SAAS Spotlight: Today’s Great Disrupter to Established Vendor Channel Programs
In all my years in the channel, I have never seen such a rapid and profound change in partner programs as I do now. This transformation is in large part due to the rapid acceleration of Software as a Service (SaaS). New companies pop up with innovative applications every day, forcing established vendors to adjust. In turn they are acquiring new companies to accelerate their SaaS success. This SaaS revolution has greatly disrupted the status quo. How? By radically changing what companies stand for.
Today the definition of what is a vendor, distributor, service company or channel partner are all very fluid. Ambiguity rules, in other words. Here are some realities to consider:
- Service providers like Comcast or CenturyLink are considered vendors and have their own partner channels
- Vendors of all kinds now have different and disparate types of channel partners for example, including MSPs, IT consultants, private equity companies, accounting firms, and ISVs.
- Traditional regional channel partners may now have a channel of his own. For example, a hosting company may now manage the channel for a software company in a particular region of the United Statesa data center company may opt to build its business by acquiring IT Consultants and MSPs
Clear leaders and laggards will likely emerge in all of this disruption. But who they are? Largely a guess at this point beyond some obvious names.
What we know for sure, is companies who have altered their business models in this digital economy will prevail. This revolution is global, and SaaS companies are changing the world. These SaaS companies are disrupters and often competitors to traditional vendors. In some cases I see vendors who acquire a SaaS company and mistakenly integrate that company into its traditional channel program offerings. For SaaS companies (or SaaS applications inside of traditional vendors) to reach their potential, the companies must move away from old day channel programs. For partners to benefit from their arrival in the market, a misalignment between incentives, rewards and responsibilities must be resolved.
Along with Chris Rallo, a leading cloud and channel industry expert, I’ve developed a set of guidelines for SaaS companies building channel programs in this disintermediated and disruptive new world. Here are my “new rules”:
- Create by the “by the type” partner benefits
Give partners what they need in their language, and with an experience reflective of how they do business. For example, give MSPs flexibility in service offerings, repeatability, and recurring revenue profit models.
- Be flexible with partnering business model options
Offer a referral model, resale model, various subscription models, and true systems integration capability options. A SaaS vendor may offer a referral to partners in one opportunity, or a resale option in other. Flexibility by customer opportunity is the key.
- Offer “short and sweet” sales enablement to partners with use cases and buyer personas
Demonstrate quickly what business challenges are by customer type, and what solution impacts a customer’s business. Don’t spend so much time on what the solution is or the technology itself. We believe short form video works well for this purpose.
- Focus SaaS partner sales team conversation on partner business drivers
Ensure reps are educated about how channel partners drive incremental revenue, specifically how SaaS apps enable new business for individual channel partners. Reps must be prepared for strategic business conversations with deep understanding of both partner selling habits, and customer buying trends. The days of lunch and learn vendor channel managers are gone.
- Give lifetime of value incentives to partners
Partners want more reward than a one-off referral fee for introducing customers to SaaS companies. But because partners have nothing physical to sell, SaaS companies think a onetime referral is enough. It won’t in most instances. The tighter a partner is with a SaaS vendor through the life of the customer, the more likely both companies are to continue profit together.
Some SaaS companies think they can penetrate the market directly without help from the channel. But the most successful SaaS sompanies will solve customer challenges with partners. To do so, they must create flexible offerings and solve complex customer challenges. Customers require complex technology, business, and process integration. That’s the perfect job for the “digitally and application savvy” MSP or cloud service provider partner.
I believe long term acceleration and sales velocity happens when you tap into this incredibly powerful and digitally savvy partner channel.
Theresa Caragol is founder and principal consultant of TCC- Achieve Unite, a performance partnering solution provider that provides business acceleration services to global enterprises including partner and channel development, go-to-market planning, M&A channel integration and executive learning forums. She has more than 20 years’ experience in building and managing multi-million dollar indirect channel teams and strategic alliance business and programs from inception to sales success. Prior to founding TCC – Achieve, Theresa held senior executive roles at Extreme Networks, Ciena and Nortel. She also has co-founded a Channel Tech Industry Think Tank with Penton / Informa designed to influence and support the industry’s transformation.