A SaaS partner ecosystem includes all businesses that have a relationship with a SaaS vendor to market, sell, service, or complement the solution. This guide covers partner types, funnel roles, and key metrics including Customer Acquisition Cost (CAC) and Monthly Recurring Revenue (MRR) that determine when and how to build one.
I decided to break the guide into several parts.
Through this and future posts, I will provide an answer to the following questions:
What is a partner ecosystem? Why might it be needed? How does a partner ecosystem look for a SAAS company? What are the key metrics? When and where to deploy one? Where to start?
What Is a SaaS Partner Ecosystem?
A SaaS partner ecosystem is defined as all independent businesses that have established a relationship with a SaaS vendor to market, sell, service, support, complement, or adapt the solution to mutual customers. Partners operate under a formal Partner Program that defines the value exchange. Their roles range from generating referrals to integrating solutions through APIs and connectors, or penetrating markets and geographies where the SaaS vendor has no presence.
Typically, a SAAS company moves through at least five stages: Pre-Startup (Problem-Solution Fit), Startup (Product-Market fit), Growth Model (Search for repeatable, scalable, profitable model), Rapid Scale, Maturity.
When Should a SaaS Company Add Partners?
A SaaS company typically moves through five stages: Pre-Startup, Startup, Growth Model, Rapid Scale, and Maturity. Partner ecosystem elements are first introduced during the Growth Model stage, when the business evaluates its go-to-market approach. The core questions are whether adding a partner will reduce Customer Acquisition Cost (CAC), decrease revenue churn, or increase Monthly Recurring Revenue (MRR), and whether the recovery time fits capital efficiency goals.
There are two relevant questions for a SAAS company:
A) How profitable will the business be at the Maturity stage?
B) How much capital will it require reaching the Maturity stage?
We need to look to those questions to think about the introduction of partners. Will the addition of a partner reduce CAC (Customer Acquisition Cost)? Will it decrease revenue churn? Will it increase MRR (Monthly Recurring Revenue)? Is the time to recover the investment compatible with the capital efficiency goals? From a partner perspective, the parameters likely to attract them will be associated with profitability, investments, and complexity (more about this later).
What Are the Types of Partners in a SaaS Ecosystem?
SaaS partner types are organized by their position in the sales funnel. Top of the Funnel (TOFU) partners drive awareness and generate leads. Bottom of the Funnel (BOFU) partners drive conversion and sales. Outcomes partners complement the offer and enhance customer business results. Each category includes distinct partner roles with different responsibilities, incentives, and relationships to the SaaS vendor and the end customer.
Top of the funnel partners are Marketing Affiliate Partner, Influencers, and Referral Partners.
Bottom of the funnel partners are Resellers, Managed Service Providers, Marketplaces, OEMs, and Distributors.
Outcomes partners are System Integrators, Technology Partners, Solution Partners, Alliance Partners, and Training Partners.
The role of the top of the funnel partners is to drive awareness, generate leads, and provide referrals. They leverage their relationship, access and ability to influence the customer. They supply information and create interest that, hopefully, will translate into leads.
Examples of Top of the funnel SAAS partners:
Marketing Affiliate Partner
They typically send traffic to the SAAS website. The SAAS company will reward affiliate partners for each visitor or customer (sale) brought by the affiliate’s marketing efforts.
Influencer Partner
Typically a consultant or trusted advisor, his objective is to provide advice and guidance to the customer, to be effective he needs updated information of the available solutions. The SAAS vendor will support the partner through training, product access, sandbox, demos, or white-papers. Usually, there are no monetary rewards associated with such referrals.
Referral Partner
The purpose for the referral partner is to generate leads to the SAAS sales team in exchange for a fee per lead closed. There are some differences with the Marketing Affiliate Partner; Referral Partners leverage the relationship and trust with the customer. It provides a lead, so it is never anonymous.
Examples of Bottom of the funnel partners:
Reseller
The goal for the reseller is “just” to sell the service, capturing a profit margin. Resellers can provide additional services like renewals, billing, or contract management.
Managed Services Provider
The purpose for the MSP is to take the SAAS offer and deliver it as a full, outsourced solution to the customer, based on their platforms and its relationship with the client.
Marketplace Partner
This is a specialized platform that offers multiple SAAS vendors. It can act as a Reseller or as a Referral Partner. It can be stand-alone or part of an IAAS, PAAS or SAAS company.
OEM Partner
The OEM Partner will use the SAAS solution as a part of his product. The OEM Partner will define the go-to-market for its product.
Distributor
The distributors in the SAAS environment include a marketplace capability. They can provide a platform to support any resellers managing the SAAS solution, such as billing, provisioning and vendor contracts.
Examples of Outcomes partners:
System Integrator
The role of the System Integrator is to provide customization, deployment, and integration in the enterprise. They can have vertical or horizontal specialization. They usually have relationships with the IT department and with the business leaders. A successful deployment, customization, and integration with existing systems will increase the possibility of a successful business outcome.
Technology Partner
Technology Partners develop and market SAAS solutions that complement and enhance the SAAS vendor’s own.
Solution Partner
In the same way that Technology Partners do, they supplement and enhance the SAAS solution, but in this case through a product or service.
Alliance Partner
An Alliance Partner is defined as one having a broader and deeper relationship, with strong organizational commitment and significant business impact. The range of this partnership could go beyond the goals already described, into areas such as product development, joint branding or finance.
Training Partner
The aim of the Training Partner is to educate the customer and other partners regarding the SAAS service.
A combination could exist, in which a partner performs several roles, for example, a System Integrator that resells the product and delivers training, or, a referral partner that can provide some customization after the sale.
The descriptions above do not comprise an exhaustive list, as new partnership types and combinations are being constantly introduced
This concludes part I, where we have introduced the concept of the partner ecosystem. In Part II we will discuss situations in which it may be needed and the associated metrics to decide its introduction and to measure performance.
Thanks to Mike Allen for input and suggestions.
References and further reading:
The Stages Of A SaaS Company: When To Scale For Success
12-key-levers-of-saas-success By David Skok
SaaS metrics — what really matters? By Joe Knowles
Differences between IaaS, PaaS and SaaS in cloud computing
Bech, Hans Peter. Building Successful Partner Channels: in the Software Industry, TBK Publishing®. Kindle Edition.
Strategic Alliances. Three Ways to make it work. Steve Steinhilber, Harvard Business Press
This article was written by Osvaldo Bianchi, a business leader and strategist helping small, mid-sized, and large companies grow quickly and efficiently leveraging expertise in SAAS, indirect sales, digital go-to-market. Osvaldo co-founded Latamkey, based on innovative sales outsourcing business model.
