Chris Lavoie, Director of Strategic Partnerships at Arrive, joins the show to discuss his outlook on partnerships strategy. “A lot of partner leaders are lazy in their assessment of who is a priority,” claims Chris.
Partner leaders need to be honest about their own team’s capabilities.
“They look too much at the total addressable market and not enough at what their own ability to capture that market is.”
Chris gives tactical tips for how to address this alignment between vision and action. He helps listeners understand how to shrink their definition of who a partner is.
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Full Transcript:
Will Taylor 0:03
Howdy partners, and welcome to another episode of The howdy partners podcast where we give you tactical insights that you can deploy in your job so that you can be successful. Within partnerships. We're joined with Chris Lavoie today, the legendary. So Chris, tell us about who you are, what you're working on. And then we'll dive into things.
Chris Lavoie 0:26
First things first thrilled to be here today with with you fellas. I'm always enjoy our conversation. So thanks for having me. So yeah, so Chris Lavoie here, based in Toronto, Ontario, I'm in the the ecosystem strategy and training space. So really, that focuses on supporting b2b SaaS companies, advising them on their their strategy of how do they go to market, particularly emphasis on Technology Partnerships, which is a big focus of what we're going to discuss today. And then the other piece that I'm really passionate about is training. So I focused a lot in 2023, on, you know, understanding where are the gaps, that exist within SAS companies with respect to the training that they offer, to their partner managers, the ICS in partnership roles, and it's pretty alarming to see how large those gaps are. And so that's a big focus for me right now is, is working with program leaders, managers, directors, VPS, on how to implement some v1 training program for onboarding and ongoing training. But more importantly, working directly with those ICS themselves. So I have a few initiatives that I've been working on that cater to that helping them prepare for a role that really many of us just fell into. And there's not much in the way of, of robust training available.
Will Taylor 1:43
I love it. And in 2022, behind the scenes a little bit you and I were we're working on a full course for this. So we definitely have some some history, and I love to see that you are living through it in that educational piece. And you know, I've I've taken my bath into more of the media and content and whatnot. But that's still really holds true to something that aligns with me. And I think that's why we vibed so well, when we would meet up and riff on these things. So I'm excited that, that you're seeing success in it, and you're continuing to put out that good into the world. So our topic today is tech partnerships and how to monetize them. The integration partnerships, an app marketplace, strategy, everything from source influenced and rev share, we're going to dive into today. So Chris, my first question is, what do most get wrong about monetizing tech partnerships? They may think about rev shares most important or, you know, I need to get leads. And I think it can lead to bad habits. But what do you think most get wrong about monetizing tech partnerships?
Chris Lavoie 2:55
Yeah, it's a it's a really important question. I think to preface it I, I know a lot of program leaders C suites where they're like, how is it possible that our technology partner program is so unproductive relative to their channel or agency program? Given that, you know, tech partners, the huge advantage they present is this giant Tam, right. So your average tech partner is going to have, you know, 10x 100x, potentially 1,000x, the number of prospective qualified customers for your business, as opposed to say, a boutique agency that maybe does digital marketing design. So it's frustrating for a lot of company leaders that their tech render program isn't as productive as it should be. And so to answer your question directly of what many get wrong, is, I think it comes down to picking the partners that you're going to prioritize. And with that, I believe a huge mistake I see is program leaders, partner managers, confusing Tam, total addressable market with som, which is the serviceable obtainable market. And to break that down, you know, it's, it's very easy to, you know, be mesmerized when you log into crossbeam, or reveal, and you look at the account overlap data with some of your larger tech partners, and you're just like, Oh, my goodness, I'm going to be rich, right? Because they have so many seemingly qualified customers, right. And that's the TAM. That's the total market you could capture if you were to bring on all of those customers. But that is, you know, that is far fetched to only focus on that number. And so, what you see happen too often is, is companies and program leaders and partner managers are using that metric, sometimes that metric alone in order to decide which partners to prioritize, which is of course a flawed approach because it says nothing about your ability to capture those those customers that that market right so that's why something like a som service serviceable obtainable market is a much more important metric to look at which factors Then things like, okay, sure a partner, this partner company presents a large tam to us. But, you know, are they selling to a similar buyer persona? Right, so potentially your partner is selling to CMOs and VPs of marketing, but you're actually selling to chief operating officers and logistics managers. Right. So that's already going to chip away at the team that's available free, because it's gonna be difficult to sell and say, co selling and ABM style campaigns. Another important consideration in determining SOM is, you know, what's the pool of sellers at your tech partner organization? Me and we've talked a lot about this, I call it the ideal refer profile or IRP, meaning customer facing employees. Right, so potentially, a partner who is presenting this large Tam, they in fact, only have a handful of account executives or customer success managers, and these are people of we're actually going to be referring you business. And so if they don't have that many reps to work with, that, again, is going to really put a dent in that TAM that you can capture. Whereas, you know, one partner might present us smaller overall Tam, but they sell to the same buyers that we do, they have a crap ton of AES and CSMs that I can work with. They have a mature partner program and are willing to reciprocate and, and see us as a big opportunity, just like we see them as an opportunity. So this soliloquy is to say that what I see most partners get wrong is they're lazy in their assessment of who is a priority, and they're looking too much just at this gross tam number, and they're not actually thinking enough about what's their ability to capture that market. And that includes factoring and a lot of the considerations I mentioned, but also auditing their own existing resources, right, flipping your own couch cushions and saying, Do I even actually have the tools and ammunition to go get that market? So that's, that's where I'd start.
Ben Wright 6:50
There's a lot, there's a lot to unpack there, and a lot of like, really, really great info. And so I think the some definition is a phenomenal one. And so Chris, like from a tactical perspective, if you've got a partner manager, are you doing that some analysis, when you're recruiting a partner like whereabouts in that process? Does that kind of evaluation happened? In your opinion?
Chris Lavoie 7:10
Yeah, great question. So I'll answer in two parts. So if, if you're in the business of taking on net new partners, this is something that I'm looking at very early on in my discovery phase, because something I'll also talk about later on is terms of trends is programs need to completely redefine, and shrink their definition of who is an actual partner, because you just can't afford to be working with as many partners as you have been. So to that point, if you're in the discovery phase, you know, first things first, you just want to make sure they're qualified, like, alright, you know, is there a need potentially an integration has been requested, that's a good starting point. You're you're crossing your T's dotting your eyes, but then you need to ask these really important questions. Right. So I'll start with analyzing Tam. And if that's sufficiently high, typically 10x, whatever my annual goal is, I'll I'll move forward. But then as quickly as I can stack, ranking them based on something like the song, and you might be a qualified partner, but you have a small, some small, realistic opportunity. So potentially, I'll put you into a non managed bucket that will nurture and an onboard and a low touch no touch sequence versus another person who presents a large sum, I'm going to put you in a managed strategic bucket where it's like, we are going to place a specific goal on you, and we're going to try to activate you as fast as possible.
Ben Wright 8:27
Yeah, I love that. I mean, yeah, there's that there's so much and is that so that you mentioned a couple of factors that kind of feed into that. That song, right? You mentioned Pon a team mentioned ICP, does did either one of those factors of a highway, in your opinion. 22 does any kind of factor. So for example, let's just say well, on that large sales team doesn't sell to the right at ICP is that one factor that the outweighs the other, so to speak, when you're considering some
Chris Lavoie 8:51
really important question. So one thing I didn't mention that is, in my opinion, the most important thing is value creation, through the partnership for your short shared customers. And this this, this applies to agency to tech partnerships that applies to agency to agency. But it certainly applies to tech to tech companies, when there's an integration involved. Meaning, you could have a partner company who presents this massive amount of Tam and you might even believe that your ability to capture it is pretty strong, given XYZ considerations. But if the integration is so so and it doesn't move the needle for your shared customers, it's not highly marketable, you're never going to get off the ground, and you're going to waste an insane amount of resources. So that is by far the most important to me. And let's just assume that that's a checkmark. It's like, yep, some serious value being created from two integrations coming or two companies come together to form an integration. To be honest, the next thing for me is how many sales and success reps do they have? Like I really do believe that that would be the second most important thing to me after joint value creation. That's more important to me than buyer persona overlap ICP. The overlap partner program maturity, because to be honest, if your partner has a lot of customer facing reps, they don't even need to have a partner program per se, you just need to get access to those reps to really evangelize those relationships. So that's that's my personal approach.
Will Taylor 10:16
So for those integration partnerships, so let's say they pass the some analysis, what is the first critical step that partner manager should take? So you mentioned you know, if they have a large sales or CSM team, you can start evangelizing the relationships there. But what is that critical step? Let's say, I am, you know, thrust into a new role. And they say we got these integrations, or, you know, the product team says, Hey, we just build this integration. And now you're trying to kind of backtrack as a partner manager to now action that what is that critical step that a partner manager should take? After an integration is built?
Chris Lavoie 10:55
Yeah, great question. And I remember, I provided a quote for for alloy, they were doing a report on on this and asked me, What's the biggest challenge for integration programs. And, you know, a big focus was, you know, it's hard to get integrations built, that's the big bottleneck is just convincing your company or your partner's company. And of course, that's a significant challenge. But my slightly controversial comment was, that's, that's, that's tough. But what I find is even more challenging. And to answer your question is what happens after an integration is built, and it's really driving adoption of it? Right. And so that's where I would start, because you need to understand the value, right? I see too often. And I know because I made this mistake myself, is really great new integration, you feel like that's like the green light to launch all of your go to market activities, these advanced enablement, exercises with your partner reps, and then the smart reps on your partner companies like great, like, what's the value? And your love fall? I mean, I mean, I just told you all the use cases, like isn't that enough? No, like, no, like, what's, where's the where's the tangible value? Where's the data, the evidence, that's our shared customers are benefiting by XYZ, when we use our integration, and then we're just, we're just standing there like crap, we don't have that data. And you can't have that data unless you're driving usage and then actually analyzing those accounts. And so to answer your question, explicitly, first step for some promising new integration, is to really focus on driving adoption. And this is some tough love for the tech partner managers, who might be listening where you're like, it's not my job to drive adoption, I'm only gold on close revenue. Well, it's like, guess what, you can't drive revenue from your partners effectively, until you have a value added integration. And you can't know that until you've driven installation. Right. And I'm giving tough love because I was given that tough love because Lord knows, I complain, like, like heck to my previous managers for the same reason. But I eventually understood that there's dominoes that need to fall in order to really convert tam into song. And that only happens when you have an integration that is being used. And you understand that it's valuable. And I think it's interesting, you bring this up. So I was talking to somebody about at marketplace listings, the other day, like boy should be included in that marketplace listing. And I think, for me, the most impactful piece of collateral you can have in there as a joint case study, which is like an actual customer that's using the integration and the value proposition again, from into your point, Chris Lee.
Ben Wright 13:21
If you're a good sales rep, the question I would ask is like, Oh, can you tell me, one of our customers is using this integration? That'd be my first question, right? And if you haven't got that, it's all nebulous at that point, really, to be totally honest. And so I love the point that you just made there. And like I said, this conversation I had, I said, you need to get join case study with real ROI on that, and people will start to take notice. So I think that's a really, really, really great point.
Chris Lavoie 13:47
It's the bet it's the Holy Grail of every integration partnership is a true joint customer case study is centered around the integration. It's not just fluffy. You're basically just reiterating what the use cases are and what the expected benefits are. It's like, no, it's like cold, hard cash in the bank for our shared customer. Here's how they use the integration. That's really important because it, it lowers barriers for potential net new buyers, but it has as much data as possible. And again, you can't build something so powerful like this unless you have data around usage. And so the need to really focus on that, and that requires really heavy collaboration with your customer success team and customer marketing team.
Will Taylor 14:29
So now that let's say we have that built, we have the joint story, we're getting some activity. I know that when you and I've chatted before you have good examples of rev share and when it works, and there's I feel like even still some lack of knowledge around where rev share actually matters where some people say, doesn't matter at all. You know, it's only for affiliates. That's really when they care about it. But I know that you have an example of what err, that is the main source of value that you can give to your partner, when there may be not this, you know, give and take that you could do equally tell us about when rev share matters and the example where it actually benefited the relationship and drove activity within the partnership.
Chris Lavoie 15:21
Yeah, really good question. So, you know, rev share as it pertains to tech partner programs is certainly different than it is for agency partner programs. So the, the the profits, there is look like for agency partner programs, it's difficult, difficult oftentimes to send them leads back, right. And so if you're going to stand up that relationship and motivate them, you're going to need to put some skin on the game and give them a percentage, typically in perpetuity, or on a fixed year basis. And so that's a mean instrument for driving value to agency partners in tech, my approach has always been to avoid rev share relationships as much as possible. And my goal is just to commit to some equitable referral Exchange, which isn't just, you know, I send you 10, you send me 10, right? It's really based on the metrics. So it's like, What's your average contract value? What's your average close rate? What's your goals, and so potentially, I only need to send a specific partner three reps, or three referrals that lead to sales accepted leads in a quarter, and maybe the semi 10 Based on our, our goals and average contract value. So that's always been my approach. I think it can be a useful instrument, even for a technology partner programs, when there is just a natural gravity or funnel for one company based on where they sit in a customer stack, relative to the partners to send a high volume of leads organically, right, but it doesn't happen both ways. Right. So meaning partner, a consent partner be a lot of referrals based on where they sit in the tech stack selling to the same buyer persona, but it doesn't happen the other way around. Because, you know, you don't want to just, you know, capture no value from that relationship, if you're the side who's sending all of those leads, so put that partner on a rev share agreement, you know, we did this with a few partners where this, this activity was happening this way. And what's great is, you know, rev share income that you get from partners, it should never be confused with revenue, like ARR or, or net new revenue. And I, I don't like when I see programs like boasting so heavily, but like the rev share they're getting because of that just goes into your company bank account. It's not recurring revenue, it doesn't contribute to your quotas or goals, and it shouldn't. But the way I looked at is like, once it started to become significant, I'm like, okay, I can actually, you know, make the case with my finance leadership team is like, hey, look like I just generated $250,000 In rev share income last year, like that should contribute to my own personal departments, p&l sheet. And I use that to justify strategic hires that I made, right, so one hire particular I made I was able to do, because I was able to offset their salary based on the the revenue or income I was getting. So yes, it's not a recurring revenue generator, per se, but it can help stimulate partnership activities if you're able to start with that. And more importantly, to me, I was able to justify hiring expenses, because I was able to offset it with the income we were getting from, from rev share.
Ben Wright 18:23
Yeah, I love the way they sit in the tech stack, like the SAS buying river is how I've always referred to as like, qoocam, upstream and downstream of you. And I love the piece of like, if it's a natural flow, and you're always going to send leads over then why shouldn't you get a decent a decent amount of revenue from there. So I love the way that you've kind of parceled, then into a couple of boxes, because my thinking is similar to yours in terms of technology partnerships, which is rev share is not going to move the needle from either side leads are right, but you're gonna convert into into close opportunities. But I do love the concept of if there's a natural flow, and that always gonna send us leads, well, then why would a new In addition, be able to get revenue from that partnership? So I think that's a great, a great kind of concept for sure. Exactly.
Will Taylor 19:09
So where does influence revenue sit in in all of this? There's definitely been I guess, this year, especially, I feel like there's been more of a focus on sourced and people are saying, You shouldn't care about influence. But I know that you've dealt with this in the past and it's provided, you know, actual value for the program. So tell us your argument for influenced revenue.
Chris Lavoie 19:35
Yeah, for sure. This is a polarizing topic, that I can spend a whole session on. So to be clear, I think influence should always be a primary consideration for partner programs, meaning you should have some playbook so to speak on how to solicit influence from partners on key deals, get material influence, track that influence and understand it. I'll start things off by saying I think program leaders need to be very careful about how they go and comp and quote other their ICs. Right. And I'm, I don't think any one individual should own an entirely 100% influence goal, because I think that doesn't motivate and incentivize the right behavior, because what you're gonna have is double counting happening, right you so you're gonna have this partner managers is gold on influence revenue, and they're gonna get paid bonuses. But then someone had to, you know, source that pipeline in the first place, they're getting bonus, and then the sales reps have to close that deal. And then they're getting bonus, and so as the manager, so you can quickly erode your margins, when you're, you're you're paying out on top of funnel metrics, not just closed source revenue. So I'll say that, but I do think it has a huge place. And, you know, really creating a productive partner program, I think it's particularly important for long complex sales cycles that have big ACV attached to them. Right. So if you're an SMB quick sales cycles, influence isn't as relevant because you can spend a lot of time getting material influence on a deal that maybe was already getting close anyway, because it has a close, high close rate, it's a small deal amount, it's not really worth it. But if you start getting into the, you know, 2550 100k million dollar deals that have, you know, three 612 month deal cycles, inevitably, you're always going to need influence, at which point, you certainly should have a very robust process for going in looking for the influence getting influence tracking, influence, quoting and comping your reps on it, I've seen some really cool models where, say, a partner manager has a goal of $100,000 of closed revenue in a given month or quarter, they can get up to 50% of that attributed to influence revenue, right. So maybe they got they were able to influence 50k closing, and then the other 50k came from net new source revenue. So there's some flexible models you can do there. But I think the key is, is I would avoid making it a major contributor or the exclusive quota element for, say, a partner manager. Just because you don't want to incentivize,
Ben Wright 22:09
you know, behavior that isn't focused on sourcing net new business. And I think for long complex sales cycles, big ACV, it has a really important place. Yeah, and this, this feedpoint is a really interesting monk's, it's definitely like a non argument, but definitely a heated conversation I've had with VPs of sales before whereby, and then he's been engaged in a deal, a partner has come in mid stage, and maybe gave them an additional contact or an additional champion, which has helped the sales cycle along. But again, I think it's always difficult to explain to the VP of sales that did actually influence the sales cycle, because their opinion is, hey, we're already engaged that we generated the lead. And we ended up closing it right. And so I don't know if you can talk to that a little bit.
Chris Lavoie 22:50
Yeah, no, it's that. So that's what I forgot to mention. So thanks for that is, is the most important thing you need to do is tracking things. So certainly avoid putting any quotas on things until you actually understand what's going on. So the real quick, one of the last things I built out at gorgeous, was our partner influence motion. So we had a very specific playbook for sales reps to basically break glass in case of emergency when their deals were going dark. I had a junior partner manager on my team who would be alerted when a deal was flagged as needing help, it'd be very specific process for going to find the right partners who could potentially help engage, connect them with our sales rep, get the influence, track the influence, track it by type, because we had different types of influence. And then after about four months, we had enough data where we're like, okay, we can say definitively that across this four month period that let's just say, let's just say 100 deals, were flagged by sales reps as needing help. So for 100 deals, they broke last and said, Hey, we need help for the deals that actually got help from a partner. So they were partnering funds versus the deals who needed help, it didn't get the the influence they needed. We had a 22% Higher close rate on those at risk deals that got the help they needed versus the ones that didn't, right. And so this was beautiful data that we were like, Okay, now this is legit. Now, we're very much incentivized to go continue doing this. And now with this type of data, you can factor it into, say quotas. Because based on this date, you'd be like, okay, influence revenue is equivalent to about 20%, closed arr. Right? So if it's a say, you say a partner manager was able to successfully influence a 10k deal, perhaps they deserve to cave it, because we understand now that influence is is, you know, equal to approximately 20%. In terms of close rate. So, that's the need for data so important.
Ben Wright 24:42
And I think he did something really smart there, which is, you've actually got the rep to flag that they need help. Right? And so there's actually there's evidence there to say hey, they told us they needed help on this deal. We provided the help and so it does give you that kind of fullback day a point to point to Two point you made in terms of like, we're not just, we're not just making this up that we influenced the deal, your rep requests, he provided the help and then an outcome close. So I kind of love that as a, as a tactic for sure.
Chris Lavoie 25:11
Yeah, absolutely. And as always, whenever you do cross functional things like this, getting influence getting your partner reps to send leads, like we would turn it into case studies, right. And so, to be honest, like, it was a slog to get this program off the ground. And then one time we had this are one of our star AES, she was able to close this 50k deal, which is like 10x bigger than our average deal size, because one particular partner came through in the clutch and provided a ton of Intel ton of influence. And we close this deal and this person, unsolicited this AE, without even me being involved, goes into our company wins channel makes this big post celebrating the deal closing and like highlighted, you know, the junior pmmi team for for offering such amazing influence. And all of a sudden, this is our case study, right? This is our internal case study. And all these eight years like what, like how can I get in on that action? How can I have partners helped me with my deals. And like, it's one thing to hear from me telling AES this, but when they see one of their peers, right benefit from it, the FOMO, just, you know, it was, you know, took off. And so that was like the inflection point for us was just having our first big when we could document and then evangelize the rest of the sales team on.
Will Taylor 26:20
That is amazing. And we've heard that multiple times on like the success stories in having these conversations on the podcast. I was just thinking while you were talking about that, I was like that needs to be its own episode of How do you operationalize you know that breaking the glass, and, you know, getting into the weeds of that. So, we will have an episode two on that. And that was a good like, carrot to dangle as well for that story. Chris, take us home in let's say, one minute, what is your tactical tip that partner managers can implement? To Morrow? Or, you know, the next day after listening to this? What is that tactical tip,
Chris Lavoie 27:00
it's gonna be today, if you're listening to this, this, this advice needs to be implemented today. But yeah, to two things, and I flirted with both of them during this, this, this podcast. So one is redefining and shrinking your definition of a partner, and really adopting this ruthless prioritization. Right, meaning, don't be so liberal and giving up your calendar invites, you know, really think critically about which partners deserve your time and attention and resources, you know, probably 20% of the companies you think are your partners that are in your portfolio, are actually worth partnering with and focusing on and you're gonna have to have some tough conversations as your goals go up, and you need to shrink your focus, talking to these partners saying, hey, look, based on XYZ, based on you know, the trends with our partnership not being as productive as we would like, and I, I take culpability there as well, I can't prioritize you, and I really just can't work with you right now. But my goal is to get back to a place where we can't, right, so you're gonna have to have some tough conversations, less is more. And then the other piece I also flirted with earlier was, you know, ICS programs in general need to start thinking about enablement. Not from the company perspective, like how can I enable this whole company? You need to think about it from an individual perspective, right? So again, who are those sellers? What is the ideal refer profile? So who are the roles and job titles within your partner organizations? Who can refer you into deals? Right? And how can you ultimately earn your way into getting really exclusive access to these reps, so you can evangelize them establish these authentic one on one relationships. And their goal really, with tech partners, specifically, because they do have so many customers is two to three champions per partner. Right? So think about that. So you have 10 companies sent 10 partner companies, your portfolio, if you can legitimately evangelize and get two to three champions per those companies. All of a sudden, you don't just have 10 companies referring you business you have like 20 to 30 Mini companies, which are these employees themselves, you can refer your business consistently. And that's really all you need. That's an oversimplification, but start thinking about it from an individual basis and what enablement materials and resources and spiff programs you need for those individual reps not necessarily just for the company as a whole.
Will Taylor 29:05
Thank you, Chris. Thank you for your wisdom and like we talked about we're going to have you on again. Love it.
