The Role of Partnerships in Growing Your Software Business

Posted on by Melanie Purkis
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Is your organization considering new software partnerships?

While there are a variety of ways available to grow your business – traditional marketing, outbound lead generation, advertising, and word of mouth, to name a few – well defined and duly considered partnerships are one particular avenue that can be a boon for your business. In a partnership, businesses and organizations combine forces to benefit all parties.

In fact, if you look hard at the most successful and growing businesses, you will find that partnerships play a key role in their growth.

That is not to say that all businesses can make partnerships front and center to their growth plans without hard work and organization. There are pitfalls and challenges associated with leveraging partners, just as there are for any growth channel.

However, proper planning and execution of a partner strategy can pay huge dividends in a variety of ways.

This post will discuss many of the benefits of partnerships and how your organization can find, structure, and manage the alliances your business needs to succeed.

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How Partnerships Supercharge Growth

Understanding how partnerships supercharge growth comes down to knowing what partnerships do.

With a partnership, you are expanding your capabilities and offerings.

Expanding your capabilities means your business can do more. Explaining your offerings means your business can offer more. In both cases, your customers and clients benefit.

Skills and Capabilities

Expanding your capabilities through partnership means that your resources will have a greater impact on growth. One example is for an IT or managed services provider to partner with a company in a specific metro area to provide on-site support in that location. As a result, the original provider can service a larger area of customers, and the partner providing the last-mile support has increased their revenue. Everyone wins.

Expanding skills and capabilities is not just about more revenue (we will get to that shortly) but also about leveraging partnerships, so you do not always have to hire to address every need of your own.

Wider Offerings

Expanded capabilities are one thing; expanded offerings are another. Expanding your catalog of products and services gives your customers the chance to buy more from you. Think of it this way: people shop for IT hardware at CDW, SHI, or Dell.com precisely because they can find so many things they need in one place.

A wider or expanded set of offerings serves this same need for your customers. Adding all those products and services on your own would be time-consuming and costly. Adding those products and services through partnerships? That can be done with significantly less complication and friction.

Filling the Gaps

Similar to having a more comprehensive set of offerings for customers, partnerships help fill the gaps in your product and services portfolio. To continue with our CDW, SHI, and Dell.com example above, one of the reasons that large stores are successful is, in addition to offering many things customers need in one place, they also provide goods and products that complement each other. A customer can purchase all of the necessary software and hardware in one place instead of piecing together their infrastructure from across multiple vendors.

For example, it makes sense for managed service providers to offer security services. Why? Because anyone in need of managed IT services also needs security services. Having both solutions at the ready fills a gap in the services portfolio.

Increased Revenue

Each of the items above directly feeds into increased revenue and additional growth for your company. New capabilities and fewer resource constraints put you in a position to serve more customers. More comprehensive offerings mean that you can better attract new customers and markets while increasing the share of your wallet with those already on your client roster. Filling the gaps reduces churn as customers come to rely on your business for mission-critical services.

types-of-partnerships

Types of Partnerships

Partnerships allow customers to address more of their needs with a single vendor or supplier. Partnerships enhance what you can do, how you do it, and who you can do it for. With that in mind, it’s important to understand the different types of partnerships available to your business.

In terms of how you might directly increase revenue through partnerships, there are typically four different models. Yes, there are other business models and exceptions, but for the most part, you will find that partnerships follow one of the paths below.

Referrals

Just as your business likely benefits from word-of-mouth referrals from current customers, so can you find benefit in referrals from business partners. Referrals are the most straightforward, least complicated form of partnership. In a referral agreement, one or both parties refer potential customers to the other when it seems that the business opportunity makes sense.

Imagine a software provider that does not support OSX (Mac) but does support Windows. Perhaps they refer Mac users to a partner that supports OSX. In exchange, that partner might refer Windows users to the software provider.

Referral fees can range from cash payouts for leads or won business, all the way to the simple accumulation of goodwill with the partner.

Finding referral partners often comes down to finding organizations with products you cannot offer but might appeal to your target market.

Affiliates

Affiliate partnerships are a bit like referral partnerships with one key difference: the affiliate partner always expects to be compensated for driving business your way. Most affiliate programs are run using either affiliate codes or links so that orders can be appropriately attributed and tracked.

Affiliate partnerships can be great for all involved but require additional administration for all parties to ensure that everyone is getting credit for the sales they generate. There are a number of software offerings and entire marketplaces for keeping your affiliate sales and payments organized, which will be critical to long-term success.

Setting pricing and the payout structure will be an important part of attracting active affiliates that will promote and ultimately sell your offering.

Affiliate programs tend to be more successful when selling a well-defined product or services like software or managed services.

Resellers

As the name suggests, reseller partnerships are where one party resells the offering of another party. Often, the reseller receives a small discount and/or adds an additional margin to the price. Many organizations help the reseller white label the offering, so the customer thinks the product or service is coming from the reseller. In most cases, the reseller manages the billing relationship with the client and the first level of support.

Reselling is an excellent way for both businesses to grow. The reseller can provide goods and services that it lacks the resources or expertise to provide on its own. The provider can grow by leveraging another company, the reseller, to handle sales and support.

Co-Selling

Forming a strategic alliance often means simply co-selling with another organization. Tackling opportunities together can be a great way to leverage partners without the administration and housekeeping of a traditional partner program. 

In a co-selling arrangement, you might bring a partner into an opportunity to combine your offerings. You decide together who owns the parts of the billing relationship, the fee schedule, and who provides support. In-kind, you might also have co-selling partners that bring you into an opportunity in much the same way.

Co-selling relationships are somewhat common for larger solutions or deployments where it simply is not feasible for one company or enterprise to offer the full suite of services or products needed.

how-lw-approaches-partnership

How Liquid Web Approaches Partnership

Our team of the Most Helpful Humans in Hosting® recognizes how vital partnerships can be to your business and how you fulfill your promises to customers and clients. As a result, we have supported small and mid-sized businesses for more than twenty years with one mission in mind: helping them reach their full potential.

Partnerships have been core to our own growth, and we enjoy helping other organizations, regardless of sector, get the most out of their partnerships. Liquid Web has been a partner over the years to thousands of companies, turning infrastructure and technology challenges into competitive advantages.

To learn more about how a partnership with Liquid Web can work for you or explore partnerships in general, please contact us. We would enjoy the opportunity to learn about your business goals and see how we might partner in your success.

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About the Author

Melanie Purkis

Melanie Purkis is the Director of Liquid Web's Managed Hosting Products & Services. Melanie has more than 25 years of experience with professional leadership, project management, process development, and technical support experience in the IT industry.

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