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040 - How to achieve Self Sustainable Growth with your Partners · Partnerships Unraveled

• 0:07
  Welcome back to Partnerships Unravelled, the 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 at Channext.
• 0:18
  And I'm here together with Alex W ithford VP Partners at Channext.
• 0:22
  Alex, how are you doing today feeling in this zone?
• 0:25
  We, we're recording four podcasts in less than 24 hours, so I feel like we're really ramping into it.
• 0:30
  Yeah, good, how are you?
• 0:30
  Yeah, doing well.
• 0:31
  Hopefully it increases our quality a little bit.
• 0:34
  Yeah, maybe.
• 0:35
  Or maybe we look lazy and bored, so we'll see.
• 0:37
  We'll see.
• 0:37
  But we're ready for it.
• 0:39
  I think for today's topic actually, actually it's not only today's topic because we just did a series about the partner recruit to revenue gap.
• 0:49
  I think what we really like there right, is that we can go really in depth on those topics.
• 0:53
  So we're actually launching a new series today.
• 0:55
  Yeah.
• 0:56
  So in the last series we discussed the recruitment to revenue gap, which is the obviously mechanism that you want to bring your partners on, effectively enable them and drive them to revenue as efficiently as possible.
• 1:06
  Time to value being a really critical metric there.
• 1:09
  But what do you do past that?
• 1:11
  Well, you want to get as many of your partners into a self sustainable revenue motion where they're able to drive revenue performance continuously with little to no interference from the sort of channel managers and the vendor.
• 1:23
  Yeah, I think that's a need like the first series is how do you get them to first revenue as soon as possible.
• 1:28
  But from there you want them to drive revenue on their own.
• 1:31
  Right?
• 1:31
  That's the skill you want to bring into your channel and make sure that you can get as many partners on board that are well equipped to find the right customers as such.
• 1:41
  And I think recently we've been talking a lot about the concepts of self sustainable partner revenue.
• 1:46
  Maybe can you define for our listeners what that is exactly and what phases are part of self sustainable revenue?
• 1:52
  Sure.
• 1:53
  The basic metrics that we sort of look at is is a partners on its own able to find close, renew and upsell opportunities consistently.
• 2:04
  And that's a really good barometer.
• 2:06
  Is this partner really self sustainable?
• 2:08
  And what you may find is some of your partners are able to do two of those categories or three of those categories, but not all four.
• 2:14
  And that will allow you to drive resource and focus into the particular area you need to so that the partner becomes as self sustainable as possible.
• 2:23
  You touched on why that's valuable.
• 2:25
  If you look at the mega companies out there that do lots of B2B revenue, they all do it via the channel for one particular reason.
• 2:32
  It's the hyperscaling motion.
• 2:34
  And the only way that you can deliver hyperscale is if you can have a hands off approach and self sustainable revenue is the way to get there.
• 2:41
  Yeah, and I think what's also in the self sustainable world there is the subscription based economy we're in right now.
• 2:48
  That's why two of the four phases are actually after you've closed the sale.
• 2:51
  So how do you renew them?
• 2:52
  Make sure they come back to you every year with the partner, but also upsell there, because the valuation of companies is based for the majority on net revenue retention.
• 3:02
  And if all your revenue is flowing through your partners, you want to enable them to do that properly.
• 3:07
  And actually that's what we found out from a lot of recent conversations with vendors is that that's a huge leaky bucket at the moment, actually where we've closed the customers they are in.
• 3:17
  But then the renewal rate and the upsell rates in the channel are a lot lower than indirect sales oftentimes.
• 3:23
  Yeah, we actually see this as a really common problem where SaaS businesses will set up a direct go to market motion in the US.
• 3:31
  Then they move over to Europe and they go, oh, hang on a second.
• 3:34
  Suddenly lots of languages, lots of countries, lots of tax, lots of legal, it's much more complicated.
• 3:39
  So then they leverage the channel.
• 3:41
  But then you're right, suddenly their NRR is really detrimentally affected because the partner renewal motion and the partner upsell motion isn't there.
• 3:50
  So specifically for vendors who are trying to cross the chasm, that is the sort of atlantic, how do you get across to Europe and really land effectively?
• 3:57
  You've got to make sure that your channel and your partners are set up in a way that self sustainable revenue includes renewal and upsell effectively.
• 4:06
  If I think about the word self sustainable revenue, is there such a thing as completely self sustainable revenue like that you have to do zero anymore for your partners?
• 4:14
  Yeah, I was sparring with a channel leader on this the other day and I think we got to an analogy that we both agreed with.
• 4:20
  It's never fully self sustainable.
• 4:22
  But when you're in that onboarding motion, when you're really driving that recruitment revenue gap, you're like a little speedboat, very agile.
• 4:28
  You've got to do lots of course corrections to really get the partner going.
• 4:31
  Self sustainable revenue, you're a cruise liner.
• 4:34
  You might do one degree course corrections, but you're never going to move very, very quickly.
• 4:38
  And that's what you want your channel to be.
• 4:41
  Massive powerful heading in the right directions.
• 4:44
  And your cams are just doing the one degree course correction left or right over time.
• 4:48
  It's not fully self sustainable, but that allows you to have a very hyperscaled channel because your resources are just focused on minimum adjustments rather than massive whole scale changes left and right every 30 days.
• 5:01
  Yeah, I like that analogy.
• 5:02
  I think indeed when I think about self sustainable revenue like you always keep in major contact with your partners, you keep building the relationships, you keep working on deals together.
• 5:12
  Especially on the larger ones, of course, but indeed a lot around it like you want to enable them in the ultimate way that they can do it themselves.
• 5:19
  And also that you have strong processes that when there's turnover in the employee base of your partners that you immediately find the right stakeholders again, that they get enabled, that they get trained and like in all the aspects we just discussed.
• 5:32
  So to find, to close, to renew, to upsell, those are the motions you want to continuously drive into your partners?
• 5:38
  Yeah, and I've seen it work, I really have.
• 5:40
  I've seen partners that know the vendor better than most of the people within the vendor.
• 5:44
  They've been selling the product for so many years.
• 5:47
  They really understand it's critical to their success and they're proactively those partners seeking out what else do we need to learn, how do we improve?
• 5:55
  If your distributors are doing the same thing, you can really have a dialled in channel go to market motion which is pretty self sufficient and that allows you to pivot your resources into expansion or into innovative solutions so that you can continue to grow.
• 6:09
  But a lot of the day to day work is just handled.
• 6:12
  That is the goal of the channel.
• 6:14
  In the last series we talked about how do you bring partners into this motion and this series we're going to talk about how do you keep partners in this motion?
• 6:22
  Yeah, indeed.
• 6:23
  How do you really get that continuous cycle right?
• 6:25
  Like that revenue keeps slowing in that the relationship with the partner becomes stronger as well.
• 6:30
  Do you see certain big differences between that first phase, so let's call it the onboarding phase.
• 6:35
  And then from there, once you have that first revenue, then the phase where you want to drive the continuous revenue and the self sustainable revenue.
• 6:42
  Yeah, with some of the sort of channel councils I've been involved in, we talk a lot about revenue drives engagement, engagement drives revenue and it's very much a flywheel.
• 6:50
  The idea behind the recruitment to revenue gap and shortening that time to value is you're getting first revenue in which is their first level of real engagement.
• 6:59
  And then you want to spin that flywheel over and over and over again.
• 7:03
  So their revenue is growing, their engagement is growing.
• 7:05
  And this motion is that tipping point where you go from perfect, you've generated a couple of opportunities.
• 7:11
  We did that together in the co marketing motion.
• 7:13
  We sold them together in the co selling motion.
• 7:16
  But now you want to start to hand responsibility back to the partner so that they can start to go out on their own find and close opportunities themselves.
• 7:26
  It's almost like a snowball that's getting bigger and bigger.
• 7:29
  And when you are generating more and more revenue with them, you'll get more attention within the company, becomes easier to get multiple stakeholders from your partner together to get the technical people, the salespeople, the marketing people and therefore driving those four motions again indeed, where you bring it more and more forward as well.
• 7:46
  And I think that's the interesting piece.
• 7:48
  Like first getting to first revenue, that's really hard.
• 7:50
  But then also getting the motion going, that's also quite hard.
• 7:53
  But once the motion is on its way, that's where it becomes very interesting.
• 7:57
  And that's what we really mean with self sustainable.
• 8:00
  Yes, you always need to keep pushing and you need to keep rolling the snowball, so to say.
• 8:04
  But it will get more easy, like going down because the snowball gets bigger and bigger and you are a more important piece of your partner's business.
• 8:12
  Yeah.
• 8:13
  And the other bit that is a really good barometer of this is how many deals are flowing through the partner that you are unaware of or not involved in.
• 8:21
  When you're in that recruitment's revenue gap, you're touching everything as a brand.
• 8:25
  Right?
• 8:25
  Your cam is getting involved in calls, doing all of the work, really driving the impetus.
• 8:29
  But as you get further into that self sustainable motion, the cam can start to prioritise other things within the partner.
• 8:35
  Maybe it's more executive sponsorship where it's, maybe it's helping with the comarketing motion, maybe getting that a little bit tighter.
• 8:41
  But deals are just flowing in that they don't need to touch.
• 8:44
  And the ultimate goal is, and I've seen it happen, you're having a quarterly QBR, you sit down with them, we discuss strategic direction, maybe we talk about a training plan.
• 8:54
  But that's it.
• 8:54
  Right?
• 8:55
  It's just revenue is starting to flow and revenue is starting to grow.
• 8:58
  That's really the goal of your channel working out.
• 9:00
  How can I be lazy and still hit target?
• 9:03
  Yeah, that's what you like, right?
• 9:03
  Yeah.
• 9:06
  The laziest job you can right.
• 9:08
  That to me is when the process works perfectly, is I can have a very hands off approach.
• 9:12
  We can get cams focused on what they do best, which is beers and relationships and then everything else can just handle because the partners engage the partners driving revenue.
• 9:21
  So get the process right and then drive the engagement which will lead to the revenue.
• 9:25
  Exactly.
• 9:25
  That nice.
• 9:27
  Let's start with the first phase, which is finding opportunities.
• 9:31
  What is that exactly?
• 9:32
  What does that mean from a partners perspective within that self sustainable partner revenue motion?
• 9:36
  And why is it so important?
• 9:36
  Yes.
• 9:39
  So finding opportunities is critical because if there is only a small set of opportunities ahead of them, a partner's ability to find new opportunities is what is going to make themselves sustainable.
• 9:51
  I've seen partnerships break down because the vendor just said look, we just want to attach into your existing customer base and that might not be a very deep pool.
• 10:00
  Well then guess what?
• 10:00
  Once you've sold all of those or you've qualified them in or qualified them out, then there's nothing new.
• 10:05
  And so you'll just end up, your revenue will just fall off the edge of a cliff, because if you're not generating new opportunities, you're never going to consistently grow.
• 10:12
  And so building a plan and an enablement plan and a strategy around how are we going to find opportunities is critical to long term success.
• 10:21
  Yeah, I fully agree there, and I think it's something we see a lot as well and hear a lot from the partners, is what they find quite difficult is finding net new accounts.
• 10:30
  And I think that's one of the things where you should really create within your partner programme, like how can you help your partners in a sustainable way.
• 10:37
  So not just you giving them leads, for example, because I think that's a big part of bringing them to the first revenue, that's when you want to give them leads, make sure they get onto it.
• 10:47
  And of course you keep doing that, but you really want to enable your partners that they can actually find net new accounts, but also opportunities within their existing accounts.
• 10:56
  Yeah, and make sure you define it right.
• 10:58
  There may be a two or three stage plan where you go early on.
• 11:01
  We're going for low hanging fruit, but the thing about low hanging fruit is it runs out and you've got to be able to walk your way up the value stack.
• 11:07
  And so you want to be able to dovetail your plan together so that you're getting the low hanging fruit early, because that's where you should start.
• 11:14
  But over time, you you're finding out how to acquire new customers, both from a partner perspective and from the vendor perspective.
• 11:19
  That takes time.
• 11:20
  It's more complicated, but also more valuable.
• 11:23
  And so you've got to build that motion together and it's got to be bulletproof because, trust me, out of all the four areas, this is the one that will kill the partnership quickest.
• 11:32
  If you are unable to find new opportunities consistently, the partner will not sell your product in the long term because they're not going to be able to find the opportunities to do so.
• 11:42
  Yeah, that's very true.
• 11:43
  I think that's also what we just spoke about.
• 11:45
  Indeed.
• 11:46
  With the engagement and getting the attention, that's what partners love.
• 11:49
  Like, I have a new opportunity, this is happening.
• 11:51
  That's happening.
• 11:52
  Like, you create that bus within the partnership and that's why that phase is so important of the self sustainable revenue motion.
• 11:59
  Yeah, and don't forget, the thing for partners is a new customer is actually incredibly valuable because they're not just going to sell your solution.
• 12:07
  So if you are the brand that is able to get them new customers and then they're able to sell other products and other services to those customers, you are going to be valued incredibly highly.
• 12:18
  Right.
• 12:18
  A really typical example of this is Microsoft.
• 12:21
  They sell Office 365 and then you can hang lots of products and solutions off the back of that Microsoft.
• 12:27
  You don't make a lot of margin from that product, but the revenue potential is so high, the customer acquisition rate is so high that partners love it because it's a new foot in the door and then they can sell more high margin products off the back of it.
• 12:39
  Even though Microsoft's not a high margin product, the opportunity is so big, partners love the brand.
• 12:45
  And so you've got to be able to drive your messaging in the right way to get the outcome that you need.
• 12:50
  Yeah, your product and brand positioning is crucial there in terms of finding the opportunities.
• 12:55
  We're going to dive into that in the next episode as well, maybe.
• 12:58
  Final on this topic.
• 13:00
  Who are the most important stakeholders within your partner to involve for that self sustainable finding opportunities motion?
• 13:07
  Sales and marketing.
• 13:07
  Right.
• 13:09
  Really easy marketing is going to be your mechanism to drive breadth and your sales is going to be your opportunity to drive depth.
• 13:17
  And you need to be able to see, okay, what are we selling to, who are we selling to and how are we selling and marketing to them?
• 13:24
  Having a really clear concise action plan and roles and responsibilities is the way to drive the success there.
• 13:30
  Yeah, I fully agree there.
• 13:31
  I think then we get to the second phase, right, where we found an opportunity and then we need to start moving into closing the opportunity.
• 13:38
  What are some of the things you see there?
• 13:42
  We are past first revenue with our partners, so we've closed a or some deals, but now it's time to really teach them to do that by themselves.
• 13:51
  Like, what are some crucial things to look at in that specific phase and when you enable your partners?
• 13:56
  So the statistic to look at is partner conversion.
• 14:00
  One of the things that partners will absolutely hate is if you find loads of opportunities, they do lots of work, but they're only closing 5% of them, 10% of them.
• 14:09
  So one of the ways to focus your efforts is how effectively is the partners converting those opportunities and closing those opportunities?
• 14:17
  What you want to have is a really tight funnel.
• 14:20
  So prioritise your enablement and prioritise your messaging in a way that allows the partner to convert at a very high rate and track that statistic over time.
• 14:30
  What you want to be doing is finding more and more opportunities and converting it greater and greater rate, quarter over quarter.
• 14:36
  That is how the partner is going to stay very engaged because they know, hang on, we convert 50% of these opportunities and we've got 20 opportunities for next quarter.
• 14:45
  That's leaving us in a really strong position.
• 14:47
  That's one of the barometers that I'd really be looking at closely.
• 14:50
  Yeah, but I think on that perspective, what is a crucial one if you want a good conversion rate, is educating your partners how to qualify an opportunity properly.
• 14:59
  We've just been through this as Channext in the last year as well, like, qualifying very strongly.
• 15:04
  The bigger your revenue is and the more customers you have, the better you know who are the right type of customers for you.
• 15:10
  And that same is for your partners.
• 15:12
  So if you find, like, who's the ICP, then you can say, okay, what do we really need to know from this company?
• 15:17
  Not just is it the right company, but also is it likeable that we're going to close this customer and educate your partners on that?
• 15:24
  So what kind of variables do they have to need in place before they open the opportunity?
• 15:29
  Because therefore, you make sure that you work on a very healthy pipeline together with your partners and you can indeed drive the conversion rate that you want to see.
• 15:37
  Yeah.
• 15:37
  And I think what you want to be doing as a brand is sharing the information that you've learned from other partners.
• 15:43
  Right.
• 15:43
  So you might have sold a lot into finance in France.
• 15:46
  Well, guess what?
• 15:47
  Finance in England is going to have a very similar closing motion.
• 15:50
  So who are the right stakeholders?
• 15:52
  Who are the right champions?
• 15:53
  What's the typical deal cycle look like?
• 15:55
  What's the deal velocity that we can expect?
• 15:58
  Sharing that into your partners allows them to benchmark success.
• 16:02
  Not just the Lagging indicator, which is, did the deal close, but all of the leading indicators running up to it.
• 16:08
  And if you're tracking that together, that's going to drive conversion through the roof over a long period of time, which is ultimately beneficial for you and the partner.
• 16:16
  Yeah.
• 16:16
  What role, for example, we want to make itself sustainable.
• 16:20
  My assumption is in that closing deals, you need both the sales team, of course, but also probably the solution engineers or the sales engineers that can help demoing the product and setting up a demo maybe for the end customer there.
• 16:33
  How do you enable those two roles in the best way in that phase?
• 16:38
  Yes.
• 16:38
  Sharing the learnings that you have with other partners is the first thing.
• 16:41
  Right.
• 16:41
  Having a map of what does a deal cycle look like so that you can say, well, after 30 days you should be here, you're going to need this presales information, going to need this post sales information.
• 16:51
  This is what the contractual process would look like so that you can map all of that out so that they have a checklist, a flow diagram of how this deal should go and that they are able to escalate if they are consistently hitting a same barrier.
• 17:04
  So that you can course correct.
• 17:05
  Remember, self sustainable revenue doesn't mean you never talk to the partner again, but it means you only get involved where they need you because they're doing nine steps themselves.
• 17:15
  You're getting involved in step ten.
• 17:17
  And so really making sure that you are driving the impact at the place that you need is critical to driving the partner success.
• 17:23
  Yeah, I think they're also what I hear a lot in my conversation that I'm having is why it's so important to have a lot of sales or solution engineers actually.
• 17:32
  Because that's usually the piece where partners in that closing motion are sometimes most unsure or insecure, maybe almost like they get very specific product and technical questions.
• 17:43
  So if you can enable them there, have them drive most of the closing motion but still, especially in the beginning and hopefully eventually, of course you can train people at your partners to be that technical specialist.
• 17:55
  But I think that's also a good thing to notice there and to focus on in the beginning and making sure you get your partners, like get them into that sales motion, get them comfortable with your product, with the questions that end customers are asking and give them the confidence that they can do it on themselves completely.
• 18:10
  Yeah, and I think if you can do that consistently, what will happen is your partner's education, the bar will raise over time and they are becoming more and more and more self sustainable.
• 18:20
  Which you'd expect, right?
• 18:21
  If we close ten deals or 100 deals or 1000 deals, the more deals that you close, the more you've seen, the better the partner will get.
• 18:28
  And that just allows you to direct the resource exactly to where you need pre and post sales are deal stoppers.
• 18:35
  So you want to make sure that if you don't have that right, deals will not move ahead.
• 18:39
  So making sure that you've got either the escalation point into the vendor or that the partner is self sufficient in those areas that's critical to your long term success.
• 18:48
  Yeah, and I think then we have closed the deal but then indeed we get to the renewal phase and I think that renewal one of the first pieces to do that properly.
• 18:58
  What's very important is actually at closing because especially in the resale model your partner owns the customer they know until when the contract is.
• 19:05
  So you want to document it in a very good way because you want to know exactly from all your subscriptions you have with all your partners when is the renewal date because that's where you're going to build your full renewal motion around, right?
• 19:19
  Yeah.
• 19:19
  So what's really funny is in the finding It's Sales and Marketing.
• 19:23
  In the closing.
• 19:23
  It's sales and technical.
• 19:25
  In the renewing It's operations and Sales remember, channel is always split into four pillars sales, Marketing, Technical and Ops.
• 19:33
  And in the renewal phase it's Operations and Sales responsible for making sure that happen.
• 19:39
  Do you have the processes in place that automatically trigger sales conversations to drive renewals 90 days ahead of time, 60 days, 30 days?
• 19:47
  Is that process in place?
• 19:48
  Do the contracts flow?
• 19:50
  Is it automatic renewal?
• 19:52
  Is it manual renewal?
• 19:53
  How does all of those pieces work together?
• 19:55
  Having that in place is critical to ensuring that you don't churn out heavily through the channel which is going to massively impact the value that the channel is bringing.
• 20:05
  Remember, acquiring a new customer is typically five to ten times more expensive than renewing a customer.
• 20:12
  And if you are churning out 40%, 50% of your deals after a year, the channel is a lot less valuable and then you're at risk.
• 20:20
  So you want to make sure that your renewal rate is very, very high.
• 20:23
  And the place to start is not sales, it's operations.
• 20:28
  And what do you define as operations?
• 20:30
  Like what kind of roles or departments are under operations.
• 20:32
  Yes.
• 20:32
  So for me, the first place you want to understand is do we have a billing engine in place?
• 20:36
  Is it automatic renewal?
• 20:38
  Is it manual renewal?
• 20:39
  And then you hang your sales operations process off the back of that.
• 20:44
  Okay, if it's manual renewal, when are we reaching out?
• 20:46
  What's the automation in the vendor and at the partner that flags, hey, we should have sent a quote out.
• 20:52
  Has this happened?
• 20:53
  How are you tracking consistently?
• 20:55
  What will happen very often is salespeople will be more focused on new deals than renewal deals because renewal deals can happen automatically, can do, not necessarily do, but new deals never happen automatically.
• 21:09
  So it's very easy to divert focus to a new deal.
• 21:12
  And so having either a renewals team in the partner, renewals team in the vendor, and the operational process to tie everything together and track and flag is critical to your long term renewal rate.
• 21:23
  Yeah, I think that alignment is crucial indeed, because I think always you want the partner to do the first outreach around the renewal, but you also want like the cheque ins right from your channel team, et cetera, like, are we there in time?
• 21:34
  Because that's really new.
• 21:36
  And I think another thing that we discuss a lot like the renewal is one in the onboarding phase of the customer.
• 21:41
  So make sure that there's a strong rollout, that technical and sales are doing a good job there when they roll it out.
• 21:47
  And then indeed from there have very strict processes and know exactly when do we start reaching out for renewals?
• 21:54
  What does the process looks like?
• 21:56
  When do we ultimately want, for example, in a lot of automatic renewal, there's a notice period.
• 22:01
  What is that time?
• 22:01
  When do we want to have checked in with our champions at the end customer, whether they are going to renew, et cetera.
• 22:07
  There's a lot of things to think about there.
• 22:09
  Yeah.
• 22:09
  And if there's any channel leaders out there wondering, is our renewal rate any good?
• 22:13
  Here's two statistics to track.
• 22:15
  One, what is your renewal percentage and how does that benchmark to market standards?
• 22:20
  Most SaaS brands renew at over a 90% rate and you would want that to be consistent for your Direct or your channel go to market motion.
• 22:28
  So make sure you are benchmarking both.
• 22:31
  And then the second is do you have an understanding or when do you have an understanding that the deal is not going to renew.
• 22:38
  If you don't have a flag ahead of the opt out point or ahead of the closing date, then you are in a really poor position to have that leading indicator.
• 22:48
  Really great brands know 90 days, 45 days before the deal is even due to renew.
• 22:54
  This is a high risk deal and I need to put my best salesperson on it to make sure that that renewal comes in.
• 23:00
  And if you don't have that flagging measure implemented at ASAP because that's one of the easiest things you can do to tick up your renewal rate.
• 23:08
  Yeah, I think product data is also crucial there.
• 23:11
  Indeed, really knowing what kind of product data drives renewals and therefore also sharing that proactively with your partners, where they are at, so your partners can steer those metrics as well.
• 23:21
  I think that's a very important one.
• 23:24
  There in the episode.
• 23:25
  We'll dive into this in way more detail, but we are learning a lot here at Channext about how we can learn so much from customer success and apply it to partner success.
• 23:35
  But the interesting things about the renewal motion is partner success and customer success tied together.
• 23:40
  And so we can cover that in more detail because I've got a really good five step action plan for how we can increase renewals.
• 23:46
  Already looking forward to that one.
• 23:46
  There we go.
• 23:48
  And then I think we get to the final phase, which is Upselling.
• 23:51
  Always a bit of a combination.
• 23:51
  How do you see that?
• 23:53
  Renew versus upsell or plus upsell maybe.
• 23:53
  Yes.
• 23:56
  So to me, the upsell, even more so than the renewal is generated in the closing of the deal, right, the onboarding of the deal.
• 24:05
  Because what you will find is if we've generated upsell criteria, which every good salesperson should be doing, then we've got a real opportunity and success criteria to drive towards that upsell.
• 24:17
  So one of the best things you can do is KPI salespeople on.
• 24:22
  Have we set upsell criteria and then did we hit upsell criteria?
• 24:26
  Remember, acquiring new customers is so much harder than Upselling existing ones.
• 24:32
  And so one of the great scaling levers and the reason all these SaaS brands are so valuable is once you've acquired a big base of customers, it's much easier to take them from a freemium or a low cost model to a mid or a high cost model.
• 24:46
  Driving that up, driving that deal velocity through the roof is critical to success.
• 24:50
  Yeah, I think there's a lot to do there in your margins for the partners and their commission plans, et cetera, because I think what you really want to drive is that Upsell is just as valuable as new business sale there.
• 25:04
  And I think that's usually that's not the case in margins and the comp plans, et cetera.
• 25:08
  Well, if you drive it in such a way, then you'll get that as well.
• 25:11
  And I think.
• 25:11
  Fully agree with your point, actually, it's way more expensive to acquire that new business account, especially for the partner in such a way.
• 25:19
  So it's also good to drive that message into the partner and make them understand, because there are still a lot of partners who are making the shift from being the typical vard, maybe, to more of a managed service provider now, or really more like from hardware to more subscription based type of software, et cetera.
• 25:36
  And they need to understand that as well.
• 25:38
  For them, that's also a new area and a new business they are at.
• 25:41
  So the better you put that messaging into the partners and explain to them, this is why upsell is maybe even more important than new business, the more mind space you'll get and focus.
• 25:51
  And for anyone doubting how important upsells are, it's really easy.
• 25:56
  Just look at any big SaaS brand.
• 25:59
  They have premium models or loss leader models where they're actually costing themselves money at the really low end.
• 26:06
  Why?
• 26:06
  Because one of the ways they drive valuation is movement from free to cheap to mid to high.
• 26:13
  And the tighter they can draw that conversion, the tighter they can pull those customers up through the value stack, the more money they're prospected to make in the next three to five years, which massively impacts their valuation.
• 26:24
  And so if you haven't geared your channel to help drive those conversions as well, you are making a huge error and negatively impacting, one, the perception of the channel, but to the value of that channel.
• 26:34
  And it's one of the easiest things to fix.
• 26:37
  So if you do that today, you're going to drive huge uptick in the next three to five years.
• 26:41
  Yeah, 100%.
• 26:43
  I think that's you touched upon it quickly.
• 26:45
  Like what the average is in SaaS, like, it's indeed 90% plus of your gross revenue retention.
• 26:51
  But in channel, we actually see that in general, it's a lot lower.
• 26:55
  You solve that churn problem and that you solve that upsell, because the valuation of companies is based on net revenue retention for the majority.
• 27:03
  And if that's lower than 100%, the market don't even think it's a good number, actually.
• 27:08
  So make sure that when you build your channel, that your renewal and upsell motion really gets the time it deserves.
• 27:13
  Exactly.
• 27:14
  I've seen channels who are happy with a 40% renewal rate, which is awful.
• 27:20
  Whereas you're absolutely right, most SaaS brands are saying, hang on, if our NRR isn't above 100%, that's awful.
• 27:26
  And that's a massive discrepancy.
• 27:27
  And look, the ones leading the way are companies like Microsoft, over 400,000 global partners, and their NRR is growing through the channel, not dropping.
• 27:37
  And that's what you really want to be driving, because it's how do we get the double scaling vector of, hey, SaaS renewal and upsell blended with the hyperscale of channel?
• 27:46
  That's the business we're all trying to build?
• 27:48
  Because that's really how you're going to continue to grow year over year.
• 27:52
  So business leaders, channel leaders understand that driving upsells in the channel is the critical way to add a zero to your valuation.
• 28:01
  Yeah, I'm really looking forward to this series already.
• 28:04
  Thanks for sharing again today, I think for our listeners as well.
• 28:07
  I hope to see you in the next couple of episodes because we're going to talk about self sustainable partner revenue.
• 28:13
  How do you find close, renew and upsell customers.
• 28:16
  Those are the upcoming four episodes and in every episode we're going to discuss one of those faces.
• 28:22
  So thanks again, Alex.
• 28:24
  Thanks to our listeners for listening and see you next week.