Pioneering Routes To Market With Partners

Dependencies for a Route to Market Plan

The formation of a company’s routes to market through partners is a strategic function of a company. The purpose of building out partner routes to market is part of a go-to-market plan, which should be built out only after a company has found its Product Market Fit (PMF). PMF is not merely about having a great product or service, it signifies a clear alignment of a problem, a solution, and a buyer who is willing to pay to solve the problem. It’s about having the right product for the right market, at the right time. This is an important principle as the purpose of partners is to provide service, enable adoption, fill gaps or extend a capability, to enable growth supporting the product that fits in the market, whereby partners share in that success.

Since partners fill various needs for a company, understanding partner taxonomy is necessary – particularly when using the concept of “ecosystem”, which emerged out of cloud computing business models due to platform based services. Partners can be any or all of the following:

• A channel for sales or distribution, typically utilizing resellers.
• A technology partner to fill a gap or extend a portfolio of offerings as an ISV, application, or integration technology partner.
• A service provider as a system integrator, an agency or a managed services partner.
• An alliance or joint venture partner who provides support in a GTM function that is mutually beneficial for both parties.

It should be noted, partners can embed technology that is part of their overall offering for an end customer. For the purpose of this article, we consider those companies customers of the technology service provider in a B2B2B model. Outsourcers of process services or digital business services fit here, in the middle “B”.

Ecosystems are born out of the use of platforms whereby partners across these business partnerships can coexist and support each other. The revenue opportunity is driven by the platform and surrounding services. In a cloud-based ecosystem, everyone wins when the ecosystem grows as customers adopt a platform that becomes the gold standard in an industry.

As part of the process of finding PMF, establishing the product’s unique value and its differentiators are realized through customer feedback as well as harvesting data supporting the value proposition. This is a primary component when seeking partners in the go-to-market plan. Companies who are unable to communicate clear value generally have a hard time seeking and maintaining partnerships which can burn time, resources and credibility.

Defining “The Why” of Partner Routes to Market

Building out strategic partners is a critical function where understanding the needs of a business and the purpose of the partnerships need to be defined prior to seeking partners. While this is not the same as a company’s ideal customer profile (ICP), there are some similarities in defining partner criteria and the business model supporting a specific type of partner. As part of a GTM plan, partners support the business for a well-defined need.

When understanding why partners are needed in a go-to-market plan, establishing a unique value proposition for those partners is essential. Both parties ideally bring something unique to the table. Gene Slowinski, director of strategic-alliance studies at the Rutgers Graduate School of Management reiterates that before you even approach a potential strategic partner, you must make sure that you have something of genuine value to offer them. “Unilateral deals fail,” says Slowinski. “Probably 80% of the deals that we see include company A providing some unique product or technology and company B providing access to markets and distribution.”¹ Partnerships should not be pursued for the purpose of taking on a complete function of a business. That is outsourcing, in which a partner is really a vendor. It is a common mistake to use the terms partner and vendor interchangeably, which has consequences.

Defining the purpose of a partnership as well as outcome, allows both organizations to see a shared benefit and incentive for the relationship. Partners need to understand the business value of working together, the risks, tradeoffs and benefits. Partnerships can include one or any of the following combinations of providing technology, services, sales, marketing or access.

Identifying and Recruiting Partners

Once it is clear why partners are needed in a go-to-market plan as well as the unique value proposition for the partner type, identifying and then recruiting those specific partners is an activity requiring undivided attention in most cases. Companies often try to build a partner function without appropriate resources and skills which can have a negative result, particularly if there are limited partners that fit the criteria a company seeks.

Use of data and analytics to identify the ideal partners then ranking them by priority could be combined with other facts, for example, a shared customer base, executive relationships or technology focus to support a narrative of shared benefit. Showing quick wins and how to drive success early is key as both companies invest time at the expense of other activities. When there are partnerships between small and large companies, it is often challenging for the former to navigate the complexity of a large organization. For this reason, and particularly hyperscalers, a strategy to partner with a large company’s partners is a good idea.

When investing time and resources in finding the right partners aligned to the company mission and goals, it is important to stay focused and disciplined on the partner profile needed to support the objective of this route to market. It is common for companies to stray from this when introduced to new companies where eagerness of something “new” supersedes the objective.

Partner Programs to Support and Enable Partners

Partner programs support a mutual business plan as a best practice that can be measured with shared KPIs to drive accountability for shared goals. Without clear responsibilities with defined outcomes, accountability is difficult, and relationships can sour when objectives are not met.

Partner enablement is key for partners to become effective champions. When partners are experts on a product or service and can communicate the value independently as a result of understanding the capability, partners can become a force multiplier. When partners do not have a clear understanding of a company’s differentiators, alternatives become an easy out if there is no incentive for strong alignment to a solution.

As part of finding the proper balance of responsibilities in a strategic partnership, recognizing which ones your company and team are best suited to manage is vital. As mentioned above, a mutual action plan is fundamental to any successful partnership. This can entail negotiations around Intellectual Property (IP), rules regarding discussion of financial metrics, liabilities, and support are all key elements to establishing a relationship of trust and value. As Pat Summitt famously said, “Responsibility equals accountability, equals ownership. And a sense of ownership is the most powerful weapon a team or organization can have.”

The Power of Partners to Drive Growth

Partnerships can be a powerful strategy to drive growth and scale for an organization across various partner types. In a recent McKinsey report alliance and joint venture partnerships have grown at a rate of 14% CAGR since 2016 adding 10,000 deals a year over the past five years.² In the emerging tech landscape, particularly Web3, new relationships have formed to drive brand awareness and a new route for brand marketing utilizing digital assets.³ Roblox's partner program has driven engagement of GenZ consumers by well known fashion brands like Tommy Hilfiger, Forever21, Nike and Ralph Lauren. Microsoft, heavily invested in OpenAI, has a dedicated AI partner program to drive adoption to their portfolio which now, AI is embedded.

While partners are a strategic approach to drive revenue and growth for companies scaling up, or pioneering new ventures like the Metaverse, it is often a misconception and point of revenue risk to believe partners should have sole responsibility for sales pipeline development. While this is somewhat true if they are a channel to market, requiring investments, assuming this for other partner models can become a point of friction in the relationship. Defining the revenue motion and agreement for the operating model is key to a successful partnership. Without clear alignment for roles and responsibilities in sales and marketing, a partnership can consume precious resources across both organizations with little to no gain in revenue.

Last, appropriate resourcing of a partner route to market is essential for success. Professionals skilled in building partnerships should be considered as part of a partner route to market business plan. Typically these professionals have a cross functional skill set with tenure in an industry and are comfortable wearing many hats in their roles. Use of data and emerging technologies to accelerate building partnerships is a new opportunity, particularly to use AI for rapid analytics, as partner data has volume and variety requiring time consuming analysis.

Conclusion

After finding PMF, defining routes to market as part of a go-to-market plan can be a strategic advantage for a company. Defining why partners are needed, the unique value proposition and identifying the partner types are important to understanding which partners fit into the plan and why. It is essential to support partners with programs to drive accountability and share responsibility towards a mutually beneficial goal with a business plan, executive involvement and governance. Utilizing partners in a go to market strategy can be an accelerator for growth or as a way to enter new markets, as well as branching out into new areas of innovation.

References

¹ Inc: “Slack’s Stewart Butterfield on Getting to $1Million in 72 Hours”, cited in July 2023 (Source)

² Mckinsey: “Harnessing the power of partnerships to thrive in turbulent times”, cited in July 2023 (Source)

³ YOC: “Fashion Brands That Have Collaborated With Roblox”, cited in July 2023 (Source)