The B2B SaaS industry is one of the most fiercely fought spaces in the world today. The barriers to entry are low and there is a ton of intellectual capital chasing the same dream. For every SaaS product that exists, there are literally hundreds of competitors.
If you are the CEO or the Head of Sales of an upcoming SaaS company, you have probably already pondered about running a partner program at some point in your startup’s growth story. If you haven’t, you may want to consider revisiting your 2018 annual plan.
To many, the answer may seem like a no-brainer. After all, selling through partners is a cost-effective, low-risk growth strategy.
In a revenue-share model, you are able to grow revenue just by letting go a percentage of actual sales booked rather than by incurring large recurring costs associated with salaries and other administrative overheads.
That’s like the stuff that a startup CFO’s dreams are made of. Right?
However, according to an article on Techcrunch, only about 20% of SaaS companies worldwide run a reseller program, as opposed to 80% traditional IT vendors.
So which are these companies that do have successful partner program?
These are, coincidentally, also the biggest players in the industry. Companies such as Microsoft (Office365), Google (Cloud), Intuit, Workday, and Salesforce have all, from their very early days, invested in building a strong distribution ecosystem consisting of Value-added Resellers, ISVs, and System Integrators (SIs).
While all that sounds great, it is important for you to evaluate and understand if and when it makes sense for you too to invest in a partner channel.
6 questions you should ask yourself before you take a leap:
- Have you established the product-market fit?
- Are you looking at expanding globally or is your focus limited to only a few GEOs ?
- Would you want your tech team’s focus to be only on building a great product than on ancillary work — such as custom development, data migration, and implementation?
- Are you thinking long-term (say 3 years and more) or is it the next sales quarter that excites you and your investors?
- Have you discovered your repeatable sales model internally (either inbound or outbound) that you can take to external sales teams and replicate?
- Do you have the patience and the money to stay invested for 6 months to 1 year in recruiting partners and enabling early success for partners?
At Freshworks, the partner channel has been an integral part of growth strategy right from our early stages.
Why Freshworks invested in a Partner Program
Our first paying customer came from Australia, without a single interaction with anyone at Freshworks. This was pure self-service, a 30-day-trial-enabled-evaluation-purchase at its best.
After setting up our inside sales team, we witnessed our first wave of exponential growth. However, while the Annual Contract Values (ACVs) were rising, our sales were mostly confined to English speaking regions. We were receiving interest from other regions, but could not get past the semantics although our product was already available in 15+ languages.
Somewhere in 2013, we asked ourselves these aforementioned questions. Was the product-market fit established and did we have a working sales model? Hell, Yeah!
Our tech focus was always on developing features and building what was useful to all customers than for select marquee accounts. This was a necessity as we were still very young and needed to evolve our product quickly. And we were definitely in it for the long haul…our goal was to build a $1Billion startup in valuation.
Through the channel, we were able to setup a virtual sales team globally in over 30 countries, spanning from Taiwan to France and till Mexico. That’s feet-on-the street from 50+ teams spreading the good word through local marketing, meeting prospects and supporting our customers every day. Our sales in LATAM and South East Asia is driven entirely through partners and the channel contributes to over 30% of our revenue in Europe.
Extended local offices
When you’re not a multinational but a growing startup that is looking to penetrate local markets, the reseller channel seems like the more economically viable option. Our channel partners have a physical presence in the region, interact with clients, and staff personnel who are familiar with the culture, management practices, social behavior, and other intangibles that are crucial in making our business tick. For one such region — Russia — we witnessed market growth percentages as high as 300% after transitioning from the inside sales model to a partner-driven one.
Outbound revenue and lead generation
While most of our early success was from acquiring companies that are digital natives (such as e-commerce, travel and other online and digital businesses), we went onto taste success in entirely new segments such as manufacturing (Bridgestone), offline retail (COOP Adriatica), and even the postal services (La Poste)!
With each new partner we brought onboard, we got a foot-in-the-door to hundreds of companies that these partners were already doing business with. Consequently, we were able to tap into segments that did not fit into what we thought was our “ideal customer profile”.
One of the challenges SaaS companies globally are faced with today is generating leads while keeping costs low. This would only get more compounded with the arrival of GDPR, which would severely impact outbound email communication to prospects.
The partners we work with are also mini-product companies that assist in product development, which in turn drives customer acquisition, retention as well as upsell.
Our partners fulfil the customisation needs of our customers by building integrations, custom apps, portal designs, and delivering other value added services. In one such instance, our partner in China analysed product requirements locally and built the WeChat integration for Freshdesk. WeChat is the most popular social media app in the Chinese market, and the product integration has boosted product value significantly.
Homogenous international marketing strategies are making way for local marketing, after all, there is no paucity of stories of brands that lost their way in translation. Freshworks partners deliver improved customer connection by building a personal brand relationship with prospects.
Our reseller channel recommends campaigns and initiates localization efforts which are instrumental in driving revenue and loyalty of customers who appreciate our brand’s unique promise in every market.
From a completely sales and technology focused approach, we’ve now ramped up our local marketing efforts and already got the ball rolling — 38 language websites across products, 24 published case studies in different languages along with 83 blog posts in non-English markets — numbers that are continually increasing every year.
It all boils down to this…
With all these points to consider, it is not surprising that businesses often struggle to find the “sweet spot”. The trick is in finding the right sales channel or an optimum mix of channels that yield the maximum results. Now, this is often easier said than done, since different markets require different approaches — knowledge that can only be garnered via exhaustive experimentation over time. If you’re in for the long-haul, channel sales might just be your cup of tea!