful this is likely to be. After seeing a co-branded campaign, 68% of consumers are able to make buying decisions without speaking to a sales representative.

Technology Partners

Technology programs will typically refer to an ISV (independent software vendor) and can also get complicated quickly. In the technology program space, you may come across references integrations, APIs, plugins, and let’s not forget marketplaces! So, we are again going to simplify.

The main thing to consider here to is the concept of an ecosystem and being part of an ecosystem. In an ecosystem setup, you’ll meet customers and prospects where they are and help them solve problems. Since you will always be at the table, you’ll be reducing customer churn and creating wider adoption, which often leads to referral channels.

Integrations / Extensions

Integrations and extensions are created to exchange data between products over APIs, helping users solve problems and automate complex or manual processes. This ultimately creates a simplified and more valuable experience for customers. Most companies offer a developer program, enabling new partners to enroll, build apps and integrations in a self-serve manner, and gain benefits like demo environments and marketing.

Zapier is one of the best examples of this, a simple platform that allows end users to integrate web applications they use. Automating workflows from scratch, or using their pre-built Zaps.

Marketplaces

An app store or marketplace is where partners can list software applications, integrations, add-ons, extensions, and services to buyers.?They can essentially advertise in a partner’s ecosystem, where their users can look up compatible integrations and maximize credibility and adoption.

Shopify has over 1,000,000 businesses using its marketplace platform, and 87% of those businesses have installed an app from its app store—with the average business using six apps.

Relationships Matter, Understand Your Partner

The key to a strategic partnerships is understanding how the relationship will benefit both parties and accelerate each other’s success. The better you’re able to communicate, understand your partner team, and know what gets them excited and helps them get results, the more successful and fruitful your partnership will be.