We have a LEGEND amongst us. Pete Caputa built HubSpot's channel program from $0 to $100M and we affectionately refer to him as "the Godfather of modern channel partnerships."
While there are a million things we could talk with Pete about, in today's episode we dive deep into his secrets of building out partner enablement and partner marketing programs. This really was the secret weapon behind HubSpot's wild channel program success and you DO. NOT. WANT. TO. MISS. THIS. ONE. We'll definitely have Pete back on.
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Jared Fuller 00:20
Welcome everyone to partner up. And today I am super excited because this guy right here pika Buta shout out Pete Say hi say What's up? Pete has beaten me up for the past like, what four or five years? Told me all the time done wrong.
Pete Caputa 00:35
As close to a work little brother as there is.
Jared Fuller 00:42
Yeah. So, Pete, you know, built from the ground up like as a sales rep to running, you know, 100 million dollar channel program at HubSpot, and now is the CEO of data box. And we're super excited to have pizza day and to dive into this topic. Y'all are gonna love it, it's gonna be a ton of fun. Before we hop in quick reminder that this episode is sponsored by cross beam cross beam is a partner ecosystem platform that acts as a data escrow service that finds overlapping customers and prospects with your partners while keeping the rest of your data private, insecure. So sign up for free at cross beam.com. So Pete,
Pete Caputa 01:17
I also have a really slick like website, you can plug in any SaaS company, and then it shows the partners that you other SaaS companies that have common partners that we play with that site? Yeah, yeah. Yeah.
Kevin Raheja 01:30
Yeah. I've only used it to find SAS, a twofer. Like other SaaS companies. But I didn't know you could use it for the
Pete Caputa 01:42
reason. They have like a database of different types of companies. I don't think they delineate between, like an agency partner and a SAS integration partner. But Yep.
Kevin Raheja 01:52
Do you use the data box?
Pete Caputa 01:57
No, I haven't used it. I just play with it. It's fun to play with. It's like one of those word cloud kind of what do they call virtual? Yeah, bring things?
Jared Fuller 02:07
Yeah, well, that they're, they're gonna get a lot of a lot of love for this one. You got p talking about them and they'll suck you in eventually p toward using the data box. They're producing actually good content. So happy to have them as partners to the show. So Pete, I want to go back with you, too used to you know, most people don't know this, but used to carry a bag. And you started selling snapper.
Pete Caputa 02:33
I have always carried a bag.
Jared Fuller 02:35
We just the bag got bigger and more people started carrying bags with you.
Pete Caputa 02:39
Jared Fuller 02:40
But going back to not like the transition from like, Hey, I'm selling to these agencies. I think I could sell with them. What I wanted to talk about today was super interesting is how much of the machine you were able to build at HubSpot around partner enablement and partner marketing. Right. So going back to those like, you know, first handful of agencies, you're like, Hey, I think I can get them to sell with us. You didn't have marketing support HubSpot tiny. Talk to us a little bit about how you started to think about like, hey, how can I market with these people, get them to generate leads, get them to sell and make them understand the HubSpot way?
Pete Caputa 03:16
Yeah, I think so. Back back then. So like 2007, very few companies, generated leads, very few b2b companies generated leads through their website. So it was like an anomaly and a boat and there but there was still like, literally hundreds of thousands of small marketing agencies out there who are the primary channel partners for HubSpot. So they were largely dependent on referrals. And so the trick wasn't so much to like, get them to do more marketing, it was more of just the initial trick was just how do we get them the initial challenge was to get them to use HubSpot. As as a way to deliver their services, and then use the promise of HubSpot, which was more traffic and more leads as a way for them to sell the ROI of of their services. Mostly what agencies were doing then was we're saying, we're selling off of like FOMO. It was like you're not on page one of Google and you should be for these keyword terms. We can help you get there or, Hey, your website really sucks. And it's probably not getting you the right people and it's not converting we should fix that. That's the way most people sold then sold marketing services then. And so we tried to pivot that more towards getting them to sell the fact they could grow traffic and leads month over month. And so you could use your website as a strategic investment that helps you grow your business more and more and faster and faster over time. Yeah, the first trick was last about like part In our marketing or partner co marketing, it was more about partner enablement. and teaching them to, to, to sell to sell different services and sell them in a different way. And so the first thing we did, there was really around just education. You know, there was a year or so where I literally did a one on one coaching with agencies and brainstorming with agencies to get them to embrace this cop these concepts. But once we had a few partners that were doing, and it was working, we build out a training program, a free, free webinar training program that we use to teach them.
Jared Fuller 05:39
What were the core tenets of
Pete Caputa 05:40
that thing that got things gone?
Jared Fuller 05:42
What's up? What What were the core tenets of like that those initial, like, someone's out there, they're like, Hey, I have to build a program. And what you're saying is like, hey, you're probably gonna have to carry the water and validate this, right? Do the coaching, do the one on one do the hard work? What were the core tenants of those initial sessions that you had? Was it like finding a why like, is this the narrative and that positioning extremely important there on like, why it's important to their business? versus here's how my software and features can help you?
Pete Caputa 06:10
Yeah, absolutely. So it was a interesting time, because everyone was also trying to figure out how to how to do business blogging, it was before that, we called it content marketing. So everybody's trying to figure out how do i do business blogging? For my own business? How do I do it as a service? How does that impact SEO and so I figured that out pretty early on the on the bell curve of adoption of the content marketing. And so we were teaching them that content marketing and, you know, business blogging at the time, could could be a key service for them, it's something you do on an ongoing basis, unlike the way they used to do SEO, which was usually once wide project, maybe with a few tweaks over three or six months, or the way you would do a website, or the or, you know, or you might do they might be doing email marketing back then. But like, that's, they were charging 100 bucks, or something to send out a newsletter, it wasn't enough to build a retainer off. So we basically did is taught them how to how to do that. So that was the key thing is like, teach them something to sell. I think most SAS partner programs, try to teach them to sell the software. And if your channel is a service, our service professionals like marketing agencies or accountants, don't try to teach them to sell the software, try to figure out what services they can deliver around the software, and then the software becomes part of the sale
Jared Fuller 07:36
for them. So were those early days then really focused on helping people build out that packaging and pricing and giving them something simple to talk to the customer about?
Pete Caputa 07:45
Yeah, yeah. So any HubSpot partner listening to this will curse me as soon as I say this, because we that I don't recommend this anymore. I'm not sure if host does. But there we came up with in the early days was come up, we have three packages. And we used to call them in our training fast, faster, fastest. And so we would get these agencies to say, to ask their prospects, like how fast do you want to grow your traffic and leads, if you want to grow really fast, then we should blog this many times a month, and we should build this many ebooks and landing pages and do multiple email campaigns per month. But if you just want to get started and you know, see progress, but you're not start with the fast package. And so we taught them to kind of have different packages with different frequency of activities in them. We don't recommend that anymore. Because Well, first of all, way too many agencies did that. And it's undifferentiated. And
Jared Fuller 08:43
just think SEO has gotten more competitive. And you can't just write a few blog posts every month and expect your traffic to go. You said something interesting there. I wonder if that recommendation absent the context of you know, small business agencies, right, and SEO, having productized services, right, like a good, better best, right? Is that still a recommendation that you would have?
Pete Caputa 09:05
Um, I think the trick to selling marketing services specifically is making the package look unique and bespoke or custom for the person you're talking to the prospect you're talking to, but at the same time, have very repeatable processes for executing. I don't believe agencies for the most part should productize their services and sell them for a fixed price. But I do believe they should have services that they've done over and over again, and have processes for them but then sell the value of that as part of the part of either multiple services or could just be that one service but I don't recommend like trying to go full product. Follow I'm saying that to
Kevin Raheja 09:52
do I think a lot of people might be wondering how patient did you have to be Pete How long did it take for you to Realize that you were finding success in the program and what were some of those moments where you realize this thing might scale?
Pete Caputa 10:08
Um, yeah, so I didn't really have much time. But I also think that the reason I didn't have much time is because I had a quote. I was in the direct sales funnel at HubSpot, the mission was very much focused on selling direct. Um, there was a there was belief by the the management team, different people in the management team, and the board and just a general consensus in the SAS world that you don't sell through channel. Yeah. And, you know, Mike Volpi, for example, worked at a company that was predominantly channel, he knew the kind of issues that occurred in terms of partners being demanding and we didn't want to go down that road, then, you know, we were selling this idea of making internet marketing easy. So why would you need an agency? And so it was different on our value prop. And we were doing well with everything we're doing on the direct sales side. So people just like, why would we screw with it? Oh, we add this complexity. And so, yeah, no. So the only way I could prove it out would be if I did it in my, my own time, really. And to a certain degree without permission. I didn't have anyone telling me don't sell a marketing agency in the early and that really early times. But we did tell the rest of the sales team not to sell marketing agencies because they return it. Right, so. So I kind of had a little bit of wiggle room there where I could sell it. And I also because we had some really early partners like Paul rates are still you know, HubSpot, top HubSpot partner, PR, 2020, and a bunch of others. But those guys and gals were referring business. And so it got to the point where I was hitting my quota, for the most part from deals that the partners brought us. But that probably took, there's probably like a four month transition from where like, I went from a product predominantly selling direct to predominantly sewing agencies. In fact, I remember the month when they took me out of the direct lead funnel. Imagine at the time was Dan tire, I'm sure you know, Kevin. And, and I remember ruining Christmas. I remember all my sisters, and my parents being so angry with me because I was I didn't have enough deals in my funnel. And I was literally I was at home in Pennsylvania, for Christmas. And I met, my mother was also trying to work from home. And I remember saying to him, like my phone calls are more important. And she was like a VP at a bank. So her phone calls were also important. And so because there's only one phone at the time that worked where we live, my cell phone reception site. So anyways, so I remember very specifically being really pissed off again, tire for taking me out of LIFO because he didn't tell me either until it's too late. But after ruining Christmas, and you know, getting angry at in the next month, I was fine. And then several months after that I was doing like two and a half to two and a half three x my quota from referrals. So that's, that's at the point where everyone realized at HubSpot, like okay, well, I'm from a pure profitability and unit economics perspective. It made sense to go to let me actually build something more than just me taking phone calls. So that Yeah,
Kevin Raheja 13:51
I get it. I get a lot of people asking me from software companies like how can we build a channel program, like HubSpot? And I don't know why they asked me that. I had nothing to do with that. But I yeah, but they asked me this. And I guess my question to you is how much of the success of the program that you built out was because of the HubSpot product and that it was so favorable to the channel and can another like type of product be as successful? As HubSpot was like pulling agencies onto a retainer model?
Pete Caputa 14:28
Yeah, I'd say about half. So I get that question, as you imagine quite a bit too, so that about half people I talked to I tell them not to do yeah. And then the other half I tell them not to do it like HubSpot. Right. It's like an awful question to be asking. So I still expect people to ask me but, um, I think HubSpot had a lot of unique characteristics that that made it work right. Um, you know, I'm a small piece of that in that I had run an agency and knew what it was like to Try to manage an agency. So I knew that persona really well. That that's one small thing. I think the biggest the biggest two things is HubSpot had massive demand already. there's not as much as they have now, but still had a relatively large amount of demand. And we were attracting agencies to us, they already thought of us as thought leaders, because of our cuts at marketing. Another one was that HubSpot product even then was, was pretty broad. There weren't other tools in the market that enabled an agency to deliver so many time consuming services, everything from SEO, to blogging to lead capture and landing page creation, to, you know, analyzing all that some social stuff that came along, obviously, marketing automation came along later. So the that breadth of things allowed an agency to say we use HubSpot, because it enables us to do all these things that helps you grow your traffic leads and sales. So I think that was a piece of it, it was really a core piece of software that agency adopted. And so most companies don't have those two things gone. In fact, it's usually the opposite, it's like, they usually take some salesperson like me that was performing well enough in the direct funnel and say, go find us a bunch of partners, and hit your quota. And, and don't ask for any help or don't distract the rest of the team. And they don't need Meanwhile, they don't have any inbound flow lead flow, they don't have a great position and that where they can get a, you know, an agency or a service business to really build a business around them. So I think it's, it's, it's more difficult. Now there are a lot of companies out there that I talked to that like, have 30% of their power from from agencies or channel partners by accident. And those are, as long as they didn't screw up the pricing and packaging, those are perfect examples of being able to create a create a channel program.
Jared Fuller 16:57
So whenever you started to transition from, you know, owning owning the book, and the social proof was somewhat undeniable that like, hey, maybe we're not a channel company, but we have a channel whether or not we want to admit it, we have a channel. How did you start to build on those early successes from an enablement standpoint? Like, what would be the checklist that peekaboo said? Like? Alright, so you have some validation? Let's look, we'll call it like channel market validation, right? Because you have to have that to some degree, a lot of businesses skip that step and just assume it's the shortcut. But let's see,
Pete Caputa 17:28
right, yeah, no, just like product market fit or market market fit, you got to have marketing marketing, you got to have, you got to have channel market
Jared Fuller 17:37
product, right. 100%. So let's assume you have some baseline of that, what would be P computers checklists for like, Hey, here's the things that you don't want to screw up or either you need to have thought through for partner enablement. And those conversations, so I always recommend is to build a training program for your partners. You both know, as, as people who manage salespeople and operations, that you don't hire your salespeople, and then tell them to go do their job.
Pete Caputa 18:04
without any help, right, you, you most likely put them through some intense training, and most likely paired up with one of your manual managers who's probably done the job before and and closely closely manage, there's probably training every week on new thing. So if you don't do at least some of that for your partner's just not gonna work. You also need to do it differently. Like it's not the same as job as someone's going to as a salesperson, right? So you need to think about what that agency's life for that partner's life looks like? And how can you help them sell? Then how can you help them market? And how can you? How can you teach them what they should sell, and how they should sell it, and how they should deliver it. Now, they might be able to manage their money, they might have to manage their team, or, you know, or manage the execution of their work. So all those things are important. And I think that's the first step.
Jared Fuller 18:59
It's not just about training them on product, but also training them on on how to build it, right. And the thing that I always say is partners aren't on your payroll. So the next question I would have around that is like, okay, let's assume we get some baseline stuff up there some basic, you know, decks and videos, even some recordings. How do you drive and once the adoption because that's not the right word, but participant like active participation, where people are, you know, diving into this and becoming, you know, trained, so to speak, whenever it's like, if an agency you're selling time a consultant, it whatever it is, you sell time for money, and I'm asking you to spend time, which is a you know, unstated investment. How do you think about getting people to, you know, drive that that behavior absent, you know, being a payroll requirement?
Pete Caputa 19:47
Right. I think there's a few different paths. One, which is the one that predominant one or HubSpot that we followed in the beginning was, we showed the owner of that of that power partner, the agent See that they could build a more profitable, more scalable business if they followed our mouse model. And so most of them were struggling with cash flow, most agencies still do. Where they, you know, they're, they sell, sell a bunch of stuff. And then they either finish the projects or the client, you know, the client engagement expires or whatever, they cancel. And then they're back selling again. And so and because those engagements are relatively large, and you know, the average agency has been a handful of clients per employee, like losing one of those clients is a big hit on cashflow. So anyways, we used to call it the cashflow rollercoaster, and how we can fix that help them fix that. So I think that's one method. Another method is if you already have agencies using your product, and that's the case, we have here a data box where they use data box as a way to automate their client record reports. They send the clients or the dashboards that they supply to clients. And so there that's a mission critical process inside an agency. And if you can establish a, you know that an agency uses your product and their business processes, not just their execution of the client work, then there's an opportunity right to to show them how they can go deeper and leverage that product deeper in their business or for more parts of their business. So those are the two ways I've seen work.
Kevin Raheja 21:29
So so when you when you transition to data box. Pete, I'm curious, what did you did you take the same HubSpot playbook with you or what changed? How did you adapt it to fit?
Pete Caputa 21:42
The new company? Yeah, it's quite different HubSpot take. You could say that data box did some stuff before HubSpot? Did but I'd say we'll just call it. But HubSpot changed things more recently. That's more similar to last but but no, I didn't take the exact same of some playbook. I think puzzle play work work really early on. And it's still obviously working for HubSpot, and very many successful HubSpot partners that are, you know, tied to the hip with HubSpot, and that works for everybody. But the the, the way that HubSpot direct and channel sales, work is better now, but it wasn't for a while. So I don't, I don't recommend that same model. And if I had to do it all over again, I do it a little differently. But I'm the data box model. The first thing is that we're we're very, we're very focused on our freemium and self serve sales model motion. So we've invested heavily in UI UX of our products and heavily into product growth team. And so we're very focused on how do we get people to buy our product without talking to them, two thirds of our sales happen that way. And so I don't have any sales people on commission, I don't have you know, we have goals that we try to hit, and we break those down to individual targets for individuals, but we don't, you know, not firing anybody for missing missing quarter for a month or two. And generally, they do it anyway. So, um, so we're a little more setup so that partners can basically self serve as well. And in fact, they can add and remove clients at will, they don't have to talk to us. They basically buy pay out based on usage across all client accounts. So that
Jared Fuller 23:44
single payer then Pete then so it's true resell
Pete Caputa 23:47
Yeah, there's really no reselling, per se, most agents and we do a bulk discount for agencies. So their cost actually goes down per client as they add clients. And so the some agencies then of course, bundle that into their contracts, so they are charging for the software and technically reselling it, some just use it to deliver, you know, a certain set of services more efficiently and and in factor in the, you know, the fact they're saving time. But still billing for, for, for that effort that they go into, into that the data box eliminates and so, and then and then some merchants are literally just reselling and to keeping the margin but they're doing all on their own paper. So where we've done what I've tried to do is eliminate conflict. Mate, make it as self serve as possible, both direct and through the channel. And, you know, make it financially beneficial for them to to use and resell the product. So
Jared Fuller 25:02
even though we have a like low price point, they have a high mark. So when you say self service as possible, I also assume that you mean that this is self service as possible. When it comes to delivering that content, that education, that enablement. A lot of a lot of folks struggle to put this together, because there's a bunch of disparate solutions from like LMS is and PRMS. And like, how do we get this in front of everyone? Do you have like a partner certification enablement? You know, kind of set up inside of the app? How is that all kind of tied together? Do you homegrown yourself? What did you guys?
Pete Caputa 25:33
Yeah, it needs to be it needs to be updated as admittedly an area where we have more more vision and execution. But, uh, the way it works now and has for a while is, it's based off of usage of the product. So if they're, if they're using pieces of the product, and they're using it at a certain level of, you know, the bit, for example, they set up a certain number of dashboards. And they've used a certain number of features, they, they can rise to the ranks of our certification. At some point, we will make that a little harder initially, we designed it so that, you know, a certain number of percentage of partners would make it through what happened is, as we grew, more and more partners made it through because it's relatively easy. Now. And so the plan is to is to beef that up. But it's, it's on a list of projects. It's not
Jared Fuller 26:28
quite at the time, but the the educational content is that contained within, like, best practices, how to set up
Pete Caputa 26:35
while we've provided yet, we've put we've delivered it all through just our help documentation to the help docs.
Jared Fuller 26:43
Specific helped. Okay, so there's kind of more scrappy and frugal versus a formal, you know, it's data box Institute, so to speak.
Pete Caputa 26:50
Right? No, it admitted like, so we've done more on the CO marketing side than we have on the enablement side. Once somebody gets our product set up, and they use it for a handful of clients, there's not a lot to learn. And we have the majority of our agency partners use us with their existing clients, some of our partners resell and some of them use it with prospects, when we want more of that to happen. But we're, we haven't done the education yet. Robin
Jared Fuller 27:18
talked to me about certifications like that's, you see that? I mean, I see it at drift. You see it at Marketo, HubSpot really anywhere in Mar tech, you know, like, hey, our consultants are x certified. We had you know, one partner that's like, we have 30 drift certifications. We're the number one drift certified partner in, you know, Europe, which, hey, great, you know, that's awesome. But, yeah, I feel like you can build certification, just kind of call certification. What would you think it'd be essential towards building it out? Plus, there's, it's limited. It's like, drifts case. It's conversational marketing certified. There's strategy. There's, you know, there's a whole bunch of other things. There's operations, there's implementation, there's a bunch of different ways to monetize a channel relationship as the agency, how do you think about building a certification program? It's like, get something simple, that's broad base and then release, you know, modules within that.
Pete Caputa 28:13
Yeah, no, it's not something we've done in either a data box. But Professor Pete, that is Professor Pete's instruction on this. Yeah, yeah. So I think we then they did a good job of building out certifications. It does drive behavior. I don't think like the certification by itself becomes a reason to become a partner. But I do think it helps to drive knowledge and reinforce the value of the product. Inside partners, like once they make that decision to say, we're gonna invest in HubSpot, or we're gonna invest data rocks, I think the training for all of the team members goes a long way. And a lot of agencies really struggle. I'm sure msps and other channel types of channel partners struggle with training their team. And so having a third party certification that they can rely on is huge, right. And I think it does increase partner loyalty quite a bit. Whether, you know, I don't think it's a conscious thing. But I think what happens is, I see what I've seen happen is an agency will say, all right, to get promoted at our agency, you have to have these four certifications, or you have to three out of these six certifications. And therefore it becomes part of the motive motivation for the employee to get it and then obviously, the the agency is benefiting from them being trained. So I think there's a reinforcement circle there, right? The more people that are trained, the more the more they're going to sell the product, the more they're gonna retain the clients, etc.
Jared Fuller 29:45
So whenever whenever you're building, building out those certifications, like the next thing that starts to happen is like, Hey, we want to we want to do want to do some webinars with you. We want to do some x with you. I feel like in the early stages, It's the answer is always really simple. You put your sales reps on the webinars with the partners, right? Like, that's what we've done. Um, what what is the other side of that look like in terms of, you know, joint go to market with, with partners?
Pete Caputa 30:16
Yeah, I'm not a big webinar fan myself, like watch like one webinar in the last 20 years. So I, although I try not to let my own biases determine what the marketing methods we use, but we've tried webinars as well, data box, we had trouble getting enough attendance to him to warrant it. Our conversion, work conversion funnel works really well by offering a free product and offering some small amount of chat support in app. And so doing a webinar didn't make a lot of sense. Also, we have a customer segmentation. So it didn't make a lot of sense that we would be, we can't pick one topic and serve a lot of prospects. So so we never gone, we've never gone down that road road. But we have gone down the road of is SEO and doing content marketing together more more on written content, recorded content. And so a few things we've done one is we have a program where we've had 10,000 people contribute to our blog posts over the last three years. And so that kind of get in, we always link to those people that contribute to those articles. For our top partners, we just started doing this where we we've been locked, they've been launching an offer that's relevant to our customers on their website. So for example, we integrate with drip, for example. So we have a partner that that has a drift conversational marketing audit that they built, and they can use data box as part of that audit. And so then we promote that via content related to drip or conversational marketing website chat. So or what is it revenue operations, revenue acceleration. We haven't written a revenue any revenue celebration concept yet, but when we do, we'll tap that partner for his knowledge and highlight him and his offering the article. So that's the idea is that where we're going Marty, we just started that we have a handful of partners doing it's probably revenue. Our process right all of our all of our marketing is is organic and content marketing. That's how we get all our signups so we have really tight processes for our editorial calendar all the way through to publication and promotion. And so we can work together with partners to figure out ways to highlight them in that new ad exist what's
Kevin Raheja 32:46
what's the success metric that agencies are trying to achieve with campaigns like that? Is it top of the funnel leads or new client signups? Or what are they looking to get out of?
Pete Caputa 32:58
Yeah, um, it's different, some agencies that we work with are really committed to their content marketing. And so they realize that, like, be the hitting a link being mentioned, you know, interacting on social around the content that we're producing together that's valuable to them and because it allows them to expand their span their reach, and they're just committed to spending that time and doing that, you know, thousands of times over the next few years. That's some of them. Uh, you know, in general, they, they get leads, because they're technology savvy. And so partnering with tech companies and being public and loud about that works for them. other partners we work with, they're much more focused on like, actually measuring how many signups and revenue they got, like, we have one partner that uses data box in order to track the revenue they're generating from several different partnerships that they have. And they're tracking, you know, literally from clicks to leads to deals to revenue. So I think it varies. But in general, we have the most there are enough agencies out there who are doing taking their content marketing seriously. And they're very receptive when a company that gets you know, even us we get three 420 times as much traffic and leads as they do. And so if we say, hey, you want to work on this together, they're ecstatic. It's better than them just sitting down and writing something and publishing into their own site that no one's gonna ever share, and it probably doesn't have a chance to rank. So So in general, we don't have any problem getting people involved in that. Even if there isn't a real short term deluge of leads from it seems like there's a
Jared Fuller 34:56
like a philosophical divide in terms of the function of partner marketing as it relates to generating awareness. And it seems to be divided based on whether or not the the TAM for the company that has a partner program is SMB or more enterprise. And what I mean by that is right, it seems like an SMB, it's much more about generating awareness, because the the target market isn't known, like you don't have a list of 200,000 accounts in Salesforce, right? Whereas in the enterprise, it's like, Hey, we are Tam is, maybe it's as big as 5000 accounts, maybe as big as 10,000, it seems like they're, the focus is much more about account mapping and getting those relationships into Salesforce, right. And then you're basically doing sales engagement, because the partner has that trusted relationship. And then partner marketing in that scenario seems almost 100% focused on enablement. Whereas in the SMB world, it's like, you kind of have to do you know, the front line enablement and awareness. Does that seem to be like a consistent theme to up.
Pete Caputa 35:58
Um, I haven't seen a lot of sass companies that sell to through large, you know, to to enterprise, and through larger channel partners, I haven't seen a lot of them. Like really leveraged co marketing effectively, if that's the point you're trying to make. And it is more focused on like, you got to spend a lot more time if you're trying to go after, you know, a 200 person Marketo partnership partner, and to get them to sell your software. It's a different level of salesmen ship or saleswoman ship, required to give him that, you know, one common agency, but that marketing automation agency to, to adopt a new product and effectively sell it resell it to their fortune 5000 clients. And so I think sales plays a heavier role there, you're not going to publish some content attract the owner of that agency, and they're not going to wake up one morning and sit and tell their team to go figure out, you know, drift, just because they've read some content, or they were asked to contribute to an article. So I think that points true. However, I think social proof is important no matter who you are. And if you have luck, if you have a target list of say 50 or 100, resellers who are going to help you open up, you know, 1000, a few thousand enterprise accounts, if you can secure those partnerships, then I would say that co marketing can certainly play a role because as soon as one partner sees another partner involved, they're more likely to jump on board. As soon as a partner sees now your product can help their client, you know, that can help engaging that partner and thought leadership content and creating that together could certainly form a relationship which opens the door. So I think there's a lot of reasons to do co marketing, besides just the immediate traffic and leads that might generate for you or a partner. There's, there's there's an I was actually having this conversation with you my job, Panini, who's director of marketing and data box here, about how our next steps with our co marketing and how we want to really build a community around it, where we're highlighting the knowledge and insights from our partners and their expertise. And he made a comment is, like, brand marketing or brand building, which is a term I don't really love. But I think it's right, I think one way to look at it as your partners are helping you build your brand, and you're helping them build their brand. And when you're selling when you are they are selling really big contracts. You know, that kind of content or brand, that public engagement together? Where you're creating content together, sharing content together, sharing each other's content, I think goes a long way in helping to influence can go a long way in helping to influence it.
Jared Fuller 39:03
It's probably more Industry Focus, right? Like there's gonna be some, you know, like, maybe you don't do health care, you know, marketing, right, like content around it, but you have a partner that's, you know, crushes it in life sciences and healthcare. Right, that that would be the appropriate avenue to leverage, you know, that their brand help you build a brand in that space.
Pete Caputa 39:21
Yeah, that's a no brainer, I think. Yeah, I think because it gives you an opportunity to do a differentiated piece of content together. Agreed. I think that's one of the hard parts of CO marketing is if you build a partner program, and even just hundreds, but if you have thousands of partners, then it's really hard to say who you're going to do this with, and how and and so I think Yeah, the more niche that you can encourage your partners to be or the more niche that they are already, the easier it becomes.
Kevin Raheja 39:51
How important is the ACV of your SaaS product and getting agencies to get up in the morning and and think about you and get excited about Like the rev share component of the partnership.
Pete Caputa 40:04
Um, I would say that it's becoming less important. I've told this story, but I don't know if I've ever told it on camera. But the night before we launched the partner program at HubSpot, it was Brian Halligan, myself and woman named Jordan Whoo. And we were putting together the deck. It was literally like 11 o'clock at night. I lived like 60 miles from the office. So I wanted to get home. So I'm like, I'm out of here. I gotta go. Like home before my wife thinks that I'm cheating on her. So. So anyways, I left, I go show up in the morning, they had made a change to the deck. And they changed the commission from 20 to 30%. And so right before the webinar started, we're launching the program officially I changed the package language. So that's why that's how that's the chairman the commission, that my logic at the time. And Brian, I had several, you know, heated exchanges about this is like, they're not doing it for the margin, the margin is inconsequential to them. Like there's they're trying to sell, just for round numbers, they're trying to sell $5,000 month contract. And they don't give a crap about there has been 20 or 30%. On a at the time, $250 month expenditure. It's like we're talking about literally like a pack of gum here at the end of the month. And his logic was like, well, we got to give him something so they're motivated, do it. I'm like, I don't think that is important. And but I will eat crow on that one. Because over time, as two things happened, one of us was price went up. And two partners added to the point where it wasn't just a few handful of clients, and some of them had sold hundreds of accounts. That became sizable checks. And I know you were at HubSpot long enough to know that john kinser used to talk to talk about how much we're paying our partners every every quarter. So I think over time that became sizable. And then as SAS exploded. You know, I think agencies that decided to sell several products back in the day are now looking at that check every quarter or every month or a year our goes out and saying, oh, wow, that's my retirement income. It's like an annuity, or it's like a 401k or, you know, a pension pension that you would have earned back in the day when they had pensions. And so I think it's actually less important now because most agencies look at it and say, Is this a piece of software we need? Is it a piece of software that my clients need? And then the next question is like, what's the margin on
Kevin Raheja 42:43
here? So it's more about delivering value to the agencies.
Pete Caputa 42:49
There. So I, if I were starting, if I were running an agency right now, the first thing I would do is go look at all the partner program and see which ones have the most generous commission plan. I did a tweet the other day on that, and they got like 150 likes and like 30 retweets. Um, but I think most agencies are not in that frame of mind, most of them are very much looking at is like, here's the services I get, I'm selling and I'm, you know, I'm selling a five or 10 or $20,000 a month engagement to these clients. And there's certain amount of software I need in order to execute on the servicer. And so there's still looking at it from a perspective of as mailbox money. Well, as opposed to building a business on it. It's not how I would look at it, I think, I think there's an opportunity to literally build a massive annuity business if you are willing to hustle and partner with a bunch of software companies and hustle on your marketing and sales. But But I don't think India is there. And it might be a little different. I don't think you guys work much with msps. But msps, are they at this point they've they've really moved into, or they're trying to move aggressively into selling SAS, in which case, they're going to look at the numbers?
Jared Fuller 44:01
Well, you have to have a product that you can service for a long amount of time. I think I feel like a lot of sass products today, you know, aren't you they're gonna work from the experience down or the data up. And there's not many actual platforms that you can manage for a client, right? So like HubSpot, or Marketo, or Salesforce, or what have you. But there's a lot of you call them what they are point solutions, that you know, they need some basic implementation and continuous maintenance and improvement, but it's not the same as like managing you know, content or managing marketing operations. Male. Right. So you're not gonna pay marketing. Yes, software company, is that I say the software company that pays that annuity would also be dumb, though. It's like, why are you paying on year two? year three, year four? Right.
Pete Caputa 44:46
Right. Yeah, I don't know. I think it depends if it's literally so there's not a lot of pieces of software these days where you like sell at once and, and they just use it all the time. Except for like CRM, right where it's really hard to change. But and so I think there's some, like at a minimum some account management required. Which if you have, if the agency or partner or reseller has a has a recurring commission, they obviously have an incentive to, to maintain that relationship, at least to the point where they're ensuring there's a renewal. But, ya know, I don't, I don't see a lot of partners making decisions based off of the ACV or the commission. But I do see more and more agencies that are, like positioning themselves as integrators and implementers. Similar way msps used to be with on premise software, where it was like our job is to help you pick the software implemented and train your team. And I do believe that there's a big opportunity there for SAS for, for agencies, with SAS as well. And I think my partners do it next to me is a really good one next to new marketing. They there's like they have 10 badges across their footer. Right. Revenue revenue is another one.
Kevin Raheja 46:08
Yeah, an incrementally growing percentage of HubSpot platform partners, were actually coming from the agency side. So like, every year since, like 2017, we saw more and more agencies designed to build tools that worked with HubSpot, probably realizing that they had better margins in a SaaS model than a service. But it was.
Pete Caputa 46:32
Yeah, yeah. I mean, yeah. And software, you're talking about? LinkedIn web is a good example. Right? He built integration platform, and then you get an SMS tool or something like that. Yeah. Yeah, I think that came like half of his business.
Kevin Raheja 46:44
Well, is there anything else that we should have asked Pete, I know that like you get a ton of people reaching out to you, what's the most common question people ask you about channel?
Pete Caputa 47:00
The most common one I get is about managing channel conflict. That's a whole other episode you guys do? Yeah, yeah, you guys hit on the two things that are most important that the least amount of programs do well, one is the enablement training the partners to build the, you build services around the product, and how to sell that and all that. And two, is the CO marketing in order to help them get, you know, grow, generate leads, and also to you know, like I was saying earlier, build a community around around your business, and, and and their business. So those are two things. But yeah, channel conflict? And my answer is simple. Don't Don't, don't don't do it. Either do direct do channel or fully double comp.
Jared Fuller 47:54
As Jerry was off to give you the update on what we've done a drift because that was a, you know, we had the advice from the beginning. And it still took us a year and a half to get to the other side.
Pete Caputa 48:05
Yeah. Other than
Jared Fuller 48:09
that, we'll have to do a whole episode on managing channel conflict. I think that that that it'll be a fun one, like working with direct working with channel. And we're absolutely going to have feedback. So before we go on, I want to remind everyone This episode is sponsored by cross beam cross beam is a partner ecosystem platform, it acts as a data escrow service that finds overlapping customers and prospects with your partners while keeping the rest of your data private, insecure. So you can sign up for free across beam.com. Pete, it's been a blast. Thank you so much.
Pete Caputa 48:39
Yeah, I do you guys are doing this. There's not a lot of instructional material for sass companies trying to build a channel program. So I'm excited to see your other episodes.
Jared Fuller 48:54
Absolutely. And definitely shoot me over anyone that you know, we need to talk to you to get their ideas into the world and on paper. And if you want to see Pete again, leave a comment in the YouTube video, talk about channel get more stuff in here. Like Subscribe, all that fun stuff. We'll see you next time everyone. Thank you so much. Awesome.