Partner ecosystems: What they are, and why they are key to success in SaaS
A partner ecosystem in SaaS (Software-as-a-Service) is a network of partnerships and collaborations that helps SaaS companies to expand their reach and capabilities. An ecosystem usually includes a range of different partners, such as technology vendors, service providers, resellers, and integrators (more on those later), who all work together to enhance the value proposition of the SaaS offering and drive customer success.
Partner ecosystems enable SaaS companies to leverage the expertise and resources of other businesses to provide more comprehensive and customized solutions to customers. When two companies work together in this way, they’re able to achieve more, with less. In short: 1 + 1 = 3.
After all, in today’s hyper-competitive world, you don’t win if you go it alone.
What if I’m not a SaaS company?
The beauty of ecosystems is that they’re not a zero sum game. They have major benefits to offer the business who partner with and support SaaS companies, too.
Resellers and integrators can leverage the SaaS offering to expand their own product portfolio and increase their revenue streams. And technology vendors can use the SaaS product to enhance their own technology and attract new customers. Ultimately, a thriving partner ecosystem can create a virtuous cycle of innovation and growth for all parties involved.
Before we get into the benefits of ecosystems, I just want to point something out. While it’s true that SaaS companies with ecosystem strategies can be more successful, this is not necessarily a guarantee. Ultimately, success in SaaS depends on the quality of the product and your broader go-to-market (GTM) strategy. A company can benefit hugely from strong partner relationships and an effective ecosystem strategy, but these are no substitute for having a good product that customers want and getting that message across properly.
1: Expanded reach: find new customers, without actually having to find them
Partner ecosystems can help SaaS companies reach new audiences and markets by leveraging the sales and marketing channels of their partners. For example, resellers and integrators can bring the SaaS offering to their existing customer base. That helps the SaaS company to widen its reach and acquire new customers, faster and more easily.
2: Enhanced capabilities: partnerships as force multiplier
Consider this scenario: a SaaS company specializing in CRM software partners with a marketing automation company. Together, they can now offer a more complete sales and marketing solution to customers.
In this case, their partner ecosystem gave both companies access to complementary technologies and services. They could use those to enhance their product offering and provide more comprehensive solutions to their own customers, their partner’s customers, and future prospects.
3: Happier, more successful customers
A great tech tool is useless if it isn’t easy for customers to use. SaaS companies can use their ecosystem to improve their customer support and customer service. For example, a company that offers accounting software may partner with a bookkeeping service, to provide support to customers, and enable them to actually get the most out of the tech.
4: A strategic revenue boost
Generating revenue isn’t just about finding new customers. Partnerships can actually help SaaS vendors to increase the overall revenue that each customer generates. This can be done by selling complementary products and services to existing customers. Let’s imagine a SaaS company that sells project management software. They could partner with another company that specializes in training. Through this partnership, they can now provide additional services like training, increasing revenue and improving the customer experience at the same time. This is a clear win-win.
5: Faster time-to-market: when speed is of the essence
Bringing a SaaS product to market can be complex and time-consuming. Through partner ecosystems, SaaS companies can leapfrog over barriers by making use of the infrastructure and expertise their partners already have. One example of this is partnering with a hosting provider, and deploying your software on their infrastructure, reducing the time and effort required to launch your product.
Sounds super valuable. And difficult to achieve?
In short, yes. Building a successful partner ecosystem takes careful planning, execution, and ongoing management. SaaS companies must first identify the right partners, then establish effective partnerships with them. Once that’s done, they need to provide ongoing support and resources to ensure the success of their partners, and of the ecosystem as a whole.
To make this work, you need to invest time, resources and infrastructure. But the benefits we outlined earlier are most definitely worth it.
Who are the main players in an ecosystem?
This depends on which type of partnership you’re dealing with. There are six primary types of partnerships within a partner ecosystem.
Technology alliances: when two techs are better than one
Also known as integration partnerships, technology alliances involve integrating products from two or more companies. The goal is to deliver additional value to the customer. Companies pursue technology partnerships if their platforms benefit from the additional capabilities and features that a partner’s solution can bring.
One real-world example of an integration partnership is the collaboration between Salesforce and Dropbox. Salesforce, a customer relationship management (CRM) software company, integrated with Dropbox, a cloud storage provider, to allow users to access and share files directly from within Salesforce. This improved the user experience for customers of both.
Strategic alliances: business symbiosis
Strategic partnerships (or alliances) align the long-term goals of two or more companies. These are multi-department commitments with clearly articulated goals and investments for both organizations. Companies may enter these partnerships because they have the same end customers, or plan to enter a new target vertical with complementary solutions.
One example of a successful strategic alliance is the partnership between Apple and Nike. The two companies collaborated to create Nike+, which allows runners to track their progress using an iPod or iPhone. This partnership allowed Apple to expand its product line into fitness tracking, while Nike was able to leverage Apple's technology expertise.
Business channel alliances
In a channel alliance, a vendor engages a partner to resell, manage, and deliver the vendor’s product to market. The partner makes money through vendor referral fees, margins or commissions, and by selling complementary services. The vendor benefits from the partners’ existing customer relationships and a faster go-to-market timeline. There are a few different types of business alliance partnerships:
- Value-added resellers (VARs)
- Systems integrators (SIs)
- Agency partners
- Business process outsourcers (BPOs)
- Managed service providers (MSPs)
Transaction & transaction-assist channels
These partnerships facilitate transactions between a vendor and an end customer. Unlike business alliances, these partners only facilitate the purchase in exchange for compensation.
These are people or entities that “influence” the decision-making of an end customer to purchase a vendor solution. They are not directly involved in the transaction. Influencer partnerships typically involve companies like these:
- Alliance partners
Retention partners help to retain the use of a tech vendor solution, by proxy, through the delivery of the partner company’s services. Companies that typically fit into retention channels include:
- Digital agencies
- Accounting and CPA companies
- Management consultants and other professional services
So, who’s really at the center of an ecosystem? The partner, or the vendor?
Neither of them.
Even though we call them “partner” ecosystems, partners aren’t actually at the center of effective ecosystems. And nor are the vendors, the influencers, or the evangelists.
The customer is at the center. The partners within the ecosystem should keep customers’ needs front and center, sourcing vendors and partnerships to achieve business outcomes across the customer life cycle.
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