Many customer success leaders in our network have asked about ways to incorporate 'Partner Success' into your overall 'Customer Success' strategy. We asked Tobias Kederer of The Delivery Advisory Group to share his thoughts on ways that B2B SaaS companies currently leverage partners to give us a lay of the land. Many companies in a […]
Many customer success leaders in our network have asked about ways to incorporate 'Partner Success' into your overall 'Customer Success' strategy. We asked Tobias Kederer of The Delivery Advisory Group to share his thoughts on ways that B2B SaaS companies currently leverage partners to give us a lay of the land.
Many companies in a wide variety of industries rely on strategic partners to better serve their customers. B2B SaaS organizations are no exception. There’s certainly a myriad of partner strategies that your business could deploy for business advantage. For the purposes of today, let’s focus on implementation partners; this directly impacts the Customer Success and Professional Services team at every B2B SaaS organization.
WHEN IT MAKES SENSE
The whole concept of SaaS is based on the premise of profitability from increased lifetime value born out of the recurring revenue. Build once and sell → deploy over and over and over again. In that scenario, recurring revenue for the software is much more profitable than the (necessary), one-time professional services/onboarding/set up revenue.
It, therefore, makes sense to utilize implementation partners as a part of your business strategy:
- Scale/Growth – You won’t be able to handle all product deployments in-house. Entire industry segments have been born out of this approach. Just think of how many Salesforce Implementation Partners there are….
- Cyclical Business – Many industries (i.e. Healthcare Software) don’t have the same demand throughout the year. Customer Success/Professional Services may, therefore, be buried in some quarters, while others are lighter. Implementation Partners can help flatten out the curve (yes, this was a “thing” long before COVID 19).
- Regional Expansion – Many B2B SaaS companies are (or want to be) global organizations. Does it make sense to constantly fly your professional services staff across continents? Partnering with regional business partners to implement (and of course sell) is common practice.
- Standalone Value – This may be worth an entire article, and without getting too deep into GAAP accounting principles, one-time setup/professional services fees have to be spread out over the course of the entire contract, i.e. 36 months. This means that if your implementations take 6 months (or much less in many scenarios) and cost your customer $100K, you can’t recognize the $100K after 6 months, but can only take $2,777/month ($100K/36). You may say this is great from a recurring revenue perspective – and you are right – however, imagine what this does to your Professional Services P&L (as you incur the cost of implementation during implementation). Why are we talking about this? Well, one (of course legal) way around this, is to prove that “an outside entity“ can implement your product/s. Enter implementation partners – show that it can be done “soup to nuts” externally, and you now have the ability to recognize the one-time revenue quicker – if that’s what you choose to do.
- Provide Customer options – customers love and deserve options. “We would be happy to implement our product for you, or you have the options to choose any of our certified implementation partners should you so choose…..”
TYPES OF IMPLEMENTATION PARTNERS
Now that we have covered when it may make sense to utilize partners, we will transition to which type of (implementation) partner may make the most sense.
Although the delivery model of each B2B SaaS company is slightly different, let’s focus on two tactical options and two strategic options.
TACTICAL OPTIONS - these can be very specific, tactical executions that will provide quick impact
- Staff Augmentation – This model makes sense when you are not quite ready to hand over entire implementations, but may need specific roles to help supplement your staff. It may also be a good way to try out a certain partner by “dipping your toe in the water”.
- Subject Matter Expertise – Similar to staff augmentation, this model may make sense if you provide very specific, industry type consulting as part of your implementations. These SME’s separate themselves from the above by being niche players with many years of deep experience (note that this will be a lower margin option)
STRATEGIC OPTIONS - these need further consideration from the business
- Parts of Implementations – The next step up is to “outsource” parts of the implementation which is an extremely popular model. In most cases, these are non-customer facing roles that may even be off-shored such as data entry, simple configurations, Q&A, etc. This model works well to a) reduce the cost of implementation and b) scale implementations – think along the lines of building an “assembly line” of repeatable work that can be done at scale/volume.
- Entire Implementation – The “ultimate” model is to have Implementation Partners to take over entire implementations. Yes, this means that you are not involved at all and the partner works independently with your customer. This is by far the most complex option, but it carries the greatest reward for the business if done appropriately. There will be an upfront cost in standing up the enablement of these partners that needs to be in consideration - this will require collateral, training, enablement and measurement to ensure that the customer experience has strong association with your brand.
No matter your situation, having a partner perform any type of implementation activity requires a (1) diligent selection process and (2) organized onboarding and training process. Just like your own team members have to be trained and educated on your product/s and the best implementation methodology for your product/s, so do your partners.
This takes time and an iterative approach may be beneficial – maybe your partner “shadows” your team during an initial pilot, takes online training classes followed by another pilot where the roles are reversed – in that scenario, your team would be the “safety net” to ensure the best customer experience. Ultimately you may want to certify your partners as part of a formal partner program that can be replicated at scale.
Partners are a critical component for each B2B SaaS company. I would be surprised if there is not at least one situation in which it makes sense to take advantage of an overall Partner strategy to better serve your customers!