Build a Winnebago: A Conversation on Partner Marketplaces
The following article is written by Pete Nicholls, Founder of HubDo. HubDo is a global SaaS integrator and service provider. As a certified HubSpot trainer, Pete works with hundreds of agencies and their clients on automating proposals with HubSpot CRM, PandaDoc, and Zapier. Read on to glean insight from Pete!
There is no denying that digitization continues to shape the design and management of marketplaces and ecosystems in the twenty-first century. Online markets have changed in response to the behaviors of the people who use them. For vendors, a healthy partner marketplace can be a great platform not only for finding new partners but also for creating ecosystems where partners can leverage each other's strengths.
In this article, I'll reflect on how much partnerships have changed over the last 30 years and offer my views on how partner marketplaces will be an essential part of the future. I will also shed some light on a few things that partnerships are missing today that are stopping them from flourishing.
How I Found Partnerships
My journey into partnership began in 1989. Up until that point, I was a manager in hotel complexes and managed properties with 2300 rooms. Even though I was in the hospitality industry, I was still very involved in technology. The world was dealing with many technological changes at that time. This was before the PC was ubiquitous. I was passionate about the changes that were coming, so I spent my days managing hotels, and programming technology at night.
After deciding to follow my passion for tech, I started working for a PC store in Australia that sold a brand of computers called AMStrad founded by the UK host of “The Apprentice” Sir Alan Michael Sugar. I quickly realized that I was actually working for a company that was a channel partner of a global distribution network.
I was at the last touch point, talking to the customers who came with their challenges that needed to be solved. My job was to represent the vendors that we supported, and that included software.
My Mission Back Then
Around 1992, networking became a thing, the internet became a thing, and I was really attracted to the idea of connecting everything. It was an ecosystem for me. I saw quickly how networking everything together created much more value.
Cisco Systems recruited me in 1996 to help with distribution. Up until that point, they had sold all of their technology directly, but it wasn’t scalable. As a vendor, they needed a distribution model and brought me on board as one of the first team members. We built the channel organization at that time that allowed Cisco to see major growth.
Cisco sent me to the UK where I spent some years as the UK and Ireland Technical Director to manage the scaling initiative. That meant that I was now at the vendor. So, I've been initially the small reseller, then I was in a middle-tier distributor role for scale, and now I was the vendor.
With a wave of technology coming down the pipe, we had to ensure we were adding value. Now as the vendor, I needed the channels between us, the distribution and service partners, and the end users, to work well because if people bought our technology and it didn't work for them, they would damage our brand. But often we hadn't even touched the customer as a vendor, they had just spoken to a local reseller. If that reseller didn't know what they were doing, if they weren't really competent, the customer would blame the vendor.
We had approximately 2,500 partners in the United Kingdom alone. To handle that many partners, you have to have a plan.
What Partnerships are Missing Today
We’ve seen programs grow at this scale in today’s SaaS market. We’ve also seen programs reach this level (or close to it) only to fail.
The truth of the matter is this: if there are essential components lacking in your channel model, you will likely not reach this level of success and won’t be prepared to handle this magnitude of growth if it happens.
This is a hard fact that we are seeing playing out again and again.
This is because we aren’t looking back in history at the successes of partnerships. We must look back to the days when we had actual, physical technology to distribute (remember floppy disks, anyone?). The rise of SaaS has led us to make some key mistakes in the ecosystem that are stunting the success of SaaS channel programs.
Here is a breakdown of those mistakes.
Bolting the Caravan to the Back of the Car
Done right, partnerships can be a huge success. Partners provide access to a larger client base, accelerate business expansion, and save overhead, allowing vendors to focus on developing a killer product.
So scaling should be easy, right?
Not really. Working with channel partners can be challenging, especially if the partnership is not part of your central internal strategy. The program becomes stagnant if you treat it as an afterthought.
The fundamental problem is that you're basically trying to bolt a caravan onto the back of the car.
The initial direct sales model is the car, and at some point, Execs realize they want to build a partner program, but there's no room in the backseat for partner people. So they say, “Let's stick a caravan on the back, and then we can put all the partnership team and our partners and pull them around. They’ll have a great time.” However, the “important” direct salespeople will continue to drive the car.
This makes channels kind of an afterthought. And if it's an afterthought and the heads of the company do not have a fundamental ecosystem mindset from day one, it's always going to be an afterthought. The channels for most software vendors are the B team and the direct reps are the A team. And if you're in the B team and you're a channel rep, you might get lucky and get promoted to be a direct sales rep. It doesn't tend to go the other way.
There is also often channel conflict built into the car plus caravan channel model, such as sales commissions that pay the direct reps in the car, or channel reps in the caravan, but not both.
Companies have to develop a true ecosystem mindset in order to see true growth and success. Partnerships need to be in the lead vehicle too, they need to be part of the A team, and they need to be present in every department. Replace car plus caravan thinking, with a Winnebago that networks everyone to create abundant value for all.
Most companies fall short when it comes to developing an abundance mindset. We all want our partnerships to be successful in the long run, and this conscious attitude of abundance makes that possible.
Consciously cultivating an attitude of abundance makes it easier for us to recognize the opportunities for development and continued success that are all around us. A case in point is Microsoft. Microsoft prides itself on the fact that for every $1 spent on Microsoft technology, the channel partner earns an average of $9 in services revenue. This is something that most vendors are fundamentally getting wrong today.
Microsoft will undoubtedly be regarded as one of the most successful providers of a tremendously scalable channel program.
In contrast, vendors today have a scarcity mindset. They tend to look at which partners can make them the most money, rather than which partners can make their business more successful overall.
One may argue that Microsoft can do it that way because they have the money. However, they would not have become who they are if they had not perfected the partner model. So, when approaching a channel partner, instead of having a scarcity mindset and making everything about every single dollar, you should focus on value and knowing that nurturing the connections with your partner would eventually give the desired result.
The Missing Link to Scalability
Let's not kid ourselves. Compared with technology distribution, SaaS distribution channels are not growing as fast as we imagined. And from my 30+ years of experience, I believe this is due to the lack of scaling distribution players in the SaaS market.
Distributors are an important link between vendors and customers. They can shorten response times, expand a company's reach, and even develop value-added products that complement a company's product offerings or lineup. Without distributors, either the buyer or the seller would have to perform these activities, negatively impacting the bottom line.
Cisco’s (and therefore my) success in the UK and Ireland wouldn’t have been possible without the network of distribution and service providers. Period.
So, how do we do this for SaaS?
Vendors who are trying to build channel programs today often don't know that this piece is missing. And so they're trying to figure out how to scale without that middle tier, the missing link.
But I’m here to tell you, it exists. Not only does it exist, but it’s thriving.
The Role of Partner Marketplaces
We are witnessing the emergence of a new version of distribution partnerships. We are trying to solve a problem that was solved 30 years ago by delivering physical equipment and adding value. We need a cloud version of a value-added distributor, and that's the marketplace.
Marketplaces are stepping into the vacuum created by the need for scalable SaaS distribution. But don’t be fooled by sites claiming to be marketplaces. Today, the marketplace is a misused term because most “marketplaces” are not marketplaces where you can actually buy, most are just fancy directories.
One example of a true partner marketplace is Amazon Web Service (AWS). You can buy integrated technologies there, all in one place. And while these true marketplaces exist, most SaaS partner programs do not allow for 2-tier marketplace distribution. They haven’t put two and two together and realized the potential that the marketplace holds.
According to the Mckinsey study on reinventing GTM strategies for enterprise tech, the future will be about expertise, simplicity, and self-service, with “more than 30 percent of buyers using digital and self-serve channels for each stage of buying journey,” and “77 percent of buyers willing to spend at least $50,000 online.”
Partner marketplaces are the only place where companies will be able to check all these boxes for end users.
How to Turn Your Program into a Winnebago
What's the difference between a Winnebago and a caravan? Well, unlike a caravan, a Winnebago has everyone in one central location, which means your channel partner is part of your team and your strategy. Below are some tips for turning your conflicting programs into a Winnebago.
Shift Your Mindset
When you change how you perceive things, you act differently. Don't treat your program as an add-on like a caravan. Think of how you can embed it within your company’s larger OKRs and strategies. Figure out how partnerships can be a part of every department in your organization.
Basically, become an ecosystem-centric company. A "Winnebago party bus".
Plug Into the Ecosystem
Second, identify which ecosystem you will connect to, or even more likely, what ecosystem you’re already a part of.
Marketplaces are gathering points. The ecosystem forms around these hubs and marketplaces. Figure out where you want to connect and develop your product so that it can connect. This doesn’t mean just having a listing on a marketplace, your product must be integrated deeply enough that it can be sold through the marketplace.
A simple analogy would be a PC that is not connected to the Internet—how useful would that be? In the same breath, you can think about a SaaS product that is not connected to a marketplace in this way. Think about how you want to create an ecosystem, which marketplaces you want to connect to, and how you want to start developing your product so that it can integrate.
In fact, it's been my experience that the technology required for a product that was not developed with the marketplaces in mind (which is to say, an ecosystem mindset) almost has to be re-engineered to fit the marketplace. Don’t do that to yourself, plan for where technology procurement is headed.
Sales managers and account managers frequently tell me that their sales partners are motivated only by higher commissions. Of course, every company and business owner is interested in maximizing revenue. But the value of your corporate partnership can be enhanced in other ways. You could offer your partners added value instead of commissions.
Ask yourself, “How can I help them grow their business? What are the advantages, disadvantages, opportunities, and threats my partner faces, and how can my company support them?” By answering these questions, you can add the value they need, and get the growth you need.
As Adam Pasch, Head of Partnerships at Improvado stated in his Greatest Minds in Partnerships interview with Kiflo:
“Talking about relationships in partnerships, I see this as we have to, in each of our engagements between people—whether it's a cold email, a follow-up, a meeting, a co-marketing piece, or a co-selling call—we have to know exactly what value that we are going bring to this relationship.”
If you don't know how to drive a partnership Winnebago, then hire somebody who does.
What’s Next for HubDo
Bringing value is exactly what we strive for at HubDo, which is why we built a true marketplace in 2022. With 20 vendors and counting, the launch of the marketplace is only the beginning.
In 2023, we will provide easily downloadable applications and widgets, all purchased and assigned to users within the marketplace. For the CRMs, we're adding the integration for the vendors who don't have the time or experience to do it themselves.
And in the spirit of an ecosystem mindset, our marketplace not only has logos but also faces or real people. This is the HubDo value-add component that doesn't exist in any other marketplace. We identify the most qualified people and showcase them on the marketplace—real-life people. The combination of apps and smart people means you get both added value and great advice.
Building a Winnebago partner program isn't easy. One of the most important steps on the road to success is to adopt an attitude of abundance (which is sadly lacking in most channel programs) and figure out how to integrate your program with your main business strategy.
With that said, SaaS partner programs still have a long way to go, but the future looks bright. With marketplaces like HubDo, partners have a centralized hub to find, access, and collaborate with the ecosystem in a truly scalable way.
If you're interested in seeing what the HubDo marketplace is all about, please feel free to Hit the chat button on HubDo Marketplace, or reach out to me directly via email at email@example.com or on LinkedIn.