How FreshBooks' Partner Program Doubled Their Customer Base
This article is a part of a compelling series that will give you practical tips on how to grow a successful partner program. By leveraging the advice of the greatest minds in partnerships, you will learn how to effectively create, structure, and build a partner program that scales revenue. If you are a startup or SMB in the B2B tech industry, this series is for you.
For this article, we interviewed George Kyriakis, FreshBooks’ Sr. Director of Business Development & Partnerships. FreshBooks is a leading accounting solutions provider for small business owners. Their cloud-based accounting software runs a range of solutions from quotes and invoicing to expense tracking and time tracking. They have an easy-to-use API that enables hassle-free integration with external applications. Currently, FreshBooks has over 30 million users across 160 plus countries.
As the Director of Partnerships, George has played a crucial role in building and shaping the partner program at FreshBooks. He has been with the company for over seven years, developing partner strategies globally and overseeing strategic alliances. Through their continuous efforts, George and his team have built a thriving partner ecosystem that focuses on integration partners, but also includes affiliates, referral, and reseller partners.
Read the following interview to discover how FreshBooks built such a successful partner program and improved their strategy. Take advantage of the advice coming from George Kyriakis himself:
Why FreshBooks Started Their Partner Program
As an accounting solutions provider for SMEs, FreshBooks always knew two things—their product has the potential to serve millions of small businesses across the world, and scaling through partnerships is the best way to reach users in target areas.
So, about seven years ago they decided to focus on developing their partner strategy to expand to more locations and attract more customers. They also wanted to increase customer retention, reduce churn rates, and boost sales with their partner program. With these goals in mind, Freshbooks was ready to launch their program.
“We found customer ‘stickiness’ is directly linked to the number of integrations our customers have. With each new integration the customer adds, the churn rate decreases.”
How FreshBooks Built Their Integration-Focused Partner Strategy
Freshbooks found that their customers would often want to integrate Freshbooks with their existing applications. Even though Freshbooks’ primary offer was cloud invoicing and accounting, customers always needed extensions and related solutions, which FreshBooks did not plan to build themselves. Freshbooks decided the best way to provide such solutions to customers was through integration partnerships.
From payroll lending to bookkeeping to CRM, there are many different categories of third-party apps that can be integrated with FreshBooks’ cloud-based software. The challenge was to have them all in one place, making it easy for customers to find the apps they need. FreshBooks addressed this challenge by building an app directory and listing all categories of apps that would support and complement their offering.
Thus, integration was at the heart of FreshBooks’ partner ecosystem. In addition to this, they have other types of programs, including affiliates, referrals, and resellers. However, most of these partners are some sort of tech or integration partners as well. For example, even their referral and reseller partners are tech companies that sell software or apps compatible with theirs.
How FreshBooks Runs Multiple Partner Programs at the Same Time
One of the winning aspects of FreshBooks’ partner ecosystem is that it entails multiple different programs. Their current partner ecosystem has the following partner programs:
FreshBooks affiliate program supports bloggers, networkers, influencers, and the like. These partners receive an affiliate link which they post on their blogs, articles, social media accounts, forums, etc. They receive industry-leading commissions for clicks/subscriptions generated through the link.
Referral partners can refer individuals (freelancers or self-employed professionals) or businesses that need accounting solutions. They get a commission for subscriptions that come through their referrals.
The reseller program is an important branch of their partner ecosystem. For instance, the company has a partnership with Chase Bank in which the bank puts Freshbooks into an offer powered through their payment gateways. With the program, Chase customers get FreshBooks at a discounted rate.
Reseller partnerships like these serve as a successful customer acquisition channel for Freshbooks. Resellers can purchase FreshBooks subscriptions at a discounted MSRP, sell them to their customers at the market value, and enjoy profit on each subscription they sell.
These include companies or developers that sell solutions or software products that complement the offerings of FreshBooks. Currently, they have integrations in diverse categories, ranging from analytics, bookkeeping services, and CRM to project management, inventory management, and more. There are currently over 120 applications connected to FreshBooks in their recently launched AppStore.
How FreshBooks Uses a Customer-Driven Approach to Build Their Partner Ecosystem
Like many other companies, FreshBooks uses inbound and outbound approaches to recruit partners. What gives this approach an edge is this: it is almost entirely driven by customer demand.
The Outbound Method
The company actively recruits apps and services customers ask for and reaches out to companies that can cater to those requirements. For instance, if customers ask for a specific tax or expense solution, FreshBooks will look for leading tax or expense solution companies and talk to them regarding integration.
The Inbound Method
On the inbound side, if a developer or a SaaS app expresses interest in partnering with FreshBooks, the company works with them to build an integration, develop a co-marketing plan, and put them up on the directory. Here, the joint customers of FreshBooks and their potential partners/developers drive the recruitment strategy.
How FreshBooks Chooses Partners in New Markets
Entering new markets has been one of the primary objectives of FreshBooks. Since companies can sell better within their own country, it was crucial for FreshBooks to partner with tech companies abroad. According to George, this is a challenge FreshBooks addresses through carefully thought-out integrations. They first understand the requirements and gaps in the country’s market and proactively recruit companies that can cater to these needs:
“Let’s take the case of South Africa. As we are proactive in our marketing and sales efforts in SA, my team comes in and looks at all the integration categories. Do we have global partners that also sell and market into South Africa? Or are we weak on that front? Are there any categories where we do not have partnerships that drive for example, payment solutions or expense solutions? Our team will then proactively go into the market, find the leaders in that space, and recruit and work with those companies.”
How FreshBooks Ensures the Quality of Partnerships
FreshBooks follows a well-defined process while selecting and listing partners on their app directory:
- Stage 1: FreshBooks finds partners through inbound or outbound methods.
- Stage 2: The API evangelists on the business development team work together with partners, give the support and guidance partners need, test the integrations, and ensure that the integrations are optimized and healthy.
- Stage 3: Both Parties come together to review the integration and make revisions until they agree on the details of how it should work
- Stage 4: At this stage, the partner program managers at FreshBooks come in—they work with partners to create micro pages on the app directory.
- Stage 5: FreshBooks takes a programmatic yet proactive approach with popular applications like HubSpot. They sit with such partners and discuss how they can work together to make the most of the partnership.
The approach, however, is different for large partnerships that fall under the main categories, such as banking, payment gateways, bookkeeping, etc. For these areas, FreshBooks has a dedicated business development manager who handles the accounts of such partners, interfaces with sales and product teams, and builds a co-marketing plan.
According to George, the role of business development managers is critical to ensuring the quality and health of partnerships:
“Managers are the ones that sit in the middle of it. Having someone to sit in the middle and interface with those different groups is the key to success. If you have someone to do the same on the partners' side, it works really well.”
How FreshBooks Tracks the Success of Their Partner Program
FreshBooks has woven measuring into the very DNA of their partner programs. Here are four crucial KPIs they use to track the success of their partnership strategies:
1. API Usage
FreshBooks has a partner ecosystem built heavily around integrations, so they pay extra attention to their API metrics. They track the API usage to assess integration performance. They do it using Looker, a business intelligence tool and data analytics platform. It has a reporting dashboard where FreshBooks can filter and track API metrics based on multiple criteria, such as usage by app, customers, and geographies.
Tracking API usage reveals crucial insights on how the integrations are performing—for instance, which are the most popular integrations, which are growing, which integrations are decreasing in usage.
2. Business Impact
Business impact is a related KPI that feeds into the data and insights obtained through API usage tracking. FreshBooks measures the impact integrations have on various aspects of the partner program, such as churn rates, customer “stickiness”, Average Revenue Per User (ARPU), and Long-Term Value of customers (LTV).
Once the company compiles all required data, they evaluate how various integrations affect ARPU and LTV. For instance, when there is only one integration, how does it impact customers? Is the impact different when customers have multiple applications connected to FreshBooks and vice versa? It shows FreshBooks why they should continue to invest in the API and grow the ecosystem.
3. Volume of Activity
The volume of activity, or the number of developers actively using the API and their engagement levels, is another critical performance indicator. It is a KPI FreshBooks heavily focuses on since they have plans to expand their developer community. It also offers actionable insights on developers who are currently using the API.
Another must-track KPI for FreshBooks is revenue. Their partner program entails multiple types of partnerships, each driving revenues differently. So, they track revenue generated from different sources using dashboards:
Revenue From App Acquiring Customers
FreshBooks tracks customer acquisition from partners promoting their product and attributes it to the partner. Not only do they monitor the number of customers brought in by each partner, but they also equate it to the revenue and measure the average size of revenue per customer.
Revenue From Referral Deals
FreshBooks measures the revenue generated through referral deals using reference IDs. The company has separate landing pages through which they give offers to referral partners. By tracking the leads coming through a specific landing page, they measure the revenue generated by the corresponding partner.
While partners promote FreshBooks, the reverse is also true. The company promotes third-party apps, such as payment gateways and bookkeeping services, and gets a revenue share in return. FreshBooks tracks the revenue they receive from such commercial agreements with third-party providers.
Key Takeaways: George’s Advice to Improve Partnership Strategies
1. “Ensure that everyone is in alignment with your strategy.”
Alignment is key to success. You must make sure that your executives, CEO, founders, and others at the management level know and support your strategy. Likewise, you must ensure that other departments in your organization, such as product development, sales, and marketing teams, are in the game, too.
2. “Start with depth and then grow to breadth.”
Often, while building partner programs, people tend to go right into the scaling phase before making existing partnerships successful. The problem with this approach is that you will not have any substantial ROI to show success and get the investment required. Reverse this approach—go deep with a few key partnerships and make them successful before scaling.
3. “Make sure you monitor KPIs and track success.”
In the absence of KPIs and metrics, you are likely to fall into the trap of merely giving updates and looking only at the “cool” things you are doing. Measure and track all relevant KPIs to ensure the success and effectiveness of your program. Moreover, when you have the number of customers, revenue, usage, churn impact, and other metrics to show, it is easier to get buy-ins from others in the organization.
Make it Happen for You: How to Grow a Partner Program Like FreshBooks
If you want to grow a partner program like FreshBooks, it is essential that you have the proper tools to structure, automate, and scale your program.
A Partner Relationship Management (PRM) platform allows you to:
- Organize your program with tiers
- Coordinate training, onboarding, and certification processes
- Trace leads
- Build a knowledge base to provide instant answers
- Collaborate with partners on a shared pipeline
- Get full visibility over partner activity
- Measure partner performance
- Track commission and payouts