Updated: Oct 2
There have been many conversations about channel partners looking for ISV's. Still, not much is mentioned about ISV's being partner ready.
It's essential to have your product customer-ready. However, if you want to have direct access to the global IT channel, you need to do it properly. This channel, which is estimated to purchase $5.6B of software for internal use by 2026, according to Jay McBain at Forrester, accounts for a significant portion of all technology spending worldwide.
Many software start-ups and scaleups seem unaware of this IT channel, and very few have taken advantage of it. For those not in the know, the IT channel has, for many years, been how most customers purchase IT hardware and software. Suppose you're in the business to business software market; this is a route to market you need to consider. Just Microsoft co-selling with partners eclipsed $8B revenue per year, and that's Microsoft selling partner solutions, not the other way round.
With behemoths such as Microsoft claiming 95 percent of revenue comes through partners, there's a significant benefit to operating in this market.
Nevertheless, partners are busy folks, and you're going to need to find a way to get their attention. Once you have their attention, you will need a way to keep it and make them successful with your product.
I've worked for major software vendors, major systems integrators, small channel partners, and run ISV's, so I certainly know what not to do to make this work. What follows are the top items to make such a partnership work.
Partners fulfil a need but rarely create a market
If there is a burning need in customer land, which your product meets but it requires complex configuration, installation or integration, then partners are your ticket to a global market. Suppose there is good services revenue, guidance, and customers want your solution. In that case, the partner ecosystem will be easy to build. Partners have sales forces, but rarely will a new vendor product get airtime unless the economics are outstanding and the customers clamour for the solution. Don't expect partners to cold call their customers on your behalf to push your product unless there really is something in it for them.
In partner land, customer satisfaction is king
The second your product causes a customer satisfaction issue, technology partners will drop it like a red hot iron bar. Keeping their customers happy is how partners lead happy and robust business lives. I've found it doesn't matter what business problem your product solves; if an update or quality issue causes customer dissatisfaction, then they will quickly stop recommending your product and exit as quickly as they can. While any quality issues lose you customers, losing one partner can lose many customers.
It's all about attach
For IT partners, attaching services, managed services or other products to turn your product into a solution is the goose that laid the golden egg. Whilst they can make money just reselling, when partners get to add their skills or industry knowledge to your product, they can be the superstars (and charge for it). Think of ways to provide guidance for the partner to solve more for your customer than you thought was possible.
Document, document and document some more
Software shouldn't need a manual; however, partners need documentation. They never want to call you for support, so the more you provide through guidance, knowledge bases and more is critical. Help your partners learn, and they will feed themselves forever (or is that a fish?)
Partners like to feel special
Partners know they provide both a way to filter support cases (reducing your cost) and help you sell and market (again reducing your costs). They understand their value because the large vendors tell them so. It's crucial you treat them as unique as your competition will. Make sure you know how you add value and understand where you sit in their value chain. Finally, co-marketing funds, lunch and entertainment go a crazy long way with partners.
Margin isn't everything, but it helps
Some vendors offer no margin, but exceptional services attach; others offer good margin, but just a straight sale. See how you can leverage margin to drive the correct behaviour in your partner base, but never compete against them; just work with them as partners, and you should be ok.
Partners need more nurture than customers
Spending time with a happy customer has little upside, apart from a repeating sale. Nurturing partners can offer new business avenues, new verticals, geographies or client segments. Take time to nurture your partners, and your business will grow and grow.
Getting this partnership right requires people, time, cost and effort, however, get it right, and you have just gained a massive multiplier for your software business.