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009 - Partners: What does a channel partner want from a partnership? · Partnerships Unraveled

• 0:07
  Welcome back to Partnerships Unraveled. T he podcast where we unravel the mysteries of partnerships and channel on a weekly basis.
• 0:15
  My name is Rick van den Bosch and I'm the CEO and founder of Channext.
• 0:19
  And I'm here together with my co-host, Alex Whitford, VP partners at Channext.
• 0:23
  Alex, how are you doing today?
• 0:23
  Yeah, really good.
• 0:26
  Excited to be here.
• 0:27
  Yeah, I fully agree.
• 0:29
  Especially due to the topic that we're going to discuss today.
• 0:32
  Recently we've been talking a lot about that.
• 0:34
  We did a lot of from the point of view from the vendor, but it might also be very fun to look at it from the lens of the partner.
• 0:41
  What do you think about that?
• 0:43
  Yeah, absolutely.
• 0:45
  The partner dynamic is more interesting because they have so many different priorities, because they sell so many different vendors and they've got the end-user as the focus of what they do.
• 0:56
  So approaching it in some ways, we've talked about channel strategies should almost approach it from the basis of the partner at all times.
• 1:03
  So I think a great topic to get in today is really what are their priorities?
• 1:08
  Yeah, absolutely.
• 1:09
  When I think about myself, I tend to fall into the trap where I'm thinking about how should we create a program?
• 1:16
  How should we position something?
• 1:18
  How should we bring it... That sometimes you tend to forget, but hey, there's another person at the other side.
• 1:23
  A partner that has completely his own intentions and generally doesn't really care about what you want.
• 1:30
  So you need to find alignment there and how are you going to achieve that?
• 1:33
  Yeah, the clue is in the name.
• 1:35
  It's partner because we're trying to build a partnership.
• 1:37
  If you start from their perspective and work back to your offering and to your product, that's a really helpful process and something that, we've spent a lot of time talking about over the last few episodes.
• 1:49
  Because it's so critical that they are informing the end-user about your product and your offering and your go-to-market motion.
• 1:59
  Having them at the core of everything you do is critical to success.
• 2:03
  Yeah, put the partner in the center of everything and give them your full attention and really focus on bringing the perfect partner experience.
• 2:10
  That's what will bring the most success.
• 2:13
  So that's why I'm very excited for today as we're going completely try to put ourselves in the shoes of the partner.
• 2:20
  From that perspective, Alex, could you give us a point of view?
• 2:24
  If you would be in the shoes of a partner, what do you want from your perspective with your business?
• 2:31
  Yeah, sure. So business fundamentals, you always start from the customer.
• 2:38
  How do we acquire customers, how do we retain customers, and how do we grow customers?
• 2:43
  I'm a salesperson at heart, so I'm always going to start from that sales methodology.
• 2:48
  Then at that perspective, I want to build a three-pronged strategy.
• 2:51
  Which is How do we go and acquire net new end-users? How do we then retain those end-users?
• 2:58
  And from a customer success perspective, How do we grow those end-users?
• 3:01
  And that, done effectively, is the blueprint of any successful business.
• 3:06
  Yeah, absolutely.
• 3:08
  If you look at it from the partner perspective, they want to grow their business.
• 3:11
  And you need the three things you just mentioned.
• 3:13
  That's how you grow your business.
• 3:14
  You can get new customers. You need to make sure that they stay your customer.
• 3:18
  And you can upsell or cross sell within those customers.
• 3:22
  That's what you need to think about all the time.
• 3:24
  How can Ifacilitate my partner to do such things?
• 3:28
  And how can we fit our proposition– not talk about your product – but how can you fit your proposition in the partner's proposition so they can bring that as a whole package to the end-user?
• 3:38
  Yeah, you'vebrought up an interesting point.
• 3:41
  Growth within an end-user.
• 3:43
  There's two ways to do that.
• 3:44
  There's upsell and cross sell.
• 3:46
  For most vendors, it typically doesn't work that way.
• 3:49
  It's upsell only.
• 3:50
  You want to sell them more product.
• 3:53
  But cross sell is obviously an interesting narrative.
• 3:55
  One, it's easier to drive into the end-user.
• 3:57
  So you're making the partner's life easier if you come to them with that proposition.
• 4:01
  But you also are able to target and segment end-users very effectively.
• 4:05
  So if I'm a partner and a vendor comes to me and says, we've got this brilliant attachment product into this ecosystem, or this selection of products, who are your end-users that have those products today? Who have you sold those products to?
• 4:18
  And can we work together to close that business?
• 4:20
  That's a great warm introduction into a partner.
• 4:24
  Because I'm sitting there thinking, brilliant, you know who your type of end-user is, we're easily able to segment the end-users that I currently work with, and we've got a proven proposition that works in that market.
• 4:35
  That's a really great sale strategy.
• 4:38
  It's all about showing them how to easily integrate it within their current customer base.
• 4:45
  That's why it's so important as vendors to closely work together with other vendors.
• 4:51
  Because partners are always looking at What does my customer base look like right now?
• 4:56
  What type of software or what type of products are they already working with?
• 5:00
  And what's most easy for me toattach to that?
• 5:04
  You say it all the time, How easy is it to sell?
• 5:07
  And there's a big differentiator there. If you put your positioning very strongly within the ecosystem that a partner is selling already, that's very valuable for the partner.
• 5:19
  Exactly.
• 5:20
  One of the things that is easy to forget in the channel – because you're dealing with a sort of macro strategy – the partner has a relationship with the end-user.
• 5:29
  So trust is so important to that relationship.
• 5:33
  And I know there are partners that have dealt with the same end-user for 20 years.
• 5:37
  Product has come and gone, vendors have even come and gone, but they still hold that relationship.
• 5:42
  So they're going to maintain that relationship as paramount to their success going forward.
• 5:47
  When you take a proposition like an attachment sell, cross sell proposition into them, it gives them a great level of security. Because if you're able to say This end-user and this end-user have bought exactly what we're selling, then I think, Okay, I know the solution works.
• 6:01
  I know those end-users have done their due diligence and we're happy to purchase it.
• 6:05
  So conceptually, this is a good proposition.
• 6:08
  I feel a lot more secure that I can take that into the vendor.
• 6:11
  And if you're also offering to come in with me to show it and prove it, and we can have a commercial discussion, that's giving me even more security.
• 6:20
  I'm much more likely to take you up on that offering.
• 6:22
  Yeah, you're right about that.
• 6:24
  I f I would put myself in the shoes of a partner, what's often overseen is that we think, Oh, I have a brilliant product, so my partner would want to sell that product to their customer base.
• 6:36
  But in general, that means a partner would probably have to replace another product there.
• 6:40
  So either you have a product that is a great attachment – so you can upsell or grow the revenue with that customer – or you can have a look at How can I help those partners to get new customers?
• 6:55
  When I talk topartners, the thing they really want help with is getting new customers.
• 7:01
  Oftentimes the partners are very good from a technical perspective, also quite good in sales.
• 7:05
  But they have some difficulties getting in touch with new customers at scale.
• 7:09
  They often told me, If you bring me to the table, then I will make sure that I help the customer and help to close the deal.
• 7:18
  But how do I get to the table with that customer?
• 7:21
  Yeah, absolutely.
• 7:23
  Humans are lazy inherently.
• 7:25
  We want to do the minimal effort for the maximum output.
• 7:28
  That's true of vendors who want to be introduced into new end-users easily.
• 7:32
  But the same is true for partners.
• 7:34
  So if we want to build a net new end-user acquisition strategy, we've got to build that together.
• 7:40
  And it's not just unfair, it's unlikely to work if you put the burden on partners and just say, There you go, off you go.
• 7:49
  Can you go and win that new end-user?
• 7:51
  An even worst mistake is you come in saying, We're going to win that new end-user together.
• 7:57
  Then once you're in the door, you go, Any chance we can speak to your existing end-users and try and switch sell?
• 8:03
  That betrayal is going to turn me off as a partner immediately.
• 8:06
  Yeah, I agree.
• 8:08
  It's a very delicate process to do that in the correct way, but the best way to start with a new partnerships is to help them bring net new end-users.
• 8:18
  So if you're already developing the market on your own as a vendor, that's what a partner really loves.
• 8:24
  If you bring them some net new leads and some net new revenue, that's a great way to start.
• 8:29
  You start building trust, you start building the proposition together and then the step to go into their existing end-user – maybe your product actually is better or there's higher margin for the partner on your specific product than your competing products – then it becomes a much more natural process.
• 8:45
  Than immediately diving into it and say, Hey, what does your end-user base look like and how can we sell more to your end-user base?
• 8:53
  Sometimes vendors are very concerned that, I'm giving some of my valuable leads away or valuable revenue away and just giving it to a partner.
• 9:04
  To me, that's backwards.
• 9:05
  It's the fastest way to work out which partners want to work with you.
• 9:09
  Because if I give one lead to ten different partners and only three of them are thankful and introduced me into opportunities, those seven leads aren't a cost, they are proof that I should no longer work with those partnerships and now I can just focus on the partners that we'regoing to build a partnership with.
• 9:25
  Yes.
• 9:26
  So really look at it like, I give you the opportunity, I invest in you, but then you also want to see what energy do you get back for it?
• 9:33
  Yeah, exactly.
• 9:35
  One of the biggest costs in the channel is partners working with vendors who don't really want to work with them, or vendors working with partners who don't really want to work with them.
• 9:44
  So the quicker you can find out where the actual sort of bridge is working, then that's where you can pour focus and pour attention.
• 9:52
  And once you've got a qualified list of partners who really want that two way relationship, then you can start to execute a very high level.
• 10:00
  So don't think of those lost leads as a cost.
• 10:03
  They aren't a cost, they are just proof of where you need to focus.
• 10:07
  Yeah, I agree.
• 10:09
  And then putting myself in the shoes of the partner again, it's crucial that if you bring new leads or new opportunities to a partner in the beginning that it's high quality.
• 10:18
  Because if there's one thing that also will annoy the partner very quickly, if they notice that they need to invest time in something where they very quickly know, oh, there's not really something here like they gave it to us, but it's not qualified properly, et cetera.
• 10:31
  So the better you do that as well and the higher quality lead you give to your partner, that's also a great way to startand win the trust.
• 10:39
  Yeah.
• 10:39
  And you mentioned trust, right?
• 10:42
  Honesty and integrity is what builds trust.
• 10:44
  And if you want to and I know vendors that do this, they want to give a partner 200 leads and they might not be well qualified, that's okay, be upfront about it though, so that they can go and hire the internal resource to qualify those leads effectively.
• 10:59
  But what's really frustrating and I've had partners call me before and say, Alex, this is not what we need.
• 11:05
  This is not what we expect is I promise you good quality leads and then give you bad quality leads immediately.
• 11:12
  I'm going to say, right, well, this vendor either does not know what a good quality lead looks like, which is terrible, or they're lying to me, which is worse.
• 11:20
  And I think all the partners are of course looking to really sustainably grow their business and they do that by bringing continuous value to the end-user.
• 11:28
  What are things from a partner perspective where you're looking at so you can bring the most value to the end-user?
• 11:33
  And what kind of things are you expecting there from your defenders and your partners are you working with?
• 11:38
  Yeah, so the best partners and what all partners should be focused on is solution orientated product.
• 11:45
  So what problems does the end-user have and how are you going to fix them?
• 11:50
  Far better than talking about features and benefits.
• 11:52
  And look at this call gizmo.
• 11:53
  And this is really interesting.
• 11:55
  It's, oh, I'm having bad audio quality.
• 11:58
  Is that a mic issue, is that a latency issue on the network?
• 12:01
  Find the problem and then resolve that problem.
• 12:04
  That's going to build inherent trust within the end-users and that the vendors that work in a similar format are the ones that I'm going to be attracted to as the partner because then I can be very solution orientated with the end-user.
• 12:17
  And if the vendors are solution orientated with me and those are in sync, I'm far more likely to position you as a product.
• 12:24
  Yeah, I agree.
• 12:25
  I think what often happens is we create like a product sheet with all the product specs with all the features on it and we hand that to the partner and we expect them to translate that themselves tobring that message to the market.
• 12:38
  But what you can much better do is make it very practical for them like hey, here are the three main use cases of our product.
• 12:45
  This is the solution, this is the ideal customer for it and really help them to bring that message to the market, because that's how the partner brings the most value to the end-user in the sales process, in the customer success process, and you really have a full go to market motion much better there.
• 13:01
  Yeah, absolutely.
• 13:01
  I saw, and I'll keep their name out of it, I saw a cybersecurity vendor do this very, very effectively.
• 13:09
  They pitched their product at certain ransomware space and then they just did educational material after educational material around why there was a gap in the market for this area.
• 13:20
  And it allowed partners to be very informative to the end-users to say, hey, we believe you should do a check on this area because we believe you might be at risk.
• 13:30
  Once the end-user did that check and said, oh my God, you're right, how can we fix this?
• 13:35
  They were suddenly able to position the product.
• 13:37
  We weren't going in saying, this product solves this issue, we were going in and helping the end-user do an assessment, which in turn allowed us to sell products.
• 13:48
  But that's a massive difference because one for the end-user, they think, okay, well, that's really helpful, I'm going to be bought into that as a solution.
• 13:55
  And then if we uncover a problem, well, you highlighted the problem, so now I can work with you to solve the problem.
• 14:01
  And that's a connected tissue.
• 14:04
  Yeah, I think if I look at it like we spoke about it a lot as well of course, when we are thinking from it from a vendor perspective oftentimes, or like ourselves, we're in SaaS, it's all about revenue, revenue, revenue, grow, revenue, et cetera.
• 14:18
  But our partners oftentimes are SMBs so they are all about margin and profit as well.
• 14:24
  So I think that's interesting, of course, to think of it from a product perspective.
• 14:28
  So you want to give them some good margin there, but also very interesting to touch upon the services aspect of it, because a lot of the margin of partners is made within their services department toimplement it, to bring value to the customer.
• 14:42
  What do you think of that?
• 14:43
  Like, how could we approach that in the best way and what does a partner really find important there?
• 14:48
  Yeah, well, I think certainly in the UK it's true, and I think it's pretty true of everywhere.
• 14:54
  Salespeople in partnerships are comped on margin.
• 14:58
  That's critical to understand because if I've got to sell 100 deals at low margin or I only have to sell three deals at high margin to get to my target, I'm focusing on the high margin opportunities and so building a sales strategy into the partner that helps me, as the partner, understand how effectively I can get to my margin target.
• 15:20
  If the wraparound services are an effective way of doing that.
• 15:24
  Fantastic.
• 15:25
  I don't need the vendor to be the one that's providing high margin solutions.
• 15:29
  Lots of vendors can't do that because they're in a competitive landscape.
• 15:32
  But if you come to me saying, we're a low margin product, however, installation, management fee, ad hoc changes, implementation design are all a use case for us.
• 15:43
  Let's go in together.
• 15:44
  I'll help you sell product that you wrap your services around, which gets you closer to Target.
• 15:50
  Salespeople are wonderfully selfish, which is a fantastic quality as a salesperson.
• 15:55
  So you've got to play into that selfishness.
• 15:57
  How are you going to help me get to Target?
• 16:00
  The better you position that, the more easy it is for the salesperson to completely embrace it because it's in their own best interest, but it's also in the best interest of their end-user.
• 16:10
  So itties into the conversation they are already having on a day to day basis.
• 16:15
  And the better you position that, the better it is for the salespeople, the better it is for the full business and to grow together with the partner.
• 16:22
  Yeah, a player salespeople and a player partners are all about efficiency and so they want to get to the easiest route possible to get to Target.
• 16:32
  So orientate your messaging and orientate your support around that value proposition.
• 16:37
  And inherently I'm going to be much more interested in working with you than the competitive vendor that's telling me about how brilliant their product is.
• 16:46
  Partners don't care about products.
• 16:49
  They care about building the relationship with the end-user, solving their issues, and is making as much margin as possible.
• 16:55
  So orientate the messaging around that, I'm going to be far more interested.
• 16:59
  Yeah, I want to hear this from an AV partner.
• 17:02
  And I was like, who's your most important vendor?
• 17:06
  And he told the vendor brand, I never heard of it, to be honest, and I think I know a lot of vendors by now.
• 17:11
  But he was like, yeah, the margin on the product is great, there's a lot of implementation around it, it takes hours and it's very difficult to implement.
• 17:19
  But the product is so good once it's implemented.
• 17:21
  My customers love it, my margin is great, it's easy for my people love to implement it as well.
• 17:28
  So it's like really the full picture.
• 17:29
  And I really didn't expect that because it was a vendor I never heard of.
• 17:33
  Like usually think, oh, it's the largest brands, etc.
• 17:36
  But the partner is very cool to step into their shoes.
• 17:40
  Like, if you can really tie your product in their business model in the best way, that's when Parkins will love you.
• 17:46
  And it doesn't matter how good your brand is or not.
• 17:48
  Well, and youraised an interesting point.
• 17:51
  It was a vendor that you hadn't have heard of, that's a USP.
• 17:55
  When I'm a partner, if I position X brand that everyone sells, great.
• 17:59
  We're all positioning the same product, then then I'm in sorry, Holland, but a Dutch auction, we would say in England, it's a race to the bottom.
• 18:06
  That's no good.
• 18:06
  Right.
• 18:08
  What we want is a unique value proposition.
• 18:11
  And then the other bit that you said that the end-user loves, right?
• 18:15
  It's no point building a channel strategy that's high margin and the end-users don't like because eventually you'll get pushed out of the market because someone will come in with a lower margin product that effectively does the same thing.
• 18:27
  And so what's really important is provide unique value, provide service opportunities that the end-user solves their problem.
• 18:37
  Right.
• 18:37
  At the end of the day, sales is all about find a problem, monetize that problem, and solve that problem for less than the monetization of the problem.
• 18:46
  Once you're there, it's amazing.
• 18:48
  Yeah, it's true.
• 18:49
  And I think touching upon that, every partner wants to be unique.
• 18:54
  I think that's the number one thing to always keep in mind.
• 18:57
  And that's why it's so good to really position everything you do and message everything towards the partner as a solution because then it already feels a lot less like, hey, I'm selling another vendors product here.
• 19:10
  No, I'm selling a solution.
• 19:12
  And of course that product is part of that solution.
• 19:14
  And preferably I tie in multiple vendors into that solution.
• 19:18
  But it's my solution.
• 19:19
  I'm the local hero.
• 19:21
  I bring it to the local customers here.
• 19:23
  And I think if you embrace that and try to find out how can I tie into that solution, that unique solution of that partner in the best way.
• 19:31
  That's how you will make a real impact for the partner.
• 19:34
  Yeah.
• 19:34
  And vendors, you need to call out to partnerships where they can provide that unique value.
• 19:40
  Don't leave it up to them to work out.
• 19:42
  If you understand, hang on, this is going to require implementation, installation, and management changes.
• 19:49
  That's where you can provide your unique value over and above just shipping product or enabling SaaS.
• 19:56
  That's great.
• 19:56
  That allows me to understand where is it monetizable and where is it defensible.
• 20:02
  And I think that it isvery important to always keep thinking about, okay, we've got margin in multiple angles.
• 20:09
  We have margin on the products, of course, whether it's hardware or SaaS.
• 20:12
  And we got the margin there on the services.
• 20:15
  And there is like, okay, how do we position that as a whole package for the partner?
• 20:19
  But also it should be the first thing in your first conversations with new partners or when you want to level up with partners, what we spoke about in one of the last episodes a lot ask questions like, these are the type of questions you want to ask them.
• 20:31
  What are your most important products right now?
• 20:33
  What are your most important services?
• 20:34
  What's your margin there?
• 20:35
  How can I help you to grow that services as well?
• 20:39
  And when you get to know more and more about that, it becomes a lot easier for yourself to say, okay, but where do I position our company or our product in that service?
• 20:47
  Stack of the partner.
• 20:49
  Yeah, absolutely.
• 20:50
  And walk away.
• 20:52
  If you've not found how you can really form a tight partnership, don't spend time on it.
• 20:57
  Right.
• 20:57
  I think that's one of the things that I often see partners complain about.
• 21:01
  Yes.
• 21:02
  They spent six months on boarding our sales training after sales training, then they just wanted access to our existing customers.
• 21:07
  We weren't going to give it to them and the relationship failed, wasted our time and theirs.
• 21:12
  So, working out as quickly as possible, where there's synergy and if there isn't, that's okay.
• 21:18
  We can both move on with both adults, that's fine.
• 21:21
  But finding the partnerships, both from a partner and a vendor level that work together, those are the relationships that are worth investing.
• 21:28
  And then double down on those relationships.
• 21:31
  It's all about getting to a joint value proposition ASAP, because if you just train them about the product, etc.
• 21:37
  After a while, the partner is like, okay, I know all about their great product now, but I have no clue how to sell to my customers because it doesn't fit my proposition and I can tie it together.
• 21:47
  And I think if you create a joint value proposition and , that's a big part, I think when youformalize the partnerships together, immediately, you know, how do we bring it to market together?
• 21:58
  How does it fit your strategy?
• 22:00
  And from that perspective, really bring that joint value proposition to the market?
• 22:03
  You have a real kickstarter compared to a lot of other partnerships.
• 22:08
  Yeah.
• 22:08
  And you flip the proposition on its head, you've put yourself in the partner's position and gone, how do I easily facilitate opportunities?
• 22:16
  How do I easily drive growth?
• 22:18
  What's going to matter to the partner?
• 22:20
  Land there, walk backwards.
• 22:22
  And now, as a partner, I'm going, Hang on, this vendor is really taking me seriously.
• 22:27
  I want to reciprocate, I want to invest in this relationship as well.
• 22:32
  Yeah, I fully have to agree there, because I think then that's where the partner really feels, oh, it's about me, it's about my business, it's about how I can grow.
• 22:39
  And if you do that in the correct way, then a partner will start loving you already.
• 22:44
  Yeah.
• 22:44
  I've heard partners say the dreaded words vendor arrogance.
• 22:48
  Right.
• 22:48
  Oh, they're this shiny, sass vendor who's just hit 100 million arr.
• 22:53
  They're not interested in me and suddenly I'm not interested in you.
• 22:57
  I don't want to invest in your relationship.
• 22:59
  I have the relationship with the end-users and it's a double edged knife.
• 23:03
  If you don't invest in me, I will also defend my end-user against you.
• 23:08
  So you've just created two enemies, one the end-user and one in me.
• 23:13
  And now I'm their trusted adviser.
• 23:15
  So when you try and speak to them, I'm going to say, don't listen to them.
• 23:19
  I've got a different proposition that is aligned with my priorities and now I'm going to walk them in instead.
• 23:26
  I love the word trusted advisor.
• 23:28
  I think that's what we underestimate a lot like that strength of that local trusted advisor in their own language, probably the person you see at the local football club, at the local hockey club, etc, etc.
• 23:39
  And that relationship, that's so crucial and that's why it's so important to always think about the partner because they are the trusted advisors and they will forever stay there.
• 23:49
  Yeah, exactly.
• 23:50
  And the partner cares more about the end-user than you do.
• 23:53
  I'm sorry, vendors.
• 23:54
  So they're always going to prioritize the end-users benefit.
• 24:00
  And so if you can build the value stack that it appears that the end-users benefit is at the core of what you're doing, that's going to help you, but if you don't, it's going to hinder you.
• 24:11
  Yeah, I agree.
• 24:12
  While we were talking about this, I was just thinking about another pain point that Iexperienced myself as well, whom I know that a lot of partnerships have.
• 24:20
  It is the fact that your revenue is always like going to zigzag, right?
• 24:25
  It goes up really high, but then you think we're going to conquer the world, everything is going really well and then the next month it can be like, oh, everything's falling apart, I don't know where things are going.
• 24:36
  And I think that's also a thing for a lot of partners that they are starting to realize that I don't really want that anymore, that it's like so unpredictable and it goes left, it goes right.
• 24:45
  And I think there's also an interesting part.
• 24:48
  How can you help as a vendor for the partner tohelp them create more recurring business?
• 24:54
  And I think maybe question to you, like what do you think there?
• 24:58
  Like why does a partner really want that and what can you do as a vendor to support it?
• 25:03
  Yeah, look, you know, through my sales career I've always loved lumpy projects.
• 25:06
  They're great.
• 25:07
  Suddenly you're at 300% of Target, it's really exciting.
• 25:10
  Tooth and nail, try and bring it in in time for end of quarter.
• 25:14
  But that's as an individual salesperson when it's my business and I want sustainable growth, I want to flatten those projects.
• 25:22
  The projects are great because they can drive you into overachievement.
• 25:26
  But I know a business that could not sell anything for two years and wouldn't have to sack any of its staff just based on its renewals.
• 25:35
  And so they were in a super protective place and it allowed them to be hyper aggressive in growth because then they could hire more sales people because they were so certain there.
• 25:46
  So businesses that have a renewable model or businesses that encourage renewable services are going to be ones that allow you to minimize projects and flatten that curve, which allows for a far more sustainable growth model.
• 26:02
  I.
• 26:02
  Think that's why so many agencies or Virus or MSPs really love working with SaaS companies as well.
• 26:07
  Because all of a sudden they can sell a subscription product and they can get subscription margin there as well.
• 26:13
  So instead of starting at zero every month again you start stacking subscription of subscription on subscription.
• 26:20
  And I think that's where partners are really like hey, this is very interesting, I want more of this.
• 26:25
  But what you need to be aware of as a vendor is that it also really requires training for the partner because they are shifting from a one off model to a subscription based model.
• 26:35
  Which means that the true money is in the renewals, is in the upsell.
• 26:38
  So they need to really figure out that as well.
• 26:41
  Like how do we organize our company in such a way that we continuously drive impact for the end-user so they stay our customer forever because that's where the subscription based model is really winning, of course, for all stakeholders.
• 26:55
  Yeah, I'vehad to do this a couple of times through my career, both within distribution and also as part of my consultancy practice where I've helped businesses understand how to build SAS organizations.
• 27:10
  Even things like quota is incredibly complicated because if your target is 100,000 margin and you do that through projects, achieving 1000 margin in the short term through renewables is almost impossible.
• 27:23
  But for the people that don't work in that space and don't understand it, there's a really clever mechanism called the rule of 72.
• 27:31
  So if I close one deal in one month and it's worth 1000 and that's renewed every month, it's reoccurring revenue.
• 27:38
  In month two, I just close one more deal.
• 27:41
  So month one is 1000 and month two is 2000.
• 27:44
  And I continue to close just one more deal every month and they all renew by the end of the twelve months I've sold 72,000.
• 27:52
  And so that's a really great lesson because you sit down and go, how does that work?
• 27:56
  Yet it's an exponential curve.
• 27:58
  And so you continue just to close one more deal, one more deal.
• 28:01
  End of year two is 300 grand.
• 28:03
  End of year three, I think it's 1.2 million.
• 28:05
  And you've just got this ever increasing thing.
• 28:07
  So while the runway is long for SAS is why all of the top tech businesses are SaaS businesses.
• 28:14
  Because it's not just their benefit, it's your benefit.
• 28:17
  And how could you facilitate that as a vendor to help your partnerships make that shift or help them to train them and execute that in the right way?
• 28:25
  Yes.
• 28:26
  So one of my pieces of advice, and I think maybe this is we can go into far more depth on another time, one of my pieces of advice is to build a new sales team.
• 28:34
  So if I'm a partner, I want to separate the process for projects which are incredibly valuable but lumpy, and they're very revenue driven versus an organization that's more like an MSP, which is building time over time, you've got to comp those salespeople very, very differently.
• 28:52
  But for the long term growth of the business.
• 28:55
  Having a team that's super focused on large projects, operationally and training is driven towards that area.
• 29:02
  And having a team that's all about macro growth through SaaS businesses, suddenly you've got the best of both worlds, which is you want to be getting to 80% of Target through your renewable SaaS revenue and then your projects just drive over achievement.
• 29:17
  And if you can build those two pieces independently, suddenly I'm a partner that's transformed and in it for the long distance.
• 29:23
  I'm going to continue to grow effectively.
• 29:26
  It's crucial to think about it in that way in the because what I think we underestimate sometimes is partners cannot make the shift directly, like completely from project to subscription because subscriptions always start lower and they need time to build up.
• 29:41
  So if I would do a million per month in projects and all of a sudden, yeah, I've got this new SaaS product, they can't just turn everything into SAS for two hundred K per month, so to say.
• 29:51
  Of course they know long term they will win with that and it becomes more predictable.
• 29:55
  But they still have many employees, they have a lot of costs, they literally can't do it.
• 29:59
  So it needs to be a motion where you guide them towards that process.
• 30:04
  And I think the best way in it is to start with people who are completely focused on the subscription based.
• 30:09
  It requires customer success, team as well, because you need renewals, you need impact, you need upsell, etc.
• 30:15
  And then drive forward with that.
• 30:15
  Yeah, exactly.
• 30:18
  And even things like billing entities, right?
• 30:21
  This is why MSPs are so valuable in that space because they've got a billing engine that allows you to aggregate all of those different SaaS products together.
• 30:28
  But that's why if you're trying to come to me to educate me on your product, and I don't sell SAS today, you're also going to have to educate me on that business model so that I can understand.
• 30:39
  Right.
• 30:39
  What you're saying is this will be a brilliant proposition and in fact might be my best proposition, you might even become my most important vendor, but it's probably going to take two years for that to happen.
• 30:49
  That's fine, but I've got to know that from the outset, right?
• 30:52
  You can't come in and say, yes, we've done a brilliant job, we've closed four deals.
• 30:56
  And I sit there and go, hang on a second, this is worth 3000, but it's worth 3000 every month for maybe seven years.
• 31:03
  Okay?
• 31:04
  Suddenly I'm looking at that number wildly differently.
• 31:07
  But if you're used to that impact revenue and margin just dropping in, it looks like a tiny, insignificant number.
• 31:13
  And my sort of my push to all partners out there start to look at that reoccurring revenue firstly, if you're going to be acquired by another partner that reoccurring revenue is the most valuable bit of your business.
• 31:26
  Yeah, it's true.
• 31:28
  It's the ten x mill to put at least on your revenue instead of five times on your profit.
• 31:32
  EBITDA.
• 31:32
  So it's a huge difference there.
• 31:35
  Yeah.
• 31:35
  And I know partners who are aggressively pivoting to that model and in fact even potentially building a SaaS engine behind it because then they can be valued as a SaaS business and not just as a partner.
• 31:47
  And they go from five X profit to 25 x revenue and suddenly, well, maybe not in this market, but six months ago they would have been.
• 31:55
  And suddenly they're like, oh my God, my business has been transformed.
• 31:59
  And because they've got that banked income up coming in every time you're allowed to be more aggressive, you can afford to be more aggressive.
• 32:07
  Yeah, Ireally like the word transform.
• 32:10
  I think if you look at it, if you can help your partner transform their business, which provides them with more growth, more predictability, more certainty, more sustainability and really help them guide into words such a subscription based model, that's where you will really win.
• 32:26
  Because you help them with your product, get more margin, but then to really get the icing on the cake that's if you help them to even bring their services or their projects into a subscriptionbased model.
• 32:38
  And I think when I look, for example, at HubSpot how they've done it, they literally helped agencies and for agencies it's one of the worst.
• 32:45
  It's always like this and like that, and going up and down again, but they were all in the project.
• 32:52
  But all of a sudden HubSpot sells an end-user together with the agency, a twelve month contract, and if you don't do anything with HubSpot, you won't get any results.
• 33:01
  So all of a sudden they could tie their services on top of that with marketing automation, with SEO, with inbound activation, et cetera.
• 33:10
  So instead of having a oneoff project, theysell HubSpot to the end-user, the partner.
• 33:15
  So they get margin on that, but all of a sudden they get all their revenue that they would have with the projects, but get it also in a subscription based model and there is a lot more predictability all of a sudden.
• 33:26
  And that's what I find so cool.
• 33:28
  Literally, HubSpot helped transform agencies business into such a better and sustainable business model.
• 33:34
  What's funny there is I think you can sum up end-users like partners because they're the trusted advisor.
• 33:40
  Well, vendors can be a trusted advisor for the partner if they've got the partner's priorities in line, and HubSpot clearly did.
• 33:47
  And suddenly they've transformed agencies into a far better business model.
• 33:53
  Vendors who are serious about driving partnerships forward, that's the mindset they're going to need.
• 33:58
  Which is not just please sell our product, we think it's really clever, but it's how do we work together to really impact real change into your business.
• 34:06
  And some of that has to be educational around why this new business model may be different but should be very valuable.
• 34:14
  Yes .
• 34:15
  It's a delicate process to take the partner through that journey, but if you do it well, then your own business will flourish as well.
• 34:22
  Absolutely.
• 34:23
  And I think where I'm so excited to see where the markets headed is we sometimes talks about the perfect partner deal and to me, the perfect partner deal with how you tie in the end-users priorities, a real problem that they have.
• 34:38
  You build in SAS hardware services and you tie that all up into a lovely monthly subscription that can just roll through.
• 34:46
  Think the same way that Apple manages.
• 34:48
  You buy an iPhone, you buy Apple Care, you buy AirPods and you just pay a monthly number.
• 34:52
  That's the type of business.
• 34:54
  But imagine instead of doing that for£3000 worth of Apple products, you're doing that for hundreds of thousands of pounds of It services.
• 35:01
  Suddenly you can say, oh, we only have to close a few of those every year and we're going to have such an impact on our business because somehow you've blended Project and SAS perfectly together.
• 35:13
  It's a unique proposition and you solve the end-users issue.
• 35:18
  Yeah, I think that's why you see the managed service provider's market booming so much at the moment.
• 35:23
  Like partners love it, they are really embracing it.
• 35:26
  They , instead of selling the product separately and their services, they tie everything together in one subscription so oftentimes.
• 35:33
  I also see this a lot, especially in cybersecurity.
• 35:37
  It's wide labeled as well, so you don't even see which vendor isbehind it.
• 35:42
  And then the partner just takes five vendors that he really likes.
• 35:45
  He creates one solution together with an hourly subscription based model.
• 35:50
  Sorry, a subscription every month for a certain amount of hours towards their end-users and all of a sudden they have this ultimate subscription of their own.
• 35:59
  And I think that's really cool because right now the MSPs are really building a subscription based model with that.
• 36:05
  Yeah, it checks all the boxes unique for the partner, solves the end-users problem, it's renewable, it's sustainable, and we can land project costs for implementation, but tie it all up together so that the end-users not having to pay lumpy lump sums either.
• 36:22
  That's why the subscription model is so much more beneficial.
• 36:26
  It's why all of our products today, as consumers, we consume, right, netflix, YouTube, all of it.
• 36:32
  I think even Twitter's announcing today that it's going to drive a subscription model because it's just better for everyone involved not to have to have that significant outlay at one time.
• 36:42
  I'm very happythat you touched upon the end-user because that's a fact for the end-user.
• 36:48
  They love it as well.
• 36:50
  All of a sudden they go from a massive investment to something that spread out over multiple months or maybe even years in that way.
• 36:57
  And for them, they can have a very high quality services and products, but for a much better price than they could probably not pay if they would have to pay it in lump sum.
• 37:06
  Yeah.
• 37:06
  I'm good friends with a couple of sort of enterprise global It directors and they tell me what the subscription model has done is allowed them to tackle more projects within the same time frame.
• 37:19
  Because if you've got a 3 million budget and you go up, we need a network re architecture that costs two and a half million, that's the only project you're doing that year.
• 37:26
  But if it's two and a half million sweated over five years, oh, hang on now.
• 37:31
  I cantackle more projects within the same time frame, meaning that my It transformational process, suddenly I canget it done in half the time.
• 37:41
  Yeah, I think that's a really good way to look at it as well.
• 37:44
  Like, you can make multiple investments at the same time in that way.
• 37:48
  Yes.
• 37:48
  And for your CFOs out there, I'm also able to then look at those costs continually and manage that through a PNL far more effectively than 3 million here, 2 million here.
• 37:59
  And it's lumpy and painful for businesses to manage.
• 38:02
  Yeah, and less surprises , because usually when it's like an hourly based contract and all of a sudden, sorry, we're 50% over the project scope.
• 38:12
  Yeah.
• 38:12
  And if there's one thing finance people hate, it surprises, because they're never good one really good.
• 38:18
  I really enjoyed this diving into the partner perspective.
• 38:21
  I think, to summarize, we really looked at the partner like, what do they want?
• 38:25
  And eventually It's growth by bringing more value to the end-user.
• 38:29
  So growing their revenue, growing their business.
• 38:32
  The margin is really important.
• 38:33
  Never forget about that.
• 38:35
  So that's where services play an important part.
• 38:37
  So how do you create a joint value proposition where you put the surface of the partner together with your product, , but then from that perspective, we ended, of course, with how do you help your partners transform to a recurring business?
• 38:50
  And that starts with enabling them to sell products that are recurring.
• 38:54
  But then the ultimate thing is how do you tie that together in a recurring joint value proposition?
• 39:00
  And if you do that well, then you help your partners transform their business and you will both win in the market.
• 39:06
  So I think thank you for today, Alex, and thank you for listening again, we really enjoyed it.
• 39:11
  Hope you will share it with your colleagues or send us a DM on LinkedIn.
• 39:15
  We always appreciate the feedback and hope to see you next week.