The integration capabilities of the SaaS business model offer the capability of increasing customer bases for many companies. By integrating better payment and communications solutions, SaaS vendors allow users to access information through a subscription-based service from almost any device. The vendor manages the entire platform, and since the subscription service is flexible to adapt to the strengths of a particular business, it is a proven way to retain customers and grow market share.
However, there are companies that are not prepared to deploy enhancements, absorb changes, or manage the impact to their organization. This is why collaborative partnerships are so critical. It allows a SaaS-platform business to tap into new markets, reach a larger audience, and scale quickly. While expanding their reach, SaaS companies find they can generate more revenue without investing in additional sales resources. The power of leveraging resources with partners expands their offerings, enhances product capabilities, and grows the customer base.
Collaboration in the SaaS World
In an increasingly digital world, it’s time to take notice of the benefits partnerships provide. Collaboration is crucial in the context of SaaS for several reasons, such as team efficiency, scalability, data centralization, and analytics and reporting. Working together achieves more and therein lies the value of partnerships. It provides an increased ability to deliver value to customers and generate consistent revenue without wasting resources.
SaaS Partnership Varieties
There are several types of SaaS vendor relationships and they include referral partners, affiliate partners, VAR’s (value-added resellers), integration partners, and strategic partners.
- A referral partner is what the name implies. It’s an individual or business that refers potential customers to the SaaS vendor. In turn, the referring partner receives a commission, or other incentives as agreed upon. This type of partnership is usually in combination with an influencer or a company that identifies with a company’s specific target audience.
- An affiliate partner promotes the company’s products and services and receives a percentage of sales by providing affiliate links to the SaaS company. An affiliate partner doesn’t have to be an active user of the company’s services.
- A VAR, however, is an already integrated entity which is actively selling products/services and may bundle them with their own offerings to provide a better, more extensive solution. The VAR will typically receive a commission or share of the revenue for each sale.
- An integration partner provides complimentary services or products that can seamlessly immerse with the SaaS company’s offerings to enhance the value of products and provide efficiency and functionality—which is a great benefit to the consumer.
- A strategic partner is a company with a similar target audience, or market presence. By teaming up with them the possibilities of joint marketing, marketing development, and other strategic projects are possible. This association leverages resources and skills to reach a common goal, thereby expanding market reach. SaaS portfolios have increased 32% between 2001 and 2023 (Productiv). This increase continues despite tighter budgets and reductions in staff—an anomaly in the business sector.
The Innovative SaaS Ecosystem
Businesses flourish or fail based on generated revenue and customer retention. With SaaS partnerships, the focus is on an interconnected network of other companies or entities in which everyone coexists and shares technologies, knowledge, skills, and works collaboratively to develop new products and services.
The concept is not new, yet some companies balk at the SaaS subscription-based platform because the journey requires organizational change. Those willing to take the leap will reap benefits. Success depends on swift and confident moves, and it’s mandatory that companies making the transformation look at the leading software, hardware, and service companies that are successful because of the SaaS model.
A company must define its portfolio offerings, adapt a new sales approach and go-to-market strategies, and retool back-office capabilities. There is one goal: avoid pitfalls that inhibit progress so the company can migrate faster into the SaaS platform and realize benefits sooner.
What are the major areas of focus for a SaaS company? The consensus is to target new market segments and achieve a gross sales margin of 75% or higher. The next step is to achieve valuation multiples that are commensurate with subscription businesses and achieve higher net retention and customer lifetime value. This requires a new economic portfolio and operating model, so a company must look at its market size, growth potential, and customer dynamics— and be willing to make a model change through investing a transition.
The SaaS Journey
Most analysts say the SaaS transformation is a 3-to-5-year journey and requires a thorough plan. Companies must assess operational readiness, outline key initiatives, and prioritize a roadmap for an efficient transformation. To benefit from the value of a multidisciplinary collaboration, the focus must be on product development, finance, sales, services, support, and cloud operations, among other intangibles.
SaaS companies maximize their growth potential and achieve greater success in a competitive market by identifying the right potential partners, developing a partnership strategy, and fostering long-term relationships. The key to a good partner relationship is mutual understanding, open communication, and shared goals.
Value of ISVs
Independent Software Vendor partners can offer commercially available software on hardware and cloud solution marketplaces. Many ISVs work with partners to drive long-term growth and retail revenue. This partnership achieves the technical and marketing support needed to design, develop, and implement software and solutions. Ninety-five percent of Microsoft’s commercial revenue comes from its partners (Wire19), demonstrating the incredible possibilities ISV partners can provide.
The four main types of ISV partnerships are: OEM (Original Equipment Manufacturers) Partnerships, Software/SaaS Investor Partnerships, Payment Partnerships, and Reseller Partnerships. OEMs supply parts for a product made by another company; Software/SaaS Investor Partnerships provide availability of finance for expansion and more; Payment Partnerships involve a payment method for an ISV product which adds value to its merchant clients; and Reseller Partnerships involves reselling another company’s goods.
By identifying potential partners, developing a partnership strategy, and fostering long-term relationships, SaaS companies maximize their growth potential, and in the process achieve greater success in a competitive market.
About Brian Godla
Brian Godla is the Director of Business Development at Everyware, a leading customer engagement, billing, and payments company based in Austin, Texas. Launched in 2015, the company provides services to more than 9,000 merchants across multiple verticals including healthcare, travel, utilities, not-for-profit, and automotive. The platform provides a simple, fast, and secure way to move money while enhancing the ability for merchants to communicate with their customers in real-time with text messaging. It saves them money by improving cash flow and reducing paper billing costs, chargebacks, and fraud. For more information about Everyware, visit Everyware.com or follow on Facebook, Twitter, Instagram, and LinkedIn.