Why is successfully choosing and leveraging a partner model important? What can partners provide that direct sales doesn’t?
Partnerships provide scale and access, while direct sellers focus on 1:1, personalized sales – partnerships create a multiplier effect that unlocks brand awareness, opportunities, and new consumer segments you wouldn’t be able to access on your own. You need more components in place to be able to take advantage of partnerships, but that initial investment has the potential to reap significantly greater rewards than a direct sales model.
Direct sales models help you achieve product market fit before you pursue partnerships – the insights that come out of the 1:1 interactions of the direct sales model are invaluable in finding product market fit, and there isn’t a shortcut to arrive at those insights.
Partnership models amplify your product and messaging to reach larger volumes of customers more quickly – shifting from a direct sales to a partnership approach is effectively shifting from a 1:1 sales process to a 1-to-many sales process. Scale can be rapidly unlocked, but for it to work, you need to have a strong understanding of how to position your product to your ideal customer.
What are the different philosophies you can adopt for your partner program?
Decide whether you want a Partner program that prioritizes revenue or branding – while many partner programs have a single clear-cut goal at one end of the spectrum, there is significant variation because each program needs to align to the partners’ stage of growth, and short and long term objectives
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Relationship-focused |
Revenue-focused |
| Description |
“Tea and Crumpets” models focus on external validation and work to build long-term relationships, reputation, and brand awareness |
Partnerships that exist to solve a revenue goal, with a focus on hitting easily quantifiable sales goals |
| Examples of measurable priorities or program goals |
Add X large brand names as partners on your website |
Bring in X qualified needs or close $X of sales per year |
What makes an organization more likely to succeed with a partnerships approach?
Companies shouldn’t adopt a partner model until they understand their customers – they need to understand details about their customers like:
- Segmentation
- Pain points
- How to talk to them
- Optimal sales process
Typically, companies in Series-A and beyond benefit from partnerships – companies with any customer or product type can benefit from partnerships if they understand product market fit. Oftentimes, companies in Series-A and beyond are prepared and resourced for partnerships. Before that point, companies often lack resources and clarity on the segments or product features to lean into.
For software companies, if your target customer uses a platform, you’re well positioned to leverage a partnership approach – awareness of existing customer relationships should factor into the cloud platform your product is built on. Microsoft, Amazon, or Google can potentially bring their partners into deals with their existing enterprise clients, whereas companies like HubSpot already serve SMB or mid market segments. If the cloud or platform you’re built on can’t service the customers you eventually want to sell to, a partnership approach with that platform won’t work.
What partner models are available? Who does each model work best for?
Each partner model solves for a specific set of needs – start with what your company is looking to accomplish. Then, work backward to identify which model makes sense for your business based on its current stage of growth and the direction you want to grow in the future.
Services Partnerships
| Referral Partners |
| What it is |
Partners that share your offering with potential customers for an incentive – they are the lowest hanging fruit for any company. They could be individuals, agencies, advisors, influencers, or companies you’ve worked with. Referral partners are usually given a percent of the contract they help bring in, but they might also be incentivized with testimonials, vouchers, or free marketing. |
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| Who should you use them |
Use these if →
• It is very easy to talk about your product and segment, and you have a tight elevator pitch
Don’t use these if →
• You’re still figuring out product market fit |
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Tips for optimizing referral partnerships
They work best with a really tight elevator pitch – the simpler this pitch, the easier it is for partners to share your offering.
Make it easy for partners to refer deals to you – whether they connect you via email, fill out a form, etc.
Have a clear incentive for referrals – reward your referral partners so that they send more leads your way.
Ensure that your referral partners have the right level of expertise to sell your product – simple products are easy to sell, but complex, specialized software often requires experts to sell it well.
Formalize once you have 5+ referral partners – new companies often have an informal referral program, (“if you see a customer that would benefit from my services or software, please send them to me”). Once you hit 5+ partners, it’s better to save time and establish consistent messaging by creating a formal program and leveraging partner relationship management systems.
| Solution Providers (Value-add reseller (VAR)/MSPs/SI) |
| What it is |
Partners that provide services and solutions to your ideal clients – they manage your services and solutions on your behalf by reselling them or building additional services and products around them and ultimately helping your customers use your products even more. |
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| Who should use them |
Use these if →
• You have very clear product SKUs that have enablement ready to go for potential partners.
• You have complex offerings and need other parties to do the implementation work. Or
• You have solutions that can be embedded in other offerings.
Don’t use these if →
• You are concerned that partners will not be able to sell accurately on your behalf, and therefore won’t be trained enough. This can result in them destroying customer relationships due to poor delivery and can deteriorate CSAT. |
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Tip for optimizing Solution Provider Partnerships:
Create clear guardrails (possibly through a tiered partner system) – if a partner will be creating and selling for your brand, you need to tightly control the content they create, the price books they offer, and the promises they can make to your customers on your behalf. Pull partners back to an earlier/ less mature tier that provides less access and fewer benefits if you see attrition through their CSAT.
Offer incentives to help you own as many customer relationships as possible – If you have a direct relationship with your customer, this reduces the chance that they will leave you if they ever leave the service provider.
Make sure your partners are certified and able to speak intelligently to your product – create certification/training programs so that partners are equipped to sell your product and provide customers with a consistent experience.
Technology Partnerships
| ISV |
| What it is |
Partnership agreements with companies that offer products that are complementary to yours – these offerings come in the form of integrations or embedded solutions that make it simple for the customer to use your solutions together. By bundling a group of solutions that the ideal client likely needs anyways, ISVs usually create a competitive pricing advantage, reduce customer acquisition cost, improve retention, and increase LTV. |
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Use them if →
• Your products have strategic and/or functional links to other products (for example, software companies who operate in different stages of the same marketing funnel that serves the same ideal client).
• You’re a lower margin company partnering with sticky higher margin companies. This provides access to a larger customer base and might create renewals on the tailwind of the “sticky” product.
Don’t use them if →
• Your products aren’t easy to integrate.
You don’t have a natural fit with another product. Products that operate in a silo wouldn’t be a good fit for ISV partnerships. |
| Who should use them |
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Tips for optimizing ISV partnerships:
Look for companies that have the same kind of ideal client – you need to have account overlap with an ISV partner in order to make it worth investing in integrations.
Craft clear messaging that explains why partnering with you benefits both companies – this helps sellers at the partner company talk about your offering with their clients.
| Cloud Partnership |
| What it is |
Partnerships between SaaS and services companies that operate within cloud ecosystems – these ecosystems include companies like Microsoft, Amazon, Oracle, Google, Databricks, SalesForce, and HubSpot. |
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| Who should use them |
Use them if →
• You’re built on a cloud platform or offer services in a cloud ecosystem
Don’t use them if →
• You’re not part of an ecosystem. If you are built on Microsoft and trying to sell to Google customers, it’s going to be an uphill battle. |
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Tips for optimizing cloud partnerships:
Understand where your ideal customers buy cloud services, and build your tech stack there – this will prevent conflicts and expensive changes in the future when you realize that your customers all operate in a different ecosystem than your tech stack.
Understand the partner programs of your cloud provider – there are a wealth of benefits and incentives (including cashback, technical support, and marketing) available because cloud players invest heavily in their cloud ecosystems. For context, the revenue in the SalesForce, HubSpot, and Microsoft ecosystems is at least 6-10X the direct revenue of those companies, and investing further in those ecosystems provides tremendous value.
| OEM/Embedded/White Label |
| What it is |
A partner embeds or uses your software/services but doesn’t sell your brand – these could be service partners who are subcontracted out or tech partners (software companies) that allow other companies to use their product and apply their own brands to it. White labeling/ embedding enables you to sell more at a lower cost because others are selling on your behalf. In turn, you get to add value to someone else’s product and they pay for the premium of white labeling you. |
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| Who should use them |
Use them if →
• Your partners are in a very competitive space and are looking to increase sales or profits by embedding your solutions in their products
Don’t use them if →
• What you offer (data, software) can’t be embedded easily
• You want your brand to be showcased so that you can increase brand awareness. In this case, consider technical integrations as an alternative or have your brand be showcased if it is included in your partners’ product. |
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Tips for optimizing an OEM/Embedded/White Label partnership:
Make it easy for people to access your data – use APIs, webhooks, etc. to increase the ease of creating these partnerships.
Have clear offerings, price points, enablement, and documentation on how to embed and position – you shouldn’t offer better pricing to someone embedding you than to someone buying you directly – this can lead to channel conflicts.
Enforce pricing confidentiality when your solution is embedded – don’t allow companies that embed you in their offering to disclose pricing tariffs.
Avoid cannibalizing your primary business model with whitelabel – decide if you want people to white label you (priority = revenue) or embed you (priority = revenue + brand awareness).
If you let other companies white label you, make sure they are in the same customer tier – If there is a significant gap between the company white labeling you and your end user, avoid the partnership to avoid brand dissonance.
What should your partner onboarding program look like? What are the steps to successfully launching a partner relationship?
An excellent onboarding experience sets the tone for your entire partnership – it’s worth investing time and resources into developing a top-tier onboarding program to ensure that nothing is missed and that you and your partners are on the same page about your vision for the brand. Think of onboarding as a process rather than a one-and-done task; after initial onboarding is complete, you should continue to keep your partners up-to-date on future developments.
| Onboarding stage |
Materials/resources to share with your partners |
| Logistics/ program setup |
• Partner Program and Enablement information
• Pricing information |
| Partnership & product 101 |
• Graphic demonstrating the onboarding process and partnership tiers
• Partner portal or content that includes all information from the onboarding package (value proposition, assets, case studies, and emails partners can send on your behalf to ensure your brand remains consistent in the market, details on how revenue sharing or other financials will work) |
| Looking Forward |
• Plan for future calls to keep partners updated on your roadmap and comfortable speaking about your brand |
Who should lead and be involved in creating a partnership? Who should own the partner relationship once it’s established?
Partner teams generally should report to the COO or directly to the CEO if partnerships are critical to business growth strategy – partner teams can also report to the Chief Strategy Officer. However, if your organization is highly lead-focused, this team can sit under the Chief Revenue Officer—but be sure to evaluate the program on a longer lead time than other revenue-focused programs (partnership programs often need at least two quarters to build momentum). For partnerships that are purely brand and awareness focused, the partner organization could report into the CMO.
Smaller companies should generally keep the partner program under a leader who focuses more on strategic priorities than pure revenue – though it depends on the organization itself.
| Benefits of partner team reporting to a Chief Partnership Officer |
Benefits of partner team reporting to a Chief Product Officer, COO, or CTO |
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| If the company can afford a separate partner team, it’s helpful to have a leader whose main priority is the partnership program itself, whereas other C suite executives have competing priorities. |
For very technical products, it’s helpful to have a leader who’s close enough to the product to understand exactly what kind of partners make sense for the business. |
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How do you generate stakeholder buy-in for your partnership program?
The C-Suite and Board should understand that a partnership program is a long-term priority before you make your first partnership hire – partnership programs are inherently strategic and can represent your business’ future revenue pipeline and exit. Your leaders and advisors need to align on the priorities of this strategy, so that you can develop a program that brings those goals to life. By the time you bring on your first partnership employee, the team should consider them as a way to drive value – not a cost on the balance sheet.
Your first partnership hire needs to be able to share their vision with other teams and manage up – many teams understand the importance of partnerships without actually knowing what different kinds of partnership programs look like. Your partnership hire must be able to show how their efforts tie into the company’s top goals, how the program will measure success, and how each individual team will benefit from partnerships.
How many partner models can a company successfully support?
Start with a referral program and build from there – small companies, especially start-ups, benefit more from having a casual referral program that helps them see what is naturally working and what isn’t. Then, they can learn from their referral program and decide if it’s worth it for them to develop another type of partnership program.
Larger companies can dedicate entire teams to supporting multiple partnership models, but it’s most important to find the “sweet spot” for your business – some Series C companies develop partnership-specific teams (such as Marketing and Enablement) that allow them to build robust partnership programs relatively quickly and support more than one type of partnership program. However, it is often better to focus on the one type of partnership program that can yield strong results than to waste energy building multiple programs from the ground up.
What should you expect during term negotiations with partners? What can you do to end up with favorable terms?
Understand what you can and can’t negotiate before starting the conversation – if you have a realistic idea of what the gives and gets are before you start making demands, you can focus on negotiating for the attainable terms that will have the highest impact. For example, if you are working with a large cloud provider or enterprise, you are likely wasting your time if you decide to redline their basic contract. Focus on the strategic outcomes that you want instead.
Protect your IP and have a strategy for “unwinding” partnerships – You want a clear plan in place for what would happen if the relationship ends. These terms can be a powerful negotiation lever. For example, you could allow a partner to continue using your data embedded in their solution for six months, in exchange for better pricing and also preserving (or even better, transferring) the customer relationship.
Standardize agreements – the majority of your language can be standard across all partner contracts (non-negotiables such as enablement and how you want your brand to be represented), while certain negotiables can be modified based on the terms you agree to during negotiations. Discourage redlining on the standardized sections of the agreement to keep program enforcement as simple as possible.
What KPIs or success metrics can you lean on to monitor the success of your partnerships?
KPIs should always tie back to your most important company goals – consider these metrics for revenue-oriented partnership programs:
- Revenue from partnership programs
- Partner qualified leads (define PQL and who gets credit for what)
- Deals that each partner influenced (define what “influenced” means)
- How much bigger deals are when partners are involved
- Renewal rate or deal expansion when partners are involved
- Performance by partner (lets you identify which attributes make a up a good partner)
What can you do to support good partners and how should you deal with a lagging partner?
Incentivizing partners is about encouraging positive performance more than punishing poor performance – your tiering structure should make it attractive for partners to want to tier up, not focus on punishing them for tiering down.
| How tiers can incentivize high performing partners |
How tiers can encourage lagging partners to perform better |
Each time a partner tiers up, they should receive:
– Better pricing
– More marketing
– More PR
Identify what your partners care about, and offer more of that as they tier up. |
Lagging partners should know that if they don’t qualify for a tier, they’ll have to tier down.
Note: If a partner’s performance becomes a significant problem that is damaging your brand, it can be better to end the partnership rather than to try to incentivize them to level up. |
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What are the most important pieces to get right?
Align your program’s KPIs to the company’s KPIs to keep the program relevant and supported – partnership programs can be an important way to keep your business attuned to what your customers want and what other key partners need in order to be able to help you grow. If your program isn’t in sync with where your business is going, the program will eventually become irrelevant or out of touch.
Create superheroes to improve cross-functional buy-in – partnership teams rely on support and resources from other teams to function well. Whenever you have a partnership win, call out your peers in Marketing, Sales, Product, Finance, and/or Legal to help your colleagues feel good about supporting the team.
What are common pitfalls?
Informal partnership programs that get out of control are no longer in the company’s best interest – if your partnership program involves more than 5 partners and remains unstandardized with no guardrails (no terms, price book, guidelines, etc.), best practices become impossible to enforce, contracts and partnerships become hard to track, and your company is put at risk by one-off arrangements that are often not fully understood until significant issues arise.
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