Why is successfully choosing and leveraging a partner model important? What benefits can partners provide that direct sales doesn’t?

Partner models can be used to:

Expand market reach, especially for small companies – partnerships extend a company’s ability to reach new customers and new customer segments, especially in new verticals or regions.
Offer more value to customers – most resellers don’t add on products simply to increase their margin; a well-designed partnership makes both offerings more valuable, increases product stickiness, and makes it easier to sell more.
Test new geographies with a lower lift– it can be expensive to build teams and open offices in new countries or regions. Partnerships can validate your market hypothesis and provide initial market exposure before you make a larger investment.
Improve brand recognition – strategic partners provide validation that is hard for early-stage companies to obtain elsewhere. For example, partnering with Microsoft signals that Microsoft believes your product is legitimate and has decided it is worth their time to work with you–an indicator that might make it easier for an otherwise-unknown company to sign new clients.

How do you devise a partnership strategy?

Step 1: Use a partner taxonomy to evaluate categories of potential partners – focus on your industry landscape before pursuing individual companies.

Step 2: Identify the low-hanging fruit within your priority categories – zoom in to determine which companies’ business model or technology is best-suited to your offering and your target consumer. For example, if you’re targeting industrials and need to partner with a hyperscaler, Microsoft’s prevalence at industrial sites would make them a potential strategic partner.

Step 3: Test your strategy before full-scale execution – validate your approach and conduct preliminary conversations with target partners to confirm your assumptions. These discussions will either boost your confidence in the strategy or help you refine your approach before making an investment.

Note: Partnership strategies should depend on mutual benefit, not connections – companies are often tempted to take a networking approach to partnerships (e.g., “I know someone at X and they might want to work with us”). However, the strategy is more likely to succeed if you target companies who will benefit the most from partnering with you.

What stage-specific considerations should influence how early-stage companies approach partnerships?

Early-stage companies should prioritize partnerships that will help them build their brand – growth stage companies need partners that can bolster their authority in the marketplace and provide high-quality and numerous leads to support sales growth. Some companies also rely on partnerships that offer global expansion opportunities, which can provide a critical additional revenue stream at this stage.

Test out the “crawl, walk, run” approach to partnerships – early-stage companies often benefit from thinking of partnerships as evolving relationships rather than static programs. Identify a few opportunities to test out this approach. A common partnership evolution:

Starts with a referral relationship – this is a relatively low lift opportunity to see if you can work well together and have similar customers.
Progresses to a reseller partnership – once your referral relationship has built momentum and proven out the mutual value of the relationship, your referral partner might find a more structured partnership to be an appealing way to make more money and improve margin.

Note: most businesses aren’t ready to sell through VARs until they have matured to at least the Series B stage.

What makes an organization more likely to succeed with a partnership approach?

Adjacent/integration-reliant products have a greater partnership channel opportunity – if your technology enhances the performance of other technologies and services or only provides value when connected to other technologies, you are more likely to successfully sell your product through technology partner plays or partnerships with larger tech companies that resell your product as part of an augmented tech stack offering (or even as a white label offering within that tech stack).

Services Partnerships

How should you categorize potential partnership models?

Frame your partnership strategy in the context of partner categories (who your partners are) and relationship types (how you work with them) – companies often confuse these two ways of thinking about potential partners, but distinguishing between business model and partnership model can help you home in on the most strategic fit. Consider both:

Types of partner companies – potential partners can be categorized by the nature of their business and how it relates to your product or business model. For example, potential partners might be:
- Global System Integrators (GSIs) like IBM, Accenture, or Tata
- Regional System Integrators (RSIs) that specialize in integrating technology systems within a particular industry, vertical, or geography
- Value-Added Resellers (VARs) that add value to software solutions by bundling them with other products and/or services
- Hyperscalers like AWS, Microsoft, Google
- Independent Software Vendors (ISVs) that sell software directly to other businesses
- Communications/ Telecom Providers that sell software or software-powered solutions alongside their primary services
Types of partnerships/ relationships – the nature of your partnership can take multiple forms (see below), including:
- Referral
- Co-sell
- Resell
- OEM/white label/private label partnerships
- Joint ventures or acquisition

What partner models are available? Who does each model work best for?

Technology Partnerships

Technology Partnerships
What they are	Technology partnerships typically involve integrating 2 products to remove friction for customers. They don’t result in direct revenue.
Example	A start-up puts the Red Hat and Intel logos up on their homepage to signal that they have integrations or certifications with those companies.
Who should use them	• Early-stage companies that want to build credibility and reduce barriers to purchase • Companies whose technologies must work with other technologies to be useful to their customers

Tips for optimizing technology partnerships:

Think of technology partnerships as tools to reduce barriers to signing new clients – these partnerships facilitate deals with new customers because they provide check marks for key decision elements for important customer decisions. For example, a potential customer might need a technology like yours, but require that it is integrated with a technology they’re already using. Consider pursuing integrations with key players in your industry to make it easier for potential customers to add your product to their stack.

Reseller Partnerships

There are different types of reseller partnerships, but they all require the partner to take a more active role in sales and implementation – all resellers purchase your product at a discount or revenue share and sell it to end customers on your behalf.

SI Reseller Partnerships
What they are	GSI or RSI partners purchase your product at a discount, then resell it under their own brand as part of a larger services/solution offering. These partners take a complex approach to implementation and effectively “resell” other technologies if those technologies are needed to create the solution they’re building for their client. These solutions are often non-repeatable packages or custom projects.
Example	A GSI takes on a custom project for an IoT company and incorporates a variety of technologies to create a unique solution that works for their client. The client effectively pays for all involved technologies when they pay to use the solution.
Who should use them	• Companies that see a strong opportunity to create a unique offering that meets the specific needs of a client. Note: It is usually easier for later stage companies to get involved in these types of projects unless your technology is something they need to create the solution.

VAR Partnerships
What they are	Partners purchase your product at a discount and sell it to end customers at list price, often alongside additional offerings. VARs try to offer incremental value without doing significant custom development.
Example	A cybersecurity VAR resells and implements their partners’ technologies and tries to add value to the overall solution by including access to their cybersecurity experts and providing Level 1 technical support.
Who should use them	Technology companies who are seeking additional geographic coverage and access to more potential clients in lieu of hiring FTE sales resources.

Co-Selling Partnerships

Co-Selling Partnerships
What they are	A partner lets you list your technology in their marketplace and takes a percentage of sales if your technology is acquired through the platform.
Example	Microsoft, Salesforce, and AWS let companies list their solutions on their partner marketplaces.
Who should use them	• Companies that already have enough traction to drive orders through the marketplace • Companies with the bandwidth to engage deeply with platform providers’ sales teams to make the partnership worth it • Companies whose customers want to buy their product off a marketplace

Tips for co-selling partnerships:

It’s a process, not an instant solution – companies often think that getting onto a marketplace is a solution in and of itself, but it is just the 1^st step in a complicated process. You must find the right team within the marketplace provider’s sales team, engage them, and empower them to help you drive sales. This type of partnership has the potential to create a lot of work with no return.

OEM/Private Label/White Label Partnerships

OEM/ Embedded/ Private Label/ White Label Partnerships
What they are	Embedding your technology into a partner’s product offering with varying degrees of brand visibility. These partnerships involve selling a piece of technology that represents an important business opportunity that will help your partner access additional markets, fill white space in their tech stack, differentiate them from competitors, or solve key problems in their offering.
Example	OEM – your technology is integrated into another product but it maintains your brand identity. You might need to modify your product to work with your partner’s technology. Private Label – you maintain some brand recognition due to your strong reputation. The partner might describe their solution as “powered by” your product or brand. White Label – your technology is completely rebranded and sold with no mention of your company. While this requires documentation and code revisions and limits brand visibility, the higher you go into a partner’s tech stack, the more committed the partner must be.
Who should use them	• Companies whose technologies fill the gaps in other products • Companies seeking to leverage a larger partner’s market presence • Companies who need to get a product to market quickly (white label partnerships require making code revisions, but this process is usually faster than building your own solution)

Tips for OEM/ embedded/ private label/ white label:

Create a “marchitecture” – a “marchitecture” is a simplified representation of how separate products create a joint value proposition for the customer. This map bridges the gap between product architecture and marketing to help companies explain how their partnerships work.

Expect engineering investment – be prepared to invest in significant technical collaboration and code modifications.

Involve Legal in all negotiations – these partnerships require commercial structures that have complex contracts. Key areas defined in these contracts include:

How support will be handled
Custom pricing considerations
Time-to-market, territory, or competitive considerations

Joint Ventures

Joint Ventures
What they are	Deep strategic partnerships for initiatives that are important but not so critical that the partner must either buy the solution or make it themselves. They have a formal structure where both companies contribute resources (and often share equity in) a shared business opportunity. This is the highest level of partnership commitment before M&A activity.
	Salesforce and Siemens launched a joint venture that combined Salesforce’s Customer 360 and Siemens’ Smart Infrastructure solutions to create a new workplace technology suite.
Who should you use them	• Companies that have a strategic opportunity that falls just short of justifying acquisition • Companies in a situation where both partners bring unique value that can’t be easily replicated

Tips for joint venture:

Finetune your strategy first – confirm the commitment level–as well as anticipated flexibility to adapt to market feedback or changing needs–before pursuing a joint venture. Joint ventures require a higher, more strategic level of investment than other partnerships and can create complicated issues if they aren’t managed properly.

How should you approach pricing for partnerships?

There is no “standard” pricing model – while there are ranges of general pricing standards for different types of partnerships, each pricing model must be negotiated based on the nature of the technology, partnership, and investment on both sides.

Relationship Type	Typical Pricing Model	Notes
Referral relationship	10-15% commission Note: referral relationships also have negotiated terms around registering/ sharing lead information between partners.	Referrals typically receive around 10% of the 1^st year revenue of any referrals they make. For subscription services, they might also receive a smaller commission for revenue from subsequent years.
Technology partnership	N/A	Technology partnerships don’t result in direct revenue or direct selling.
Reseller partnership	20-35% margin Example: if your technology sells for $10,000, a reseller might purchase it at a 20% discount ($8,000) and resell it for $10,000.	The discount range is wide because it depends on the level of investment and responsibility the reseller has for closing and for providing technical support.
Co-selling/Marketplace partnership	Range from 3%-25% commission plus annual listing fees, if required	Hyperscaler marketplaces typically charge a percentage of sales driven through their platform, as well as listing, security review, and/or annual partner program fees.
White label/ embedded partnership	30-75% discount depending on the Partner’s commitment level and degree of customization. Note: white label pricing should specify both the upfront and future payments that will be guaranteed over multiple years.	This pricing varies significantly and depends on the unique requirements of each negotiation.
Joint venture	Highly customized, as it depends on the commercial model of the joint venture.	Pricing could be negotiated based on the investment structure, profit-sharing principles, or other factors.

Enablement and Program Management

What should your partner onboarding program look like? What are the steps to successfully launching a partner relationship?

Create an enablement training program and asset repository – partnerships require cross-functional support to be successful. Key enablement elements include:

Sales – develop an 8-10 slide training presentation. Cover key items including partnership’s joint value proposition, solution details, competition, etc. Enablement resources can also include playbooks that dig deeper into these areas, but concise training materials are referenced more frequently.
Technical – train solution architects and technical teams on product capabilities, demo environments, and integration best practices.
Marketing – establish joint marketing programs, campaign frameworks, and co-branded assets.
Support – train partner support teams to handle tier 1 and/or tier 2 (depending on partnership Type) customer issues and establish clear escalation paths.

Support partnership success with internal incentives – work closely with your direct sales team to ensure that your primary sales strategy doesn’t undermine the partnership program. Common solutions include offering commission or quota relief or incorporating an upsell opportunity for the Direct team.

Establish a partnership management owner who is responsible for the program’s long-term success – partnership programs fizzle out when they lack clear accountability structures. The partnership owner should have executive support (if the owner isn’t an executive) and be responsible for driving pipeline development, coordinating with partners, and establishing account relationships as needed.

Create a 30, 60, 90 day plan – document everything that both companies need to execute to get a partnership set up for success, including a cadence of check in calls. Maintain disciplined execution against this plan.

What does a good partnership team look like?

CEOs should own partnerships initially – the CEO’s active involvement is crucial when recruiting and developing initial partners at early-stage companies. Founders/ CEOs often bring partners on board that are based on previous relationships before a CRO or partnerships owner is hired.

The Chief Revenue Officer (CRO) ensures that your partnership programs are copacetic – their holistic view of revenue lets them drive alignment between direct and partner sales channels, reduce competition and friction, and create clarity for both sales teams and customers.

Eventually, a Channel Chief should manage the program itself – dedicated leadership should be held responsible for partner program success once partnerships become strategically (and/or monetarily) significant to your business. The Channel Chief’s goal is to hit quotas and drive the overall success of the program.

As your partnership program matures, additional specialized roles become necessary – partnership organizations emerge in 3 key areas:
- Channel marketing – dedicated marketing resources for partner enablement and joint campaigns
- Solution Architect – focused on providing technical sales support for the partner sales team.
- Partner engineering – technical resources for integrations and white label projects that require code changes. OEMs frequently require their own engineering teams.

What specialized tools should a partner program use?

Partners relationship management (PRM) tools exist, but aren’t always needed – while mature partner programs might benefit from these systems, most companies don’t need this level of specialized tooling until they have a large stable of partners.

What KPIs or success metrics can you lean on to monitor the success of your partnerships?

Different metrics reveal performance at different stages of program development:

Early-stage metrics (getting your partnership program established):
- Percentage of target partners recruited (how successful you are in recruiting priority partners as identified through the partner taxonomy)
- Partner enablement completion rates
- Number of deals in pipeline
- Number of active partners
Growth-stage metrics (evaluating demand generation):
- Lead generation volume for partnership channel
- Reference design wins
- Incremental Revenue
- Opportunity cost reduction

Overall

What are the most important pieces to get right?

Start with securing long-term executive commitment – partnership programs require companies to reevaluate their channel strategy and reallocate some resources and/or focus away from direct channels. Get the leadership team on board with your partnership strategy and plan. Strong executive support facilitates this process and helps Direct Sales and the partnership organization work together.

Find the right partners – if you have the wrong partnership model for your business, you won’t be able to identify partners that will be naturally incentivized to make the partnership work.

Feed the partnership flywheel – showing that you completed a joint deal or had a concrete partnership “win” will encourage your partner sales reps, help you recruit new partners, and boost the organization’s confidence in your partnership strategy.

Don’t expect instant results – set expectations around timing to prevent leaders from losing patience. Successful Partner programs take several months to develop.

What are common pitfalls?

Not having a strategy – some companies think of partnerships as another channel “box to tick”. Aimlessly bringing on new partners whose relationships don’t add value for either party will undermine program success in the short and long term.

Prioritizing quantity over quality of channel partners – having the wrong partners results in a poorly performing program and will divert resources from successful partners.
Not following up after program kickoff – be rigorous about maintaining proactive communication with your partners. If you haven’t heard from a partner or received leads from them in months, check in to make sure that they haven’t made significant strategic or personnel changes or gone with a competitor.

Building Out Channel Partnerships