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030 - Partnerships: Marathon or Sprint? · Partnerships Unraveled

• 0:07
  Welcome back to Partnerships Unraveled, 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.
• 0:19
  And I'm here together with Alex Whitford, VP Partners at Channext.
• 0:22
  Alex, how are you doing today?
• 0:22
  I'm doing great.
• 0:24
  Thanks, Rick.
• 0:24
  How are you?
• 0:25
  I'm good.
• 0:26
  And I think the topic of today, we've been debating quite a lot lately and I'm actually excited to share this with our listeners as well because what we've been debating a lot is about partnerships.
• 0:39
  Is it a long term game or is it a race?
• 0:43
  And maybe to introduce that, could you enlighten us a little bit on that?
• 0:48
  Yeah, for sure.
• 0:48
  Partnerships, in my perspective, is absolutely the long term game, not just for individual businesses, but if you look at the macroeconomic forces, it's absolutely the long term strategy.
• 1:00
  I think if you go and ask VCs, they are all investing in businesses and as part of that process, they are requiring that you set up a partnerships team.
• 1:10
  Why?
• 1:11
  Because if you're going to invest millions in, you want billions out.
• 1:14
  And partnerships is the way to drive huge scale and drive massive demand and resource allocation.
• 1:21
  If you look at the businesses that do more than a billion dollars revenue per quarter, nearly all of them, 99% of them are all partnership led businesses.
• 1:31
  Everyone from Microsoft to Salesforce, all the key names, they all play in that space and they are partnership led.
• 1:37
  It's critical to drive scale.
• 1:39
  And so whether you're a VC or whether you're an early stage startup or whether you're in scale up, you all need to be looking about how to make partnerships the primary force to drive your business forward.
• 1:49
  Yeah, I think one of the reasons why, for example, VCs are so interested into it is that partnerships is really a moat for your business, right.
• 1:58
  Because it takes some time to build it.
• 2:01
  It's all relationship based with your partners there and I think that's something they find very interesting.
• 2:06
  If you have like a continuous flow of partner source revenue that's coming into the business, that's what VCs find super interesting nowadays.
• 2:13
  And that's what we also see is that if they could pick for a company that has a little bit higher ARR, but only very little partner sourced revenue versus one where the ARR is a little bit lower, but they have 50% partner source driven revenue, they will always choose for the latter.
• 2:31
  Yeah, for sure.
• 2:33
  There's three key reasons why that happens.
• 2:35
  One, it's low risk, right?
• 2:37
  There's very little inherent cost in building a partnership team.
• 2:41
  Second, it's incredibly highly rewarding in terms of the ROI percentage.
• 2:46
  If you've got three partnership people and they're delivering significant revenue versus three direct people, the direct people have a cap on what they're able to deliver, whereas the partnership people can scale far further.
• 2:58
  And third, you've got lots of tech integrations, meaning the scaling vector is significant because you're not just marketing into your own end users, you're marketing into other people's end users.
• 3:08
  That reciprocity will drive long term scale.
• 3:11
  And it's clear maths as to why VCs are so heavily investing in partnership led businesses.
• 3:16
  And it's also because, of course, with the integrations, for example, as an example there, that actually you get a lot longer time, longer lifetime value as well within your customer base.
• 3:29
  So there it's also long term, the more you are integrated in the way of working of your end user, the longer they will stay a customer of you and the longer success you'll have together with you and your partners.
• 3:39
  Yeah, for sure.
• 3:39
  It very much is a win win win.
• 3:42
  Right.
• 3:42
  The end user is going to win because they've got a better solution.
• 3:45
  The partners are going to win because they're able to build in a cohesive solution and make money on all the segmented parts.
• 3:51
  But you as an individual vendor, you're going to have the strongest piece because you're able to scale further and deeper and longer, which is absolutely what every business is after to maximise profitability.
• 4:03
  Even more so in a recession.
• 4:03
  Right.
• 4:05
  I think the days right now are gone of people just having crazy burn and just trying to capture the market.
• 4:10
  Driving consistent, sustainable profit is what people need, and partnerships are the best way to do that.
• 4:16
  And I think one of the crucial things to do and always be very aware of is that you also show long term, but also short term there, that you continuously prove ROI, because that's the thing everyone is looking at nowadays.
• 4:27
  Like, what is it actually bringing to the table?
• 4:30
  I think that's crucial there in every approach you take towards your partnerships every day think, okay, how do we bring that ROI back into the business?
• 4:38
  Yeah, exactly.
• 4:40
  When we look at that profitability percentage or that ROI, that's where the partnership teams internally in your business have such a great use case, to use your example that you used earlier, if 50% of your business is direct and 50% is partnership led, who do you think has the biggest team in terms of resource internally?
• 4:58
  Well, the direct team is significantly bigger, inherent risk, inherent cost, whereas the partnership team, because they are delegating a lot of that work either through the channel or into tech integrations, the scaling factor is enormous.
• 5:10
  Right.
• 5:10
  And so for a profitability or for resource addition into those partnership teams, it's amazing you can really scale.
• 5:18
  So I think we can conclude that on a macroeconomic level, partnerships is long term, but I also think partnerships very long term in a partnership.
• 5:26
  So on a micro level, because you need to build relationships, you need to build trust.
• 5:30
  And that's a very delicate process, right?
• 5:30
  Yeah, for sure.
• 5:33
  I mean, trust is the key word, right.
• 5:36
  It takes a long time to build and takes a short time to ruin and so you want to be in a very careful, methodical way of building those relationships to make sure there's reciprocity there right.
• 5:48
  You're giving and they're giving and in the end you both win.
• 5:51
  That takes a long time to do but the upside is tremendous once it's built.
• 5:56
  If you approach a partnership and you're going in it for the long term, what should be the approach towards a partner?
• 6:03
  To make sure that you ensure long term success together?
• 6:06
  Yeah, the two pieces and not sound like a relationship guru but it's the same for relationships as it is with partnerships it's honesty and integrity right.
• 6:15
  You've got to go in with a very clear understanding of what you are going to deliver and what you want back and it's absolutely fine to be very upfront with those because during that sort of vetting process, during that first and second date, you want to understand what are you in this for?
• 6:31
  And does that match my expectations?
• 6:33
  And once you've clarified, do the expectations match?
• 6:36
  We want to get to this size, we want to deliver this, this is what we want in return.
• 6:40
  If you're both on the same page then you can start to test the validity of the proposition right?
• 6:46
  Is there actually a market for what we're trying to deliver?
• 6:48
  Are we going to see the rate of return that we both want?
• 6:51
  It's all very well and good having the ideal but underneath that is there a business plan that really, really makes sense.
• 6:58
  Yeah, for that to really, indeed, really get to know your partner very well.
• 7:02
  I think we've been talking about that a lot as well, like how important it is in the recruitment phase already.
• 7:07
  Curiosity is a crucial one to really understand what's driving them, what's driving us, and bringing that together.
• 7:13
  And then the other words you'd use just before that reciprocity, I think is a crucial one that you go into the partnership with a giving mindset.
• 7:22
  I think if you do that from the get go and you keep doing that, that really ensures long term success.
• 7:27
  Yeah, I can't stress how much I see people go into a relationship going oh, this would be good, they can give me lots of business.
• 7:35
  That relationship will die, I promise you every single time unless you go in with the mindset of here's how I can help you they will always pull out at some point, whether it's three months, six months, twelve months at some point that relationship will die because it can't be a one way street right.
• 7:51
  So really search for those relationships where you can give and in return they can give not you give, you get because that drives that mentality of I need something instantly.
• 8:02
  Instead, how can I help you be successful?
• 8:05
  And find out the businesses that you can help and in return that they can help you.
• 8:09
  Yeah, that's a good one.
• 8:10
  So I think the start of your partnership is actually where you lay the foundation of the long term relationship and the long term trust and success you get together.
• 8:18
  Yeah.
• 8:18
  And you've got to scope that out early.
• 8:21
  Right?
• 8:21
  I think we've sometimes compare partnerships with dating, right?
• 8:24
  If one party is going in for a one night stand and one party is going in to get married and have kids, if you don't clarify that very early on, at some point it's going to delve into a really painful process.
• 8:35
  Right?
• 8:35
  And the same is true for partnerships.
• 8:37
  If one of you wants to scale to a billion dollars and do lots of amazing things and the other one's on for a six month plan, well, you've got to get that worked out very early on because partnerships is a long term game.
• 8:49
  It takes a long time to make a partnership valuable.
• 8:52
  And if you're not both on the same page in terms of the expected outcomes and the expected deliverables, that's going to be a painful process to unpick.
• 9:01
  And I've seen partnership people lose their job because of misaligned propositions.
• 9:04
  Right.
• 9:04
  It takes a long way to deliver and you don't want to find out twelve months into the plan that oh, actually the other partner is not very interested in delving into long term success.
• 9:13
  Suddenly you've lost your job.
• 9:13
  Right.
• 9:14
  So scoping that out early and really getting a critical understand of are we headed in the same direction?
• 9:21
  Do we want the same things?
• 9:22
  That's going to really drive success.
• 9:24
  And I think if we stay in that metaphor of indeed, like when you are in a relationship in the beginning, often times you're spending a lot of time together, a lot of attention, et cetera.
• 9:34
  But it's really important for the long term as well that you keep giving each other attention, that you keep investing in your relationship with your partner.
• 9:41
  And I think that's a crucial one as well to make sure that you not just have a very strong beginning but also have a continuous engagement towards a long term partnership.
• 9:52
  Yeah, exactly.
• 9:52
  There's no good having the long term vision that you're both ending.
• 9:56
  You both want to end in the same place.
• 9:56
  That's a good start.
• 9:59
  But then there is consistent work to get to that point and it also brings us onto the next bit.
• 10:04
  That work is in sprints, right?
• 10:06
  It's never just long term, long term.
• 10:08
  It's like what are we doing today?
• 10:08
  What are we doing this week?
• 10:11
  What are we doing this month to advance that relationship further?
• 10:14
  I think then we can go into the debate.
• 10:14
  Indeed.
• 10:17
  Because I think that's lately we're we're always chatting, it's a long term game.
• 10:20
  It's a long term game.
• 10:21
  But now the more and more we're talking to many SaaS companies as well, many vendors who are investing a lot in partnerships, we start to think that it's also a little bit of a race, actually, because why is it a race?
• 10:34
  Yeah.
• 10:34
  So there's two major races.
• 10:36
  There's the internal race and the external race.
• 10:38
  The internal race is you've got to prove ROI quickly and effectively.
• 10:44
  It's not to say you've got to deliver radical success, outsized success in a very short period of time, but you've got to show those green shoots of really, really significant growth early so that your CRO or your CEO is bought into the partnership strategy.
• 11:00
  I see so many people misalign expectations internally.
• 11:04
  They've got a plan for a two year runway and after six months, the CEO is going, I haven't seen any revenue, what's going on?
• 11:10
  And the plug is pulled from that partnership programme.
• 11:13
  Instead, what you need to be doing is being very clear around what return are you expected to see when and what green shoots?
• 11:20
  What leading indicators can we celebrate to say, oh, well, we might not have seen revenue within three months or six months, but here's what we've seen.
• 11:27
  We've seen these many deals created, we've seen these many opportunities driven, we've seen this tech integration built, we've got access to this market.
• 11:35
  Those are the leading indicators that you need to be able to sell upwards into your business to stop the plug getting pulled quickly.
• 11:42
  That traction is so crucial because how often have we seen a beautiful partner programme that had so much potential, but because they were not able to show value quickly enough internally, they pulled the plug.
• 11:53
  Indeed.
• 11:53
  And therefore we've spent so many resources, you're building relationships, you're building partnerships, and then before you get to the actual success, the plug gets pulled.
• 12:04
  And I think there indeed the better you're able to really show that internally, but also to speed up that process of showing value and making impact, the better it is.
• 12:13
  Yeah.
• 12:13
  Think like a dev team, right?
• 12:15
  If you're building a partnerships programme, think like a dev team, what's the roadmap we're not expecting to see delivered immediately, but we're expecting to see continuous progress.
• 12:25
  So what are the key gates and milestones that you're going to hit within six weeks, three months, six months, twelve months up until you're starting to get that macro revenue performance, you want to be able to sell the value of that progress internally and get everyone built in or bought into the process that this is going to take six months or twelve months to build for us to start seeing that revenue.
• 12:47
  And if they're not bought into that, you're going to lose.
• 12:50
  Right.
• 12:50
  So you need to be able to sell in effectively and then work in sprints to deliver that roadmap over time.
• 12:56
  Yeah, I think that's a really good one to approach it like that and that.
• 13:00
  Indeed.
• 13:00
  I think we can kind of conclude that a partnership on the micro level is very much a long term game.
• 13:06
  You're building the relationship, you're building trust, you're building the long term success there.
• 13:10
  But I think indeed, if you look more on the macro level as well, towards the market we've been talking a lot about, almost in every market we see, you have a very small amount of partners who's driving 80% of the revenue.
• 13:23
  And every vendor at the moment is looking to find, recruit, engage and make those partners successful.
• 13:30
  And I think that's a crucial thing as well, if you look at that, is those partners are probably only going to work with one or two vendors in your actual, like, your specific product type, so to say.
• 13:41
  So there it's kind of a race, right, where you're all competing for the same partners.
• 13:46
  For sure.
• 13:46
  Business is always a race.
• 13:49
  Look at any business segment out there.
• 13:52
  Market consolidation happens over time, whether that's through mergers, acquisitions, or whether that's just competing and driving other people out of business, that market consolidation happens.
• 14:01
  There's three big oil companies, three big pharmaceutical companies, three big gaming companies.
• 14:05
  It sort of doesn't matter what the industry is, that market consolidation happens.
• 14:10
  So there's actually two races occurring.
• 14:12
  One, there is the race for your business, which is, are we going to be one of the three that wins or are we going to be one of the everyone else?
• 14:20
  Or the second race that's happening is the race with the right partners, because those same market consolidation happens.
• 14:26
  If you're competing, you're in technology sector A, well, there's only going to be a few players and those partners are only going to sell one, two or three maximum.
• 14:36
  And so it's a race to get in front of those partners, it's a race to build the partner programme, it's a race to find, recruit, enable and drive sustainable revenue from those partners.
• 14:45
  So you better make damn well sure that you've built a partner programme and a recruitment strategy that's very effective and very efficient so you can get into the right partners quickly and effectively to win.
• 14:56
  Yeah, because everyone wants to work with the Accenture's, the CDWs and the Deloitte's of this world, right?
• 15:02
  Yeah.
• 15:02
  And what you've got to understand is, from the partner's perspective, they want to bet the right horse as well.
• 15:07
  So if you're in, I don't know, cybersecurity, then it's like, okay, well, they're only going to sell a few vendors.
• 15:13
  Even the bit CDW that sells 10,000 vendors, they're only going to sell a few key players within each of those sectors.
• 15:20
  And so you've got to make sure you're getting in front of the right partner with the right messaging and proving that you are the right vendor to sell so that they go, okay, of our three key cybersecurity vendors for this type of end user, you're in that three.
• 15:33
  And the better that you can drive your programme and the better you can drive your partnerships model to ensure that you're going to beat that market consolidation.
• 15:41
  That's how you're going to win over the long term, but it's critical that you sprint in the short term to make that happen.
• 15:47
  While you're saying this, I'm thinking about some conversations I had lately with other vendors and I think they understand that they need to raise.
• 15:55
  So we see that as well, that they are very highly investing in recruiting those partners very quickly.
• 16:00
  But what I also see at the same time is that oftentimes their partner programme is not ready yet to onboard that many partners with the right quality to really build towards that long term success.
• 16:10
  And what you see happening there is what we always call like the leaky partner journey is you get in all those partners, so you're recruiting as if it's a race, but then your partner programme is not suited for the actual race and that's where we see a lot of burning of partnerships.
• 16:25
  Right?
• 16:25
  Because we've spoken in the beginning of this episode how important it is to build a long term trust.
• 16:32
  Trust is lost very quickly, so if you're recruiting at a very high pace but don't have the face ready after recruiting, so you're programmed to enable, market and sell together with your partners, then you'll lose a lot of partners again and that's exactly what you don't want with the top partners in the world.
• 16:49
  No, exactly.
• 16:50
  The last thing you want to do is ruin a relationship, especially with a key partner that's ultimately going to be one of the keys to your success.
• 16:58
  And so what you want to do is balance the short term sprints with the long term success and that's why you've got to be recruiting at scale.
• 17:07
  Yes, but in buckets, right?
• 17:09
  So go and recruit ten partners, get those partners engaged, get those partners to self sufficient, then onto the next ten, then onto the next tent, then onto the next ten until you can automate to drive real hyperscale, you want to be doing it in sprint so that you're taking as many partners as possible over the long term to self sustainable revenue.
• 17:29
  But not all simultaneously.
• 17:31
  The difference between recruiting 100 partners at the same time and recruiting in ten batches of ten is wildly different both for internal resource and for engagement percentage.
• 17:41
  And so if you can work in those short term sprints, that's ultimately what's going to allow you to balance short term success with long term success.
• 17:51
  I also think that's also like a reason why it's so crucial to really invest a lot of resources in that post recruitment phase, so to say.
• 18:01
  Because the better you get that partner journey fixed and the better you are able to get your partners to self sustainable revenue and the more you can handle, the faster you can start recruiting as well.
• 18:12
  So it's all like this cycle we're in of getting the new partners in but also making them successful as fast as possible and therefore showing more and more proof more partners will come to you and it's all heading in the right direction for the long term and short term success we're all longing for.
• 18:27
  Yeah, you've got to treat your partnerships a bit like a sales cycle.
• 18:30
  You want the highest deal velocity and the highest conversion percentage possible.
• 18:35
  That's the same thing.
• 18:35
  You want the highest partner engagement and the highest partner recruitment possible.
• 18:39
  But that works in sprint.
• 18:41
  So recruitment sprint, engagement sprint, self-sustaining ustaining revenue, keep doing that over and over.
• 18:47
  Align resources to each of those individual buckets because they are different sales approaches.
• 18:53
  And if you can get that into a well oiled machine that flywheel turning very, very effectively, suddenly, you're going to be able to do it at scale, but do it at a very short term, focused first.
• 19:03
  Because as we were talking about that internal race, to prove revenue to the CRO, to prove success, you don't have to do that at a macro level, do it at a micro level.
• 19:13
  Go and win with two or three partners.
• 19:15
  Once you prove the model, build a business band to say, if I have three X the resource, we can six X the return.
• 19:21
  That's why I need a partner programmes manager, I need to invest in automation tools, I need to do X, Y and Z.
• 19:27
  But you win the internal race at a very small level first before you try and drive that hyperscale.
• 19:33
  Yeah, because I think the likability of being successful is way larger, right.
• 19:37
  If you make a select group of partners very successful, we've been talking a lot about having a very large channel that's hard to manage.
• 19:45
  If you have a very small one in the beginning and you show proof quickly with a couple of partners, that's the ultimate way to get internal buy in.
• 19:52
  Then you get more resources, you can recruit more partners, you can enable them better, you can maybe buy indeed, some tooling as well, so you can automate a lot of that partner journey afterwards.
• 20:02
  And then you really get into that traction process where you want to get.
• 20:06
  Yeah, you want to be tactical and then you want to be wide and deep.
• 20:10
  Right.
• 20:11
  But the first thing is to do is to win and build the motion.
• 20:14
  A bit like finding product market fit.
• 20:15
  When you're finding product market fit, you don't take it out to the masses.
• 20:19
  You get really, really niche, really specific win in a certain area, and then you can start to expand your horizons.
• 20:25
  Partnerships works the exact same way.
• 20:28
  While we're talking about this, I'm thinking about even we just said, right on a micro level, in a partnership, it's very much a long term game.
• 20:37
  But even there, we could use a race mentality because also there we're always talking about the best way to get and keep the attention of your partners is by showing them that they can grow their business with you, which is through driving revenue together.
• 20:51
  And I think that's also in terms of thinking about it as a race, yes, I want to build a long term relationship with my partner and a long term partnership, but I also want a race towards time to value, towards time to revenue with them, because then I can show my value to the partner as soon as possible.
• 21:08
  They will like me, we will build a relationship, you get reciprocity and then you'll make the time to value in your partnership also a lot faster.
• 21:17
  Look, the message is simple.
• 21:19
  Partnerships is easy because revenue drives engagement.
• 21:23
  And so you want to sprint to revenue both to sell partnerships internally but also within your partners.
• 21:29
  If you're taking a partner from recruited to self sustainable revenue in six weeks, they are going to stay engaged because they are making money, right?
• 21:37
  And so you want to sprint to recruitment, sprint to engagement, sprint to self sustainable revenue.
• 21:42
  The quicker you make that motion, the faster the flywheel turns, the more partners you can recruit, the wider your partnerships teams gets, the deeper the value gets and that is the methodology to success.
• 21:53
  But it's working out.
• 21:55
  How do you sprint for a marathon?
• 21:56
  You sprint in smaller increments and you continue to do that at scale.
• 22:00
  And I think there it's crucial as well, like within that sprint for example, in that time to revenue, do it with a giving mindset again.
• 22:07
  And that's also where you can have the most influence, actually, while you're onboarding partners, if you can help them to drive towards revenue together, which can be partly by enabling them with a couple of referrals, but also maybe really helping them in the first piece of the sales process, so to say, where you go to their customers or the end user base together, where you're going to train them, et cetera.
• 22:28
  I think those are all really things where you can really move a lot of the traction forward versus letting everything like a little bit in the middle.
• 22:35
  What you want to be able to do is to work out the right tooling that you need to give partners to get to self sustainable revenue.
• 22:43
  Some of that might be leads or deals in the short term, but as long as you have clarity like that first date, that okay, we're going to give you three leads or three deals to get you up to speed.
• 22:54
  But from that position you're then going to be generating revenue.
• 22:57
  That's where that clarity of expectation setting early on is critical because some partners will say no, we're not interested in that, we'll facilitate every deal that you give us, but we're not going to generate deals.
• 23:08
  Well that's probably not the partnership that you want, right?
• 23:11
  So having that clarity of mindset early on so that you can set those expectations very clearly, that's going to help you minimise the leaky bucket and stop yourself getting into relationships that you don't want to be in.
• 23:23
  Yeah, and also, indeed, if at the beginning of the partnership you quickly get them to revenue, you have a lot of their attention, which also enables you to engage them a lot more in the rest of your partner journey, in the trainings, in the co marketing, in the co selling motions.
• 23:37
  So it all really has an effect on the long term partnership as well.
• 23:41
  Yeah, I think the more you can focus on sort of partner velocity up into that self sustainable revenue, but also conversion, right.
• 23:49
  Minimise the leaky bucket.
• 23:51
  Get people working in sprints.
• 23:53
  Humans much prefer to work in sprints, right.
• 23:55
  We sprint from one to two, then two to three, then three to four.
• 23:58
  It's much easier for us to drive focus and drive that conversion that we need.
• 24:02
  So I think it's all about long term partner lifetime value, but with an extreme focus on partner velocity to get them to the right level as quickly as possible.
• 24:12
  100% agree.
• 24:13
  Well, thanks again, Alex, and thanks for our listeners as well for today, where we dove into the topic of is partnerships a long term game or a race?
• 24:23
  And I think we kind of concluded it's a long term mindset, but with a race sprint mentality as well at the same time.
• 24:30
  And I think that's something to think about for our listeners as well.
• 24:33
  Thank you for listening and see you next week.