Scaling a company takes a village. When you’re trying to sustainably grow your software as a service (SaaS) business, it’s nearly impossible to do it alone — you need partnerships to rapidly expand your reach and bring new leads and customers in.
Partnerships can increase revenue, brand awareness, and customer retention, but results depend on choosing and implementing the right partnership types.
Partnerships come in all shapes and sizes. Each one fills a different need and niche. Some help you build word-of-mouth, and others broaden your reach to get new users signed up for your software as a service (SaaS) solution — but all partnerships serve the ultimate goal of growing your business.
Understanding the difference between various partnership types, such as channel partners and affiliate partners, will help you build mutually beneficial relationships where you and your partners can achieve your goals.
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What are channel partners and how do they fit into your marketing strategy?
Channel partners market and sell another company’s products. While the category can encompass affiliates, historically, it’s been dominated by transactional relationships with companies such as distributors, vendors, retailers, and resellers.
However, that may be changing. Forrester Principal Analyst Jay McBain predicts that indirect sales from reseller and channel partnerships will follow consumer shopping trends towards direct-to-consumer buying and shrink each year over the course of the next decade. Indirect sales already make up less than 30 percent of SaaS revenue, and 73 percent of business-to-business (B2B) buyers enjoy the convenience of making direct purchases online.
What are affiliates and how do they work with SaaS channel partnerships?
SaaS affiliate marketing (affiliates) is a popular form of referral partnership that rewards publishers such as deal sites and blogs for driving traffic to your website. Partnerships like these build and inspire communities to talk about your technology.
Affiliates recommend your product or service in exchange for something of value — traditionally a commission for a recommendation that leads to a conversion. Money doesn’t change hands until that referral leads to a viable subscription or sign-up for a free trial. You pay for success.
While indirect sales partnerships are declining, brands are building their referral channels by driving buyers directly to seller websites. As reseller partnerships shrink, referral partnerships such as affiliates offer a new model that allows channel partners to transition into the referral world gracefully.
What’s the difference between affiliates and channel partners?
All affiliates are channel partners, but not all channel partners are affiliates. Traditional affiliates are just one star in the larger partnerships constellation.
Channel partners can be resellers, retailers, distributors, wholesalers, brokers, and, of course, affiliates or other referral partners. All of these partners help expand your business by marketing your products to their customers and audiences, either by selling them at a markup or referring customers to you and gaining a commission.
While affiliate marketing is effective, the wider world of referral partnerships provides even more opportunities to grow your business. Referral partnerships encompass a variety of partnership types in the business-to-business (B2B) world, including tech partners and industry groups, review and comparison sites, trainers and educators, and yes, even traditional affiliates.
Take Canva, for example. Canva took advantage of growing excitement about the brand by establishing a diverse partnership program with a competitive commission structure and global reach. Its current partnerships program includes over 9,000 partners with more than 25 different types of contracts. Its partners range from bloggers to tech integration partners such as HubSpot.
Is affiliate marketing a reseller or a referral channel?
While the broad definition of partnerships can include resellers, affiliates are partnerships based on referrals rather than reselling. Resellers are a transactional type of SaaS channel partner — a third party that supplements your sales program, such as an external sales team. In the SaaS world, this category can include:
- Value-added resellers (VARs) are companies that provide additional consulting, configuration, or customization services along with your software.
- Systems integrators (SIs) deal with ensuring that all your technologies work well into a unified infrastructure. They’ll recommend vendors if they identify unfulfilled gaps in your tech stack.
- Managed service providers (MSPs) are outsourced IT services that can help you select the technology that best meets your needs.
Resellers have their marketing, sales, and distribution capacities. These abilities can be an advantage, depending on what you need from the partnership. They can also indicate the partner will need to recoup for greater overhead. Many referral partners direct customers to you through the marketing capacities they’ve built for themselves.
Affiliate partnerships are outpacing resellers
The referral channel is gaining steam as self-service online sales make it easier for buyers to find and try out your product on their own. According to McBain, 73 percent of B2B buyers report finding buying online more convenient. It’s no wonder companies such as Microsoft and Salesforce invest heavily in referral partnerships.
For this reason, impact.com envisions that the VARs, SIs, and MSPs that survive the upcoming shakeup will be those that successfully shift away from traditional IT back-office relationships to front-office relationships and a referral partnership model.
That’s not to say resellers will entirely disappear. New resellers have emerged from the old-school system, adept at stitching SaaS technologies into a best-in-class stack and capitalizing on strong relationships with line-of-business decision-makers.
Getting started with SaaS channel partners
Resellers and referral partnerships have different needs and capacities, but some best practices apply across the board. If you’re looking to launch a channel partnerships program, here are a few criteria to square away first:
- Establish your brand. You’ll be hard-pressed to find partners who want to work with an untested company. Referral partnerships, in particular, work on commission, and they’re less likely to earn with an unknown brand. There’s little incentive to participate in a partnership if you can’t make money.
- Set goals. Before establishing a mutually beneficial partnership, knowing what you want out of the relationship is good. Clear, measurable business goals will help determine whether a partnership is on track.
- Do the research. Partnerships can help you reach new demographic groups and enter new verticals. Research which partners can help you get where you want to go, who they work with, and what the competition offers its partners.
- Build your capacity. Whether with resellers or referral partners, successful partnerships drive many new business, and you’ll want to be ready for it. Ensure that your company can deliver for an influx of customers and adequate customer support.
Once everything is in place, you’re ready to reach out to potential partners to build a mature partnerships program. A recent Forrester study shows that companies with mature partnerships programs grow their partnerships channel revenue nearly two times faster than those with low partnership maturity.
The growth of the referral channel has the makings of a tectonic shift in how SaaS companies market their products. A little education can go a long way toward positioning yourself ahead of the curve. To learn more about what partnerships can do for you, read impact.com’s Ultimate guide to SaaS affiliate marketing. When ready to act for your business, reach out to a growth technologist at email@example.com or request a demo.
Ultimate guide to SaaS affiliate marketing
Ready to scale your business with affiliate marketing? Download the ebook: Ultimate guide to SaaS affiliate marketing.Get my free eBook
For more ideas and guidance on SaaS affiliate marketing, check out these other impact.com resources for SaaS affiliate marketing and the basics behind successful affiliate marketing:
- Partnerships drive SaaS growth (one-sheet)
- Drive growth with SaaS partnerships (video)
- How to evaluate partnership compatibility (worksheet)
- How to manage a successful affiliate program today (ebook)