The AchieveUnite 555 – Why a Channel is Critical to Your SaaS Company is a three-part series designed to help SaaS business leaders understand why a channel is so important, how it’s different, and what they need to do to stay ahead.

In our last article, we uncovered five reasons a channel is a SaaS go-to-market must and why healthy SaaS companies needs partners to succeed. Now, let’s explore the five ways a SaaS channel is different and how this impacts your overall strategy.

 

1. THE MODEL IS DIFFERENT

 From affiliate to referral to technology partners, SaaS ecosystems look a little different. The traditional margin-based partner programs look different too.

Affiliate Programs: pay a one-time bounty on closed deals tracked primarily through cookied links from the partner websites. These programs are most commonly identified as a marketing channel and are typically housed in the marketing organization responsible for top of funnel growth through digital acquisition. Many times, they are outsourced to a 3rd party affiliate company like Impact Radius.

Referral Programs: most resemble a traditional channel model with a few distinctions. Like a traditional reseller model, partners mostly own the relationship with the company and have some influence in the purchase of the solution. However, partners may identify the opportunity, then the customer could go direct-to-paid with their credit card to purchase the SaaS offering and therefore, traditional margin-based programs don’t work. A common practice in SaaS is to pay partners a percentage-based referral fee for the life of the customer on monthly recurring revenue. The percentages may be aligned to points or tiers based on engagement, willingness to co-market, revenue, number of customers, size of transactions and other factors.

Technology Partner Programs: for partners who build apps, connectors, and other code to enhance an offering and are essential to a SaaS product’s success. By having integrations with multiple products that are part of a customer’s journey, SaaS products become stickier, creating longer lifetime value.

 

2. THE MARKETING IS DIFFERENT

The fundamental difference in marketing a SaaS offering is that instead of acquiring and nurturing a prospect until they build a relationship with a salesperson, you are acquiring and nurturing a prospect to build a relationship with the product.

The recipe is simple: demand generation and social strategies bring a customer to the app or product, content and nurturing encourage them to try it out, web pricing strategies compel them to buy, and onboarding and customer engagement strategies create loyal and long-term advocates of your product that continue to invest. The customer experience through this process is paramount to success.

Where do partners fit? Partners will exist throughout your customer lifecycle journey, and they must be armed to become your best advocates. Self-serve marketing tools that are accessible at the speed of their customers are necessary. From training to co-marketing assets, sales enablement to onboarding tools, ready resources will allow partners to scale and grow your business.

3. THE SALES MOTION IS DIFFERENT

In a subscription-based model where freemium offerings and free trials are a large percentage of the demand generation funnel, direct-to-pay is common. Sales will engage further down the funnel, and VOLUME is the name of the game. Now is the time for your sales process to evolve. With 60% of purchases happening without a sales rep involved, and customer churn being a metric to watch, sales organizations must move beyond the traditional structure of hunter/farmer to build a SaaS ready sales organization.

 

4. THE TOOLS ARE DIFFERENT

 Go to any technology event and at least one presenter will be up on stage discussing their stack. With SaaS driven solutions on the rise, there are more options than ever to help you solve today’s business problems. Stackshare.io has built a business showcasing technology stacks for startups. Partner tools are no different. The best-in-class tech stacks will always include a tool designed to support their partner business.

 

5. THE “GOTCHAS” ARE DIFFERENT

 With all this change in building a SaaS Channel, there is an increase in complexity which can create some sticky situations. At the top of the list is partner conflict.

Consider this example.

In a recent client engagement, AchieveUnite saw deals where multiple partners were engaged in a single deal: a design agency referred the opportunity around a technology, a strategic technology partner’s core technology was embedded in the solution and a services partner was needed to build an integration to a homegrown in-house system.

In the case above, it is a convoluted line between who gets credit and who gets paid. Complexities like this require:

  • defined rules of engagement
  • open and transparent conversations with partners
  • an advanced and integrated partner relationship management system to keep it all straight, customers happy and partners paid

Other common gotchas include:

Billing can also be tricky. In a direct-to-paid model, customers often use their credit cards to pay for a SaaS subscription. Sometimes, partners will pay on behalf of their customers. Regardless of the procurement direction, if onboarding or set up is required and is completed by a partner, billing complexities ensue. From needing parent-child account structures that allow a partner to manage the technical aspects but not be exposed to billing, to transitioning billing from partner to customer at some point in the cycle, flexible billing tools and practices are necessary.

Support responsibility stays with the product owner. In traditional channel programs, favorable pricing is given in return for level 1 or 2 support from the partner. Most SaaS products have highly trained and robust onboarding and support organizations providing customers access to support in product and chat. Partners no longer are the first line of defense for customer support calls. Many times, partners themselves need help with the product as well. Building a routing protocol that recognizes a partner’s customers or recognizes a partner’s book of business and levels them up in the support queue are conversations that partners should undertake and SaaS companies should implement.

Product, marketing, and sales are more interdependent than ever before. Building app trial pages that ask the right questions to route to the right sales nurture while optimizing the customer experience through testing is just one example that requires aggressive collaboration and clear swim lanes. Never has the sandbox been so crowded in delivering on customer and revenue expectations. Organizational silos are the enemy of a good customer experience.

Conclusion

Keeping these five differences – the model, marketing, sales motion, tools, and complexities – in mind will help you build your SaaS channel strategy right the first time.

In our next article, we will discuss the five things your SaaS company needs to do to stay ahead of the competition. Stay tuned.

Download The 555 eBook for free today and gain exclusive access to content and visuals to help you successfully implement a channel in your SaaS company.