How to find the right partnerships to generate sales
Patrick talks in this session about his experiences from both of his companies (Advocately & Tradegeko) in the context of using Partnerships for growth -specifically acquisition.
There are three different types of Partnerships relevant for growth or relevant to acquisition.
So, the Golden Rule is - There's one thing that will make sure a company will want to partner with you (You may want to partner with them, But, they may not feel the same.) So, basically, the partnership is certain if - It is good for them and their customers. So only if the partnership will offer some benefit to their customers, then they will partner with you.
They are never going to partner with you because it's good for you. You are at the bottom segment of the Venn diagram.
When approaching tech companies to partner with you always approach them in the context of "Why it is good for them?" and "How you're going to help with their customer base?"
Tech companies that have funded programs.
Xero is a really good example of this. They've always had an open API and they have sections on their website where you can see all their technology Partners. So, these are people who have built apps. They will send you traffic, and this traffic comes through for free as opposed to like paying per click as well. What's so great about this traffic is that - somebody uses a product you have built an integration with, they are in the app store looking into one of these categories, like looking up inventory category or the payments category or in the CRM category. So the traffic is really high quality.
They send 30,000 referrals per month, which can lead to millions of customers. The image above is them advertising on why you should partner with them. They have whole teams of people whose KPI's are around Partnerships. So, for example, this strategic partner manager - Xerocon, they hold events.
Xerocon - These events are on all the time. You can exhibit at these events. You must pay, but it's not like a sponsorship fee. It's more like costs, to just cover the booth costs and not trying to generate heaps of Revenue.
When choosing technology Partnerships, you might have Integrations with lots of other technology partner companies, but the ones that you want to think of in terms of Partnerships is - 'Do they solve the problem directly before you or else in the value chain?'.
For example - 'Tradegecko (inventory and Order management).
If somebody buys a domain from GoDaddy and starts selling stuff online doesn't mean that they are even going to get to the point where they need Inventory management because so many businesses fail anyway. So once somebody is set up with Shopify and successfully making sales on time. They've now got a problem with inventory management because maybe they're making a hundred sales a month. Those sales are with clothing - all different sizes, etc. That's where the company that solves a problem is directly in the value chain. If you are selling a product that helps with marketing on Shopify again, once somebody has set up on Shopify that's right before you in the value chain.
Example - Receipt Banks - they help with data management and expense Management on top of Xero. Once you have Xero, once you have an online accounting system set up and makes a lot more sense to have something that pumps it in.
So really think about the company - but not only one you are going to integrate with or there may be some technical relationship that solves the problem directly before you in the value chain.
- Solve the problem directly before you.
2. Come right before you in the value chain
Why would Xero - a multibillion-dollar company or Shopify or QuickBooks Online want to partner with you? So, anything that helps with getting data into a system of record. Anything to do with getting data into a system of record. For example- Receipt Bank or your accounting information is Xero is not correct, or your expense data getting pumped in - anything that involves filling gaps in their platform.
Example - For Shopify anything that can-do something Shopify doesn't have that once a business grew to a certain degree that would involve them moving off to a system that did have better Inventory management or did have better Facebook retargeting, could be a potentially good option and just any form of value added on top of that platform always helps with renewal. They look at that expense item a little bit better. So, retention is what's in it for them. That's why those companies have built these partnership programs.
The other thing that can be beneficial is Up -Sells. So, it really depends on their pricing as to how your product could help them with up-sells. For example, with Shopify, they make a lot of money through throughput (they take a percentage of the sales). So, if you can help people with shopping cart abandonment on Shopify, that means that person makes more money which means it's good for Shopify as well.
All the above will make it way more successful -the more overlap areas in customer alignment the better. Example, if they've got 10,000 customers and you can work with 9,000 of them that's good. Receipt bank has a very high overlap in alignment with Xero customers nearly all of them need help getting expenses into Xero to some degree, but whereas in Inventory management only a small percentage of the customers need Inventory management.
If you get to the point where they're sending you so many customers that an operations person has to spend three days a month doing all the payments or accounting for it - then it does not matter who solved that problem, last. Do not try and solve the problem of the admin involved in then sending you up hundred new customers a month until they're sending you a hundred new customers a month.
Finally, lots of companies have review based Market places like the Xero app store and the Shopify App Store - definitely get reviews on those because you will rank higher and that will drive to you more free traffic.
Consultants and agencies.
HubSpot - They partner with marketing agencies. Everybody now needs a website and email management, etc. So, they partner with marketing agencies - Shopify again, if somebody is built e-commerce websites for people or just websites for people. This is just a channel where Shopify can get four new customers a month. Like if somebody does four new websites a month, that's four new companies a month on Shopify. Xero does the same thing - accountants just move your clients onto Xero. Received Banks same thing. So, there is a bit of a theme here.
If you're going to pursue working with accountants or marketing agencies or The Professional Services, you need to have a hyper overlap. This didn't work for Patrick at Tradegecko because in inventory Management just because an accountant might have 50 clients per bookkeeper, but only one may need Inventory management. So, it's not going to be that step function. It's not going to be a true partnership. You must have extreme horizontal overlap with their customer base.
- Are Commissions compelling in this case?
* They can bill other services around setting up your product. They might just pay and bake it into another service invoice and pay you directly.
What's in it for them?
Tech Companies that do NOT have Partner Programs
These are Advocately's main partnerships. It's without a doubt the hardest to know if it's going to be successful but it can be really rewarding as well.
Advocately helps companies drive reviews. They do have a partner program in its infancy online, but it's nowhere near the level of those other companies. So, if you want to go down the route of partnering with a company that doesn't have a partner program in place. You need to have an extreme horizontal overlap and you really do Help that company.
You don't get a revenue multiple on in the same way as you get a revenue multiple on MRR. They do not get a revenue multiple on Commissions they get from you.
Next is Retention and Up-sells - anything that helps with retention and upsell helps with renewals and could be compelling. If you are going to pursue this kind of partnership you need to have many people ingrained at the company, ingrained in the partnership and at all levels from super Operational roles like customer success team leaders through to the CEO through to the account manager. Always try to have many points of contact.
- Connections at all levels are key
2. Partner Marketing
3. Use Aeroplanes if possible, not calls
If you do go down this route be super discerning - it's going to take you a long time to figure out its failed and not working properly. So, do make sure you're super discerning and if you do go down that route, make sure you put lots of effort into partner marketing.