Scaling Customer Success through Services Partnerships

This is the first of a three-part series where I鈥檒l share my perspectives on the current state of collaboration between Services Firms and SaaS, which I find to be surprisingly limited with substantial untapped value for partners and customers.

Key points:

路 Today鈥檚 state of SaaS and Services collaboration (i.e., Partnerships) is sparse and unexplored
路 Simplistic referral paradigms dominate this landscape but do not sufficiently address the mutual needs of partners and customers
路 A product-centric engagement model may be more effective solution to develop higher-order partner ecosystems

The average company uses 137 SaaS products.

It鈥檚 safe to say that the Services and SaaS markets are massive.

The SaaS industry is expected to reach a value of $171.8 Billion in 2022; the consulting industry is no drop in the bucket either, estimated at $132 Billion. With two massive markets in mind, how can we design better collaboration and ultimately add more value for our customers?

Fundamentally, we鈥檙e at odds with two opposite business models. One is focused on driving subscriptions with profitability through economies of scale. The other, on maximizing bill rates through management of human capital. I鈥檇 be remiss not to mention that there is plenty to discuss on strategies in play across global ecosystems like Salesforce, Microsoft, and AWS. However, we鈥檒l save that for another series.

So, what types of partnership practices do we see today?

Today, the data shows that SaaS companies over-index on building referral channels out of all partners, not just Services Firms. Crossbeam鈥檚 2020 State of the Partner Ecosystem Report indicates that 88% of organizations leverage a percentage of the sale as an incentive, followed by 41% offering discounts on their product.

Full Crossbeam report available here.

My experiences mirror this data. Partner Agreements are paraphrased as 鈥淚f you introduce me to your clients and we close deals, I鈥檒l give you a slice of my subscription for the first year.鈥

Simple and scalable. This isn鈥檛 necessarily a bad thing for all organizations. Mobilizing affiliate and referral armies, and opening distribution channels to drive top-of-funnel demand at scale are undoubtedly critical in many scenarios, which makes none of this unexpected or unreasonable.

However, a referral incentive is unfortunately not a very compelling offer and won鈥檛 gain traction with most Services Firms.

Services Firms are preoccupied with their own primary revenue streams and maintaining client trust. Most prospective partners just don鈥檛 see enough value in the referral. The cost of participation outweighs the benefits, and the incentive represents a conflict of interest. The problem is exacerbated when Software / SaaS organizations look at Services partners to fill pipeline without a solid product-market fit.

Overlooked Services partnerships are particularly a weakness for SaaS companies selling complex solutions. Things like APIs, new domain-specific languages, altered processes, and consumption-based billing /cost management quickly become an adoption and change management hurdle for end customers. This is the 鈥淗igh Growth / High Solution Complexity鈥 subset of SaaS companies, where we see the most fertile ground.

Examining the dichotomy

We need to understand this Services / SaaS dichotomy more deeply. Throughout a series of articles, we鈥檒l examine the tensions between the SaaS business model versus Services models. We鈥檒l dig into unexplored synergies and address fundamental tensions. Ultimately, we鈥檒l challenge established roles, accountabilities, organizational structures, processes and incentives to re-design a better approach.

Shaping the future of partnerships

The reality is that healthy partner ecosystems contain a variety of partners and accommodate different business models with competing priorities. Partnerships have a significant opportunity to diversify beyond the traditional affiliate and referral paradigms led by the marketing and sales organizations. We firmly believe that the future of partnerships spans across all of Enterprise Architecture. It is anchored in the Product Lifecycle, Customer Journey, Human Capital Management, Vendor and Supplier Management.

Next Up:
Part 2: Diving into SaaS Partnerships Today / Recognizing the Need to Adapt
Part 3: Building a Better Model for Collaboration

You can find a more in-depth version of this article here.

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