Knowing when and how to invest in partnerships is a hot topic. Invest too early and you risk becoming distracted from the core business, but allow a competitor to establish themselves as the centre point of the ecosystem and you’ll struggle to catch up.
The right partnerships can bring tremendous scale, distribution, and reach. Microsoft developed a winning strategy for Commercial Cloud (Azure, Teams, etc.) seeing contract values 6x larger and closing 3x faster when sold with a partner. 95% of their revenue comes through partners today and they add 7,500 new partners every month to their ecosystem. What a growth machine!
Partnerships aren’t just the domain of large companies. When I was at Amplitude, our technology partners like Segment and Braze were major value multipliers for our users. Segment brought more data into our product and Braze allowed the customer to take action on it in real-time - a best-in-class alternative to legacy suites. We pooled our resources on events, content, and international strategy to take on the 800lb gorillas together.
In the era of best-of-breed technology stacks, emerging ecosystems, and community as a GTM strategy getting your partner strategy right have never been more important. That’s why we recently brought together four partnership leaders from stand out companies to share their insights on developing a winning strategy.
I sat down with Anisha Bhalla from Facebook, Ashley Taylor from Clearbit, Christen Luciano from Hubspot, and Jennifer Chang from Tray.io to talk about how they approach partnerships. Here are 5 key takeaways from our conversation.
1. Think of your partners as an extension of your company.
When assessing a partner strategy, the focus should be first on identifying your company gaps or blind spots. Blinds spots which are both mission-critical to your success and at the same time outside of your core competency or reach are a perfect gap for partners to fill.
Anisha talked about how at Facebook they rely on their partners to be their eyes and ears for the enormous SMB customer base which they couldn’t possibly reach themselves. She leans into specialist partners like Hubspot to provide insights and user trends. Facebook also has an extensive ad agency partner program, agencies like Bamboo who have built service businesses on increasing the ROI customers see from their ads and allowing Facebook to focus on building the best technology.
Once partners are part of your strategy, it’s important to set joint goals which bring the partners together as part of a team. Ashley says “the mark of a strong partnership is when you feel like you're on a team together and that we share in each other's success.”
2. Focus on the user experience
When thinking about investing and prioritizing partnerships Christen [of HubSpot] suggests always starting with the value it will bring to the end-user. How does this partnership help a customer’s business be more successful? Will it improve the way users interact with the product in a meaningful way?
There were lots of great reasons why Apple iTunes and U2 should partner together but did every iTunes user really want the new U2 album downloaded onto their device?
Hubspot is a company that leads with its product experience as a primary customer acquisition channel, coining the term Product Qualified Lead, so maintaining the best user experience as they onboard new partners and roll-out functionality is vital.
At Tray, they also consider the quality control of their partnerships carefully. “A pitfall we've experienced, and see other partners in our space go through, is falling short on the final step of implementation/delivery for the end-user (our joint customer). This is why at Tray we are doubling down on a strategic team to streamline these efforts and create a better partner and end-user experience.” - Jennifer
3. Ensure there is Ideal Customer Profile fit
An Ideal Customer Profile, or ICP, is a description of the type of company that will benefit the most from your product - inspectable criteria like industry, size, industry, etc. are used as a compass for a company’s marketing and sales organizations.
At Tray, where partnerships include technical integration work as well as go-to-market activities, Jen spoke on how vital it is to ensure that all partners are focussed on a similar ICP before getting investing too much technical, marketing or BD resources. Starting with the same ICP as a compass will ensure the integration, supporting materials, and go-to-market plans remain aligned and you avoid wasting each other’s valuable time.
This doesn’t necessarily mean the user has to always be the same person. At Amplitude, we were focussed on helping Product teams and although Segment sold to Engineers and Braze to Marketers all three of us targeted an ICP of large companies who were prioritizing their digital products.
4. Find alignment between the Product and Partnership strategy
The goals of your company and your partners are going to evolve over time and inevitably they will conflict at times. One area where this can have a large impact is when your company or your partner build functionality that is or perceived to be, competitive to the other. Where you once had transparency, alignment, and scale you now have the opposite.
Ashley talked about how at Clearbit they often have to screen out partner applicants who simply want to white label the rich data available through Clearbit. Not only would this add no value to the user it would also detract from Clearbit's own product positioning and strategy.
Sometimes the best thing for the business and the customer is to become competitive, and that’s OK, however, most often it is a symptom of teams not having visibility into the offering which already exists, the depth of expertise the partner has in that area, and the satisfaction the user has with the existing solution.
We can take notes from how companies handle a build vs buy conversation with Engineering and Product teams. “The dynamic that we experience at Tray, is a dance with a prospect's product team, for our white label product - proving the ROI on build vs buy”. Finding alignment through ROI is a great starting point.
At Facebook, a big focus is enabling e-commerce transactions on their platforms says Anisha. Instagram has been doing a great job of this recently. They are partnering with industry-leading companies like Shopify and BigCommerce to accelerate this product strategy -- a perfect alignment of Product and BD strategy.
5. You get to pick your partners
Finally, unlike most other go-to-market teams, you get to choose your partners. Great partnerships take a long time to build, and to last even longer it is essential to choose the right partners. The time investment doesn't just come from the partner team - Ashley talked about the balance of championing partners and protecting the time of the Clearbit team.
Your partners will be a reflection of your company so focus on the culture fit too as much if not more than the strategy fit. Does this company align with your values? Are you happy with them representing your business when you’re not in the room? As you grow there will be streams of partners who want to work with you, so having a clear articulation of your partnering principles will help to avoid future conflicts and ensure a better customer experience.
In summary, here are questions to ask when outlining your partner strategy:
Do they fill a mission-critical gap which we can’t/shouldn’t fill ourselves?
Will this partnership be a value-add to the user?
Are we focused on the same ICP?
Is the Product team also bought into this partnership?
Is there a culture fit?
Thanks for reading and a huge thanks to Anisha, Ashley, Christen and Jennifer for the amazing insights. Please reach out to me or any of them to share feedback or ask more questions.
Photo Credit to Kiernan McGowan, reach out to him for great photography hi@kiernan.io