Salesforce announced this past quarter that its partners were the #1 source of its new bookings. Wow.
What that exactly means, and how it’s defined is unclear, but the point stands.
Partners are a key part of getting to $100m for most of us, maybe even almost all of us. But they rarely get us to the first $1m … usually you are too small or nascent for anyone to really want to partner with you. I’ve seen some companies like Talkdesk get to their first $1m leveraging partnerships, but even there it still takes time. In any event, partnerships almost always work. But our expectations of how quickly they deliver, and how they deliver, are almost always not met 🙂
A few things to think about:
- Partnerships generally take years to produce material revenue. Invest long here. Take your existing sales cycle — and double it. You already know your customers and how to close them. Your partner? Even if the customers are joint, they’ll never know you and your product as well as you do.
- Power laws and long tails are common in partnership programs. A few partners will drive the majority of joint deals and revenue … and then all the rest together generally are material only as a group. Try to leverage your API and self-service capabilities for the long tail if you can, and focus human resources on the ones that move the needle.
- Ask yourself “Why?” Yes, everyone wants Salesforce, Google, Box, etc. as a partner. But why would they partner with you? If you don’t know … they won’t. Having a cool tool is not reason enough. There are 1000s of startups any BigCo can and does partner with. Or even more. The easiest way to start is to bring them a few big deals. Yes, I know this sounds backwards 🙂
- Pay twice. For most partner programs, you may have to pay commissions twice: to the partner, and again to your own sales / success team. Later, you can nuance this. But in the early and middle days, you just have to pay twice. Otherwise, your team and their team just won’t work together smoothly enough.
- Double down on any partners you have early traction with. Because those are natural synergies. In the early days, invest heavily in any partners you have even 1 or 2 joint customers with. Invest in what is working. Just a few early joint customers often point to a future of many more. Sometimes, it can be hard to see why one partner gets more benefit from you than another. That’s fine, you’ll figure it out. But double down and where the natural synergies are.
- Smaller partners with high affinity can move the needle. Getting 1% of Slack’s or Salesforce’s customer base would be great. But what about 25% of a smaller, but fast growing startup where the integration is even tighter? That might make you more money, and create more revenue, than a tiny attach rate to a big co. At a minimum, don’t discount the power of attaching to 10% of the customers of a smaller partner vs. 0.1% of the customers of a huge one.
- You need dedicated resources. Biz Dev, Channel Manager, whatever. You need dedicated resources to manage your partners, at least once you can afford them. And put them on quotas, generally … but ones they can achieve.
- You have to be a good sport. If your partner wants you to show up to their customer conference, fly out to meet a prospect, or do a deal you don’t really want to do … you gotta do it. Remember, they are bringing you into a deal. That is risky. Don’t add risk to the deal for them. Sales reps will only bring customers into deals they know they can trust. Better not to bring the partner in at all, otherwise … no matter how good the solution itself.
Be patient. This stuff takes time. But it usually works.