By Ayesha Prakash
When you start out as a software-as-a-service (SaaS) company, you might be tempted to chart an independent course for the business. Yet forming the right strategic alliances and partnerships can reap major advantages, helping you reach more people and increase your potential customer base.
Because the benefits of strategic alliances usually aren’t immediate, it’s easy to disregard them when you’re getting off the ground. As we’ll explore, however, SaaS companies have a lot to gain when they join forces with the right strategic partners.
Driving Revenue via Strategic Alliances
It’s easier than ever for SaaS companies to form valuable, long-lasting partnerships. These alliances can play a critical role in enabling your business to grow and thrive, generating benefits for both members of the partnership.
For example, when the inbound marketing software company HubSpot heavily invested in its reseller program, 42 percent of its customers and a full 33 percent of its revenue eventually came from that investment. Some businesses have seen even more dramatic successes with strategic partnerships. According to Tim Maloney, sales vice president of the video conferencing software company Lifesize, 85 percent of customers come to the business via its reseller program.
Strategic Alliances for SaaS Companies
As a SaaS business, there are multiple types of alliances that you can establish:
- Partners: These companies take an active role in the success of your business, often collaborating on shared goals or ideals.
- Advocates: These companies recommend your products and services to their customers, often as part of their upselling and cross-selling efforts.
- Referees: These companies refer leads to your company and are compensated with a commission fee for every successful sale.
SaaS businesses that are just starting out usually seek to form alliances with larger, more established companies. For example, major SaaS platforms such as Salesforce can include your product as an add-on or integration, giving it visibility from a wider audience.
When setting up a strategic alliance, the most important quality is that your choice of partner aligns well with your values, expectations and objectives. For example, your strategic allies might be in the same vertical or target a similar audience. However, they shouldn’t be too similar in order to avoid overlap and competition for the same products and services. Your allies might have different buyer personas in mind, or might target clients of different sizes at different price points.
One common way that SaaS businesses form strategic alliances is by identifying gaps in their offerings and filling them via partners. If you’re a SaaS managed services provider, for example, you may not have the employees and experience needed to offer IT security services as well (which customers are demanding as concerns about cyberattacks continue to rise). Creating a temporary partnership with a managed security services provider (MSSP) can help prevent potential customers from walking away from your offerings, all while you train and hire in-house security staff to bridge that gap.
Whatever the type of relationships you choose to form, building strategic alliances can be an excellent business move for SaaS companies. By understanding what both sides hope to get out of the partnership, and taking the time to thoroughly vet potential partners, you’ll be much more likely to establish alliances that are lasting and successful.
As director of global channels at Flashpoint, Ayesha Prakash leverages her extensive experience driving business development and marketing efforts in the IT sector to build Flashpoint’s global channel program. Follow her on Twitter at @yoursocialnerd.