Note: this is the latest in our Partnerships 101 series. You can read the others below:
- Partnerships 101: What’s a PRM and should I use one?
- Partnerships 101: How to Launch a Tech Partnership Program
- Partnerships 101: How to Execute a Co-Marketing Motion to the Right People, Every Time
- Partnerships 101: Account Mapping. How to (Finally) Do It Without Giant, Cumbersome Spreadsheets
If you’ve landed here, you know the language of partnerships is a tricky one (but one well worth knowing). Maybe you’ve heard someone use the phrase “channel partners” interchangeably with “go-to-market partners”. Or you’re dipping your toes into the differences (and similarities) between ISVs, SIs, and VARs.
Keeping up with industry jargon, terminology, tools, and tactics can make all the difference between influencing your company’s ability to grow and hitting a plateau. You’ve got the power, and we’re here to help you forge onwards with confidence.
Learn these acronyms, and you’re on your way to building a dynamic partner ecosystem (we’ll get to “ecosystems” in a bit!).
- Partner Ecosystems and Why They Matter
- Partnership Types and Categories: A Breakdown
- Tools You Should Know
- Extra Nuggets for Insightful Partner Analysis
Partner Ecosystems and Why They Matter
In order to think critically about partnerships and their projected impact on your company’s revenue, you’ll need to understand the concepts of “the ecosystem” and “a partner ecosystem.”
Let’s get started.
When we talk about “a partner ecosystem,” we’re referring to a single company’s partner network. Salesforce’s partner ecosystem consists of Freshdesk, Slack, Amazon Web Services, and 1,576 (and counting) other companies.
Within that network, many of Salesforce’s partners have also partnered with each other. Slack has partnered with Zapier, for example, Stripe has partnered with ShipStation, and so on. These connections create a sticky network; if you think there’s a reason that Salesforce’s partners have partnered with each other, you’re right!
- For one, Salesforce has proven that its customers find value in the integrations they’ve developed. That means, their partners can look to the Salesforce ecosystem when they’re building out their own ecosystems to meet similar customer needs.
- Secondly, Salesforce has weight in the market (with 150,000+ users). When the Salesforce team announces a partnership, they’re essentially bringing another company under their wing—like the “cool kid” bringing another kid into their circle (and suddenly their reputation sky-rockets). It’s about Salesforce’s influence in the ecosystem.
Now, let’s talk about “the ecosystem.”
The ecosystem can be described as the entire network of businesses (whether existing within a single vertical or across all verticals) that are actively and publicly engaging in partnerships with at least one other company.
The ecosystem is made up of thousands of partner ecosystems all connected.
Our visual mapping of the e-commerce ecosystem (below) displays all existing partnerships within a vertical and draws correlations among their direct or indirect relationships in or adjacent to their partner’s ecosystem. Basically, it’s one big web of connections (and a whole lot of opportunity).
Here’s a bird’s-eye view of the e-commerce partner ecosystem.
Let’s get a closer look at Shopify’s partner ecosystem. Shopify is a “supernode” of the ecosystem, which means that it has 50+ partners (or “nodes”).
Shopify has 468+ partners. They’ve partnered with Stripe to sync their payment processing data from sales with Stripe (which supports payments like standard credit card transactions, ACH, Google Pay, and more) with their online marketplace platform. They’ve partnered with Zapier to funnel their accounting data from Shopify to Google Sheets, Wave, and other tools that are popular with sellers. (And the list goes on.)
Because Shopify has partnered with so many companies that complement the functionality of its platform, Shopify has become a “stickier” technology in the B2B world—meaning, many vendors look to Shopify as their preferred e-commerce marketplace because of the company’s seamless integrations with other products or services they love.
As Shopify’s partner count grows, its influence within the greater ecosystem and the market grows, too. Shopify’s partner team has curated a massive ecosystem that increases the brand’s stickiness and expands its market reach.
Why are partner ecosystems important?
Partner ecosystems are created because (1) no one company can expect to control a customer’s entire technology stack; and (2) no one company can realistically reach all of its potential customers.
Partner ecosystem development has become a critical way to leverage competitive advantage and drive growth by:
- Increasing market power and viability
- Accessing new markets and business opportunities
- Innovation via new technology or services acquisition
- Improving stickiness: it becomes harder to pull your product from the tech stack
While some partnership types and categories may interchange depending on who you’re speaking with (or even overlap in their meaning), partnerships are generally grouped like so:
Partnership Types and Categories: A Breakdown
Tech Partners or Independent Software Vendors (ISVs)
Broadly speaking, if a partnership involves your tech product integrating with your partner’s tech product, you have a technology partnership on your hands. This is also referred to as an “integration partnership”. These partners are known as “tech partners” or Independent Software Vendors (ISVs).
While companies in the technology industry develop software to solve a specific problem, they simply can’t address every need for their customers. This is where tech partners come in.
Generally, a platform becomes more valuable to the end user or customer with the more applications it supports. ISVs integrate some of the functionality or features of their own software within their partner’s platform, thus making the platform a more well-rounded, comprehensive solution.
Tech partnerships can be critical to a company’s growth because they enable both parties to enter new, adjacent markets without investing heavily in new product developments.
Let’s take a look at a few examples.
Amazon Alexa & Spotify
The ability to use a simple voice command to listen to Spotify on any Amazon Alexa device increases the value of Spotify and Amazon Alexa.
Here’s how Alexa benefits from the partnership.
- The ability to listen to music on demand taps into a widely popular experience (Who doesn’t listen to music?) that’s marketable to a massive, global audience. Previously, consumers turned to Alexa for one-off recipe searches or the occasional fact-checking. Now, there’s a more universal reason to purchase and use Alexa devices — listening to music anywhere (inside or by the pool), anytime (just say the words), and without needing a screen (no need to switch between your cake recipe and your Spotify).
In fact, listening to music via Spotify also became a major focal point in Amazon Alexa’s marketing campaigns.
And here’s how Spotify benefits from the partnership.
- Paid Spotify subscribers are less likely to cancel their subscriptions since they’re using their accounts more frequently and easily with Alexa (and many people received free Alexa devices through global campaigns, upping Spotify usage even more!).
- Free Spotify subscribers are more likely to upgrade to a paid subscription if they have an Alexa, because they’re a) using their Spotify accounts more frequently and b) have a greater desire to prevent ads from playing between songs.
- People who purchase Alexa are more likely to purchase a Spotify subscription if they didn’t have a subscription previously or if they were subscribers of a different streaming platform.
Slack & Giphy
Alone, Giphy provides a niche offering—silly animated or static images that can make light of any situation. Within Slack, Giphy is an everyday part of online communications between employees at many companies. It can even support a stronger company culture.
Celebrating the launch of a partnership in Slack? Get ready for a slew of warm-and-fuzzy gifs from your colleagues. In short, people love using gifs. With the bump in Giphy users through Slack, those users begin to look for gifs (and Giphy) wherever they communicate online—Facebook, text messaging, WhatsApp, or elsewhere.
In fact, Facebook announced plans to acquire Giphy and integrate it with Instagram. It’s likely that Giphy’s strategic partnership with several online communication platforms fueled Facebook’s interest and primed them for the acquisition.
DocuSign & Salesforce
DocuSign developed an integration for the Salesforce platform to enable companies of all sizes and across industries to “go paperless” and sync their document management processes with their CRM (customer relationship management) data.
The integration with DocuSign has supported more than 50 use cases at Salesforce — including streamlining document processes for IT, HR, partnership development, sales, and more. It’s become an invaluable part of the Salesforce platform—internally as well as for Salesforce customers. Their invaluable partnership even led Salesforce to invest in DocuSign.
Salesforce customers can benefit from unifying their contracts and other documentation with their CRM data—thus, making Salesforce a more complete solution for their business needs. Meanwhile, DocuSign benefits by gaining access to Salesforce’s 150,000+ users.
A great place to find more ISVs is on a company’s partner page, the “App Store,” or the “Integration Marketplace” of large tech platforms. The Salesforce AppExchange, Shopify App Store, and Zapier Integration List are treasure troves of tech partnerships.
Channel partners include all go-to-market (GTM) partners that market or sell a partner’s product or service. A GTM partner leverages a “go-to-market strategy” that defines how each partner will help the other reach their respective target customers.
Depending on the type of channel partnership, the vendor may sell their partner’s product or service in its original form (Reseller), as a bundle with a sum greater than its parts (Value-Added Reseller or VAR), as a new, combined system (System Integrator or SI), or as an ongoing service that complements a partner’s product or service (Managed Service Provider or MSP).
Let’s take a look.
Partner managers may use the term resellers as a general umbrella term for channel partnerships. As a standalone partnership type, a “reseller” is a vendor that sells a product or service on behalf of its partner.
Let’s check out a SaaS reseller example.
Bluehost & WordPress
Bluehost and WordPress market and resell one another’s product to prospects and customers.
- WordPress recommends Bluehost as its preferred web hosting partner and promotes the hosting site’s functionality within the backend of its CMS (content management system).
- Meanwhile, Bluehost offers bundled WordPress hosting plans.
Bluehost taps into the customer base of the most popular CMS, comprising 38% of the web. At the same time, WordPress benefits from Bluehost selling their product to millions of Bluehost customers and prospects.
A Brief Mention of Affiliate Programs
On a peer-to-peer level, Bluehost also has an affiliate program that offers consumers monetary rewards for bringing in referrals. Another example of an affiliate program is how production companies like Mango Street create video content with the intention of marketing and selling subscriptions to Squarespace. This is an example of a reseller in a broader sense of the term, but not a GTM reseller.
Value-Added Resellers (VARs)
Value-added resellers work with partners to develop a modified version of their partner’s product or service in order to add more value for customers. VARs tend to function on a transactional basis.
For example, someone who’s looking for a computer with custom capabilities for video or photo editing may purchase the product from a VAR. Rather than figuring out who else they need to talk to or how to integrate the features themselves, the VAR may offer a simpler, all-in-one solution.
Alternatively, a business looking into cloud storage for their employees may need additional assistance with installation, support, and system training. A VAR can provide a more comprehensive solution, on top of the core cloud storage offering, at a higher price point.
The most well-known VARs are large technology consulting firms, such as Accenture, Deloitte, IBM, and PwC, or smaller upstarts like Slalom—all of which are supernodes in the ecosystem. In 2014, for example, Deloitte Global announced a VAR agreement with SAP AG to round out Deloitte’s core services, such as financial advisory and technology consulting, through the resale of SAP software and maintenance in an all-in-one “package.”
System Integrators (SIs)
The distinction between VARs and System Integrators can get blurry as each type of reseller increasingly performs the other’s function. SIs combine the hardware and/or software components of third-party vendors to build a custom system that meets a customer’s needs. Centric and Atos are two well-known system integrators.
Managed Service Providers (MSPs)
MSPs offer technology services on top of a partner’s product or service for a recurring fee. MSPs generate a consistent revenue stream by supplementing their partner’s initial offering through ongoing technical support.
MSP offerings typically include network maintenance, hardware repair, help-desk support, email management, and any other function that requires a day-to-day administrator to keep processes, workflows, and systems running smoothly. They often serve as completely outsourced IT department solutions. Compared to VARs, which typically operate on a transactional basis, MSPs operate on longer-term contracts.
Original Equipment Manufacturer (OEM)
OEMs manufacture parts for other technology companies. For example, Foxconn, originally based in Taiwan, serves as a supplier to Apple in China. According to Investopedia, while Foxconn has many of its locations in China, they were also able to support Apple’s entry into India’s market due to the supplier’s presence in the country.
Strategic partnerships, also known as “strategic alliances,” are the big kahunas of partnerships. They can encompass any of the above partnerships but do so with long-term, big-picture planning and intention. Commercial enterprises that share resources and/or collaborate on a new endeavor to leverage each other’s expertise, relationships, distribution channels, and/or competitive market reach for mutual benefit are engaging in strategic partnerships.
Here’s a little quiz to help you drive all of this knowledge home.
Tools You Should Know
Partner Ecosystem Platform (PEP)
A partner ecosystem platform serves as an escrow service that enables partners to share their data in real time and discover data-driven opportunities. You can leverage PEPs to discover overlaps between your leads and your partner’s customers (co-selling opportunity), your leads and your partner’s leads (co-marketing opportunity), and so on.
PEPs enable easy account mapping, which simply means uncovering common connections, or overlaps, between your data and your partner’s. PEPs solve a common problem in the partnerships world: the inability to share valuable data securely and in real time.
Partnership Relationship Manager (PRM)
So, now you know about PEPs, but what about PRMs (Partner Relationship Managers)?
While a PEP can help you find the best partnership opportunities, a PRM helps you track the results. As your partner ecosystem grows, and this is especially the case for channel partners, it becomes increasingly important to organize (and at times, automate) all of the data for each moving partnership—from partner contacts, to corresponding leads, to ecosystem-driven revenue gains.
A PEP and a PRM should work hand in hand. The PEP offers visibility into overlaps between your partner’s data and your own through account mapping and can forecast potential revenue gains. Use your PRM combined with a PEP to track your partner-influenced pipeline and revenue after the partnership launches.
Extra Nuggets for Insightful Partner Analysis
Ideal Customer Profile (ICP)
The Ideal Customer Profile is a combined list of factors that your company has determined contributes to a prospect’s likelihood of converting and yielding a high return on investment.
Creating an ICP helps you narrow in on which prospects your team should prioritize. By collecting and analyzing data on deals won and deals lost, over time, you’ll discover patterns that can help to inform where your sales and marketing teams should focus their efforts.
While not every prospect will satisfy all of the traits of your ICP, you can create a scoring system to grade your prospects as they fit certain criteria.
How you choose to define your ICP depends on your company’s business goals and conversion factors. Do companies of a certain business size tend to say “no” to your product due to budget restrictions? Does your team have the best conversion rates within a specific region? Are you selling a product that requires a certain level of technological maturity—like SEO maturity?
Hubspot mentions budget, industry, geography, and legality as some of their top considerations in their post about ICPs and buyer personas. Meanwhile, Terminus defines the ICP as a roundup of a company’s current tech stack, size of their customer base, and technological maturity, in addition to budget and industry.
Figure out what works for your company and what doesn’t, and use these factors to calculate your ICP.
Ecosystem Qualified Leads (EQLs)Ecosystem qualified leads (EQLs) are leads you gain from companies in your partner ecosystem. These leads may present themselves through account mapping in a PEP. In a sense, your partner vets your leads for you. They may have already identified the contact in their pipeline or customer list as an ICP. If you’ve decided this is a valuable partnership for your company, it makes sense that a lead that’s been qualified by your partner would also qualify for you—whether it exists in a market you’re already in or a horizontal market you’re tapping into with your partner.
Understanding partnership development terms is only half the battle—knowing how and why to use them in order to adapt your strategy and drive growth will help you build a rock-solid partner ecosystem.