By Sunir Shah, Cloud Software Association
You don’t buy your shampoo, your jeans, or even your car directly from the manufacturer. That’s just how consumer sales work. Unfortunately, with SaaS, leveraging a distribution network isn’t quite so easy.
Because SaaS doesn’t fit into a box, it requires a unique, direct relationship between the vendor and the customer. Because software is now a service, which is generally a recurring subscription, it pushes vendors to focus on direct marketing and sales. And this heavy focus makes it tough for partners to step in because the relationship between the vendor, partner and customer becomes a classic love triangle — the vendor and the partner fight for control of the customer.
This dysfunctional love triangle has to be solved, though — because, frankly, it’s bad for business. Direct sales and marketing can only go so far; partnerships give you leverage to really scale through distribution. Here are three ways to move toward this business shift:
1. Add Value For Everyone
A partnership is only valuable if everyone is getting something out of it, especially the customer. Make sure you’re looking to solidify relationships that provide value for you, the partner and the customer as a whole. After all, scoring a big name like Salesforce as a partner could look great for you, but if you aren’t providing true value to your customer through the partnership, the customer won't pay for it. It’s not going to be worth the time and effort you put into landing it.
2. Approach Partners Like Markets
You won’t be successful if you aren’t approaching partnerships holistically. Instead of looking at each partner individually, think about partnerships like markets of similar companies, all with similar needs. What worked for one partner? Take that success and build it into a partner program to reach companies with the same needs. This will allow your business to keep up partnership momentum that scales.
You can even look to customers as a channel of its own. For example, Xero, a SaaS-based accounting provider, used the customer base it built through direct sales to continue its sales momentum. Xero incentivized customer accountants to offer their solution as part of their client services. This also helped create value for the accountants’ customer base.
3. Talk Through Problems And Solutions With Your Network
Partnerships can be a bit of a mysterious art, but we are never going to fix a broken business model if we don’t talk to others with the same problem. Join a network of other partnership leaders who are going through the same challenges as you. After all, you never know what kind of problems other people have solved already.
Channel sales don’t have to be a pipedream for vendors. “Companies like IBM, Intel, and Cisco all generate more than 80 percent of their revenue through resellers and distributors, yet only 23 percent of SaaS revenue are through channel sales,” Redpoint Ventures Partner Tomasz Tunguz highlighted in a recent High Alpha marketing trends piece. As we work together to provide value for all parties involved, the painful SaaS love triangle can be transformed into strategic channel partnerships.
About The Author
Sunir is building the market for SaaS distribution as both the President of the Cloud Software Association, the network of SaaS partnership leaders across 2,000 companies, and as CEO of AppBind, which solves the thorny problem of SaaS reseller billing.