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The tech partnership network effect

5 min read By October 29, 2022 December 16th, 2022 No Comments

How can you create a double or even triple network effect with tech and channel partnerships? That’s what we’ll discuss in this blog article.

The most interesting thing about tech partnerships is that you can create a double network effect. When you start a tech partnership, you first tie both companies together. In that way, it’s a 1 vs. 1 relationship. So you tie one software company together with the other. They create an integration and then start marketing and co-selling together to benefit from each other’s customer base.

The Network³ effect

What happens when two companies work together and also have a channel? You get the Network3 effect! And that’s when it gets particularly interesting. Because you’ve got two companies, with very strong customer bases – but also very strong channels. Just look at HubSpot. They are extremely solid with their partner ecosystem and tech partnerships, but also have a massive channel. If you get two of this type of companies where you first work on the ISVs or work on the tech partnership together, and then say, okay, how can we get our joint value proposition through the channel? Then you get the network times, network times, network times, network effect. What kind of amazing partnership is that?

You can go to all of the new partners at your disposal after combining your channels and focus on even more end-users. It’s a massive opportunity and you should make sure that you have a strong integration for them. For partners, it’s also an excellent opportunity. They can integrate your solution, upsell it to their customers, and bring more retention and lifetime value. Tech and channel partnerships can really be a great deal for both sides – vendor and partner.

How Microsoft does it

Microsoft is a business that does that extremely well. If you break down Microsoft as a channel organization, it’s got MSPs, ISVFs, service providers, value added resellers, facilitation partners and the whole gamut of channel design.

But on top of that, it’s got an obscene amount of technology, integration and alliance partners. The perfect coordination of that is what they are always striving for. They do a very good job, given the complexity of managing more than 400,000 global partners.

That network effect. That’s what you’re striving for : building some tech design integration story at a vendor level and taking that to market. Not directly to the end-users because you would be missing your scaling effect but bringing that to market via your partners. That’s when you’re suddenly going to get the best of both worlds. Best of channel, best of tech partnerships, whose tech partnerships do a great job doing whitespace analysis within a high value end-users, but then they’ve got to go and speak to all the end users themselves.

The obvious and logical next step is to build value within one or two end-users and make a case study and then educate your channel to take that to market at scale.

Whoever does that well is going to win and really bridge channel and tech partnerships. Isn’t that all what we’re striving towards as a business?

 

The salesforce example

If you look at the tech partnerships – of course – most of the integrations

are kind of out of the box. But if you really want to have it, specifically for your organization, it always requires customization. Salesforce is an excellent example. You can buy it for a very good price, but you need to customize it to the next level, and then it’s really expensive.

Usually you see that that’s when the partners come in, right? They are always the ones doing the customization, helping the end-users as well. A company like Salesforce or Microsoft could never scale to that level where they can help so many companies to implement, integrate and customize in the right way without partners. So Salesforce has an integration partner who’s doing the actual management and the development for end-users. Who is Salesforce going to trust most? That same partner.

 

Added value for end-users

The service delivery partners that have been working day in, day out to sharpen the Salesforce message, and make it unique and specialized for that end-user are your trusted advisors. Hit that trusted advisor and you won’t just hit one end-user, you’ll win all their end-users. 

Added value for partners

For the partners, the incentive almost comes naturally because the main source of income is the hours that they sell, the services on top of it. So if there’s an integration to be done, it will mean more hours, more implementation, maybe even the larger service contract. So there’s a massive opportunity for the partner there as well. 

More value through integrated solutions 

To come full circle, a better integrated solution provides more value to the end-users, drives up the total contract’s value, but most importantly, it minimizes churn. Unpicking Salesforce is difficult, but unpicking Salesforce that’s been integrated into your telephony and your communication services where you’ve built a security package around what’s tied into a code termed invoice delivered through a partner… Oh my God. That’s so much work to do. The cost benefit analysis of ripping and replacing is just impossible.

 

How can your channel profit from the tech partnership network effect?

Partnerships and Channel, they need to be driving win-win solutions, not just for them, but for their partners and end-users. When you get all three of those things right, that’s a message you can take at scale.

 

Want to know more about this topic? In this episode, we discuss the tech partnership network effect and channel partnerships. Listen through our player or head over to our podcast page, Partnerships Unraveled.

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