A SaaS company is any company that sells software or internet products to other businesses or directly to consumers.
SaaS products can be a significant investment, and businesses may plan large-scale initiatives around a SaaS product's capabilities. SaaS brands offer solutions that are based on a subscription service, and several account options are often provided.
For example, low-volume, average-volume, and high-volume users might all get different monthly prices that reflect the costs of higher volume usage. Vendors may provide advanced functionality at an additional cost, enabling the business to upsell users on functionality in addition to volume.
For the purpose of describing B2B partnerships between SaaS brands, there are essentially two models of SaaS offerings:
The full purchase journey—from trial to purchase to account management and cancellation—is completed by the customer without interaction from the company that is selling the product.
Goal of a partner program: Driving online transactions
Customers will need to work with a sales team to purchase a product or get a demo. Negotiations are high-touch and can be quite complex.
Goal of a partner program: Generating leads for a sales-team to pursue
Whether they're old or new, companies in the software industry have long recognized the promising value that the partnership channel brings. Partnerships are one of a SaaS vendor's most effective ways to amplify their growth rates, and a B2B partner program can be an effective way to reward other businesses for delivering new business opportunities to your company.
Cheaper and simpler cloud solutions have reduced the barriers to starting a software company—allowing companies to quickly scale their services as they build and grow their customer base.
To stand out, SaaS companies are laser focused on breaking through all the noise, finding new problems to solve, and growing their user base as rapidly as possible.
Partnerships can build communities around SaaS technology and can ignite the virality that's needed to turn the SaaS solution into more of a platform, ultimately transforming their partnership program into a thriving partnership ecosystem.
Furthermore, SaaS brand partners are able to establish themselves as experts for niche use cases and audiences by generating the most relevant content that will resonate for the specialist buyer and stretching the product in order to create a more unique, more relevant solution than what the SaaS vendor has the resources to provide.
Partnerships have been forged across brands in retail, travel, financial services, media, and other industries have driven significant revenue growth—over and above the growth that traditional sales and marketing channels deliver.
This interdependence has created the partnership economy. Hundreds of innovative brands now stretch the boundaries of what a “partnership” means, working with influencers, media houses, brand ambassadors, and more. Read on to learn more about the different partner types that are common to B2B partnerships in the SaaS vertical.
Partnership Type | Description |
|---|---|
Affiliates | Individuals or companies that get paid to generate clicks, leads, and/or sales for advertisers. Also called publishers or partners. Affiliate marketing operates on a performance-based model. Affiliates gain commission payments when specific “conversion events'' take place. A conversion event could be any number of actions a user takes on-site, like a product sale, a newsletter sign-up, or an account registration. When looking at B2B partnerships, a common scenario is for brands to offer their affiliates a commission for each client referred. For example, a brand may have a dedicated landing page for affiliate partner sign-ups that boasts a flat-fee or a percentage of commission for each referral that ends in a subscription. |
Ambassadors | Brand ambassadors use word-of-mouth to build a positive public image of your brand and products, and can help support lead generation through their engagement with your brand. Software companies often have advocacy programs consisting of customers who absolutely love using their solution. For example, a SaaS brand might offer special incentives to customers for referring friends and family. Some of the strongest ambassadors for a software company can be their own employees. Employees know the products better than anyone, which fosters credibility among customers and can boost a brand’s reputation online. Many SaaS brands will offer special referral programs for employees that can be beneficial to all parties. |
Associations & Communities | This covers a broad spectrum of partners such as business associations, trade groups and non-profit organizations that partner with SaaS brands to drive leads. Professional and trade associations make a natural partner for many SaaS software solutions. For example, some brands may partner with various local chambers of commerce as a way to reach the SMB market. Companies may also so strongly value a cause that they partner with various cause-based organizations—think of digital signature solutions who firmly believe in reducing physical paper and therefore will partner with environmental groups. |
Comparisons & Reviews | This group covers B2B-specific publishers that review or compare various SaaS products and generate leads for brands through their websites. This includes review sites, where an author reviews a SaaS product, as well as comparison sites, where similar products are compared by qualifiers such as pricing, quality, ease of use, and design. For example, many review sites have software categories where authors frequently review new software as well as write about their experience and opinion of the product. Interested buyers can then click through the partners' links and purchase the reviewed software. |
Influencers & Bloggers | Many influencers and bloggers have built niche audiences around various SaaS markets that make them valuable B2B partners. Because software is so pervasive—seeping into just about every field or hobby—a social influencer who happens to be a key opinion leader or subject matter expert in a certain space could make a great advocate for a solution that they've found value in. Interestingly enough, probably the most important social network for influencers in the software space isn't the ones you think about in the B2C space—such as Instagram or YouTube. Rather, it's community sites like Reddit or LinkedIn. Reddit has numerous technology experts having conversations in an anonymous way. Many of these social platforms also host various Social Communities where knowledge is shared among various members. |
Integrations | Software companies often work with each other to round out each other's software capabilities. SaaS vendors, if they are to succeed, cannot always build everything for everyone. They need to forge partnerships with other solutions providers in order to build holistic solutions that solve the customer's problem. Integrations enable brands to work together to create convenient and user-friendly products and services by taking one or more aspects of one brand's products or services and integrating it with the other brand's software. For example, a commercial accounting SaaS product may integrate with a CRM, in order to dynamically populate the accounting software records with customer information. |
Premium Publishers | A premium publisher is one whose content is actively sought after by a loyal audience. They often boast high-quality and ultra-targeted content served on an engaging platform. They know their audience well and understand how to connect to their readers. SaaS companies often partner with premium content sites to drive leads or sales of their products. Premium publishers may charge fees for subscriptions or memberships, and could limit the number of free articles that a non-subscriber can access in a certain amount of time. |
Niche Content | Niche content partners offer highly specialized content to targeted audiences. These partners serve content that is geared towards specific industries. They may specialize in writing about finance, travel, technology, business or any other subject matter. They enable you to speak directly to a relevant and narrow audience. Niche content partners are great for aligning your brand with key opinion leaders that speak to the same audience that you do, and are trusted by the community. They can help target the exact audience that you want to reach and can provide credibility to your promotions. |
Strategic B2B | Strategic B2B partnerships are mutually beneficial, where companies align with complimentary businesses in their ecosystem to drive referrals and lead generation. These partnerships leverage co-branding between similar or complementary industries in order to increase sales, customer engagement, and mindshare for all brands involved. These partnerships require strategy, and although they can take some legwork to get off the ground, they can provide you with significant opportunities for revenue growth and lead generation. In these relationships, the partner submits a lead using a form, or other technology, which is then passed to the brand's sales team. If the lead is qualified as an opportunity, there could be a payout for the partner based on submission of the lead. If the lead then signs a contract and the deal is won, there could be a more significant payout based on submission of a winning lead. Depending on the relationship structure negotiated, the partner may get paid out for either conversion, or both. |
Would you like to know how to find your ideal B2B partner & design the perfect alliance? See our in-depth guide, How to Find your Ideal B2B Partner, for steps to building first-class B2B partnerships.
There are a number of common pricing practices in the software world. Understanding them can help you plan your partnership structure around the pricing model of the products being promoted.
Once upon a time, this was the most common form of pricing. In a permanent licence, the software vendor charged a one-time price that allowed a certain number of “seats” to use the software. When the software vendor sold the next major version of the solution, consumers had no choice but to either remain with the old version, or upgrade and pay another one-time fee for the latest version.
In today's age of SaaS, this form of pricing is becoming rarer and rarer. Nevertheless, a small number of vendors remain committed to this model of pricing.
The SaaS world has overwhelmingly embraced some form of subscription-based pricing. Monthly subscription charges are probably the most frequently encountered in the wild, but annual subscription charges are common too. Furthermore, there are a variety of dimensions in subscription pricing that makes conversion tracking and payout calculations of the partnership world a bit more complicated:
Types of subscription pricing | Description |
|---|---|
Freemium Models | Sign up for free and gain access to a basic set of features at a limited volume. If the user wants to use more advanced features, or exceeds a certain utilization threshold, then the SaaS provider may require the user to sign up for a premium subscription. |
Free Trials | Enter your credit card, but try the product for free for a given period of time (one week, or one month). If you don't cancel, then the SaaS provider will start charging the monthly subscription. |
Flat Fee Subscription | Some simpler SaaS products may simplify pricing down to a single flat price for users. A single price is quick and easy for prospective customers to understand, but the software provider sacrifices their ability to extract more value from prospects who may be heavier users or are willing to pay more for the solution. |
Package-based Pricing | Some solutions will package up variants of their SaaS solution according to usage volumes (charge more for prospects who intend to run more transactions or revenue through it) or feature packages (charge more for advanced, specialized features). |
Per-user Pricing | When selling to other businesses, SaaS solutions can often charge on the number of activated logins, or allow as many users to log-in, but limit the number of concurrent users to their given pricing tier. |
Sales-Assisted (aka Custom) Pricing | Some SaaS solutions do not allow users to do a self-service purchase directly from their website because they require a higher-touch sales process in order to discover and pinpoint the most fitting price. This might be because the customer needs are too complex to self-determine the right package to sign-up for, or the software provider's pricing model is too complex. In many of these cases, the only call-to-action on the software vendor's website might be to fill out a “Request a Demo” form, which then gets submitted to their CRM system as a lead for a sales rep to follow-up on. |
Self-service install refers to solutions which require less customer purchase consideration, which users can either directly download or register for on their own.
For instance:
Many simpler consumer-based software (think your office productivity products, virus software, etc…) that you can download onto your laptop.
Many simple web-based applications that sit in the cloud, but have value for many individuals and small and medium-sized businesses.
In this structure, conversions can be fired directly when the user has successfully purchased the software (or software license) directly from the company's website.
Like self-service, but the customer usually receives a free trial for a limited number of days (typically 30 days), and loses access if they don't subscribe, or, occasionally, are automatically upgraded to a paid subscription if they don't cancel before the free trial period is over.
In this case, two conversions are usually fired—one at the start of the free trial (sometimes with a small payout or none at all) and another one once the user starts their paid subscription (with a more substantial payout).
Like self-service, but the customer can opt to cancel their subscription and get reimbursed (typically 30 - 90 days).
In this case, two conversions are usually fired—one at the start of the subscription (sometimes with a small payout or none at all) and another one once the cancellation period has passed (with a more substantial payout). Users who cancel may trigger the advertiser to reverse the initial partner payout.
Lead Generation, or Lead Gen, refers to a solution that may not have a simple self sign-up option on a website, and may require an actual conversation with a sales representative in order to close the sale.
The seller may run a more comprehensive discovery session to map out the prospect's needs in order to recommend the most suitable solution. The prospect may evaluate multiple vendors in order to compare each solution to their own complex requirements.
Many enterprise software solutions fall into this bucket. Leads are often submitted into a CRM system where a sales process is initiated. The sales cycle may run anywhere from a few days to a few months, over a span of multiple presentations and negotiations.
Typically, two conversions could be fired:
At the moment that the lead is qualified as an opportunity—a small payout may or may not occur at this point.
When the opportunity has passed into a later stage in the sales funnel—usually when it is “Closed-Won” and a contract has been signed.
Remember to align partner payouts to conversion value. It is up to you and your team to set payouts for the different actions that occur as part of your sales funnel.
For example, you might want to pay a modest flat fee whenever a lead is qualified, then once the contract is signed, you'd want to give partners a more significant payout, such as a percentage of the annual contract value.
Benefits | Description |
|---|---|
Increased Revenue | B2B partner programs create the potential for significant growth in sales and revenue opportunities. If a B2B partnership is successful, both parties will be rewarded with financial advantages. Brands could see increased revenue and higher conversion rates, while partners run the potential to earn higher levels of compensation. A B2B partnership can be mutually advantageous by increasing the revenue opportunities for both parties. Building a referral program to generate leads is one of the most profitable types of partnerships in the SaaS arena. While this type of partnership may take some effort to get up and running, the revenue and cost benefits can lead to significant growth. |
Reduced Costs | One of the most significant benefits of a B2B partnership program can be reduced overhead, sales, and marketing costs. Since your partners are paid on a performance basis, you only pay out when a successful conversion has occurred. If you are running a B2B referral program, the cost benefits can be even greater. Since your partners act as outsourced sales reps, you are building a team of brand experts who can speak to your products knowledgeable and sell on your behalf. These low-touch sales begin outside of your internal resources, which reduces the overall costs of new customer acquisition. |
Expanded Reach | When partnering with other businesses, your brand is exposed to a new customer-base and you are able to gain access to the other brand's audience. You are able to connect with customers that you might not have without the partnership. Your brand will be promoted to their audience as a trusted and complementary brand to their own, which will build trust and interest in your products and your company. |
Expansion into New Markets | B2B partnerships offer a cost-effective way to expand into new markets. Your business partner may be highly established in markets that you are not. When integrating each other's products or hosting referrals through your partner, you are gaining entry into marketplaces that may not have been on the table prior to the partnership. |
Attribution | Understanding ROI can be difficult, especially when measuring growth through marketing channels. Since B2B partnerships are performance-based, the steps to measuring revenue expansion and customer acquisition are much simpler and automation helps you understand which steps in your sales cycle are contributing to success. |
The opportunity to make commission is certainly a common thread across any vertical. So we're focusing on the business benefits and opportunities around partners in the Software space—what sort of unique win-win scenarios can partnerships offer?
Tech stacks can be complex, and a single software vendor may not be able to capture the full range of solutions needed by a particular enterprise. That's where consultancies, agencies, and other partner types can help—by participating in multiple SaaS vendors' programs, they can refer solutions from different vendors to their client, and provide the value-added services to either help them integrate the different solutions, customize 3rd party software, or train clients on how to make the best use out of a bundled set of solutions.
Many businesses out there are not tech-savvy. They may not have the resources or budget to hire dedicated resources to handle a particular need that can be addressed by technology, and would prefer to outsource a function/capability, particularly if they view the function/capability outside their core competencies. This provides a unique opportunity for specific partners who can bundle together software and outsourcing services.
This is very specific to independent software vendors (ISVs) or channel partners who produce their own software. Development resources are often limited, and the most successful software companies realize that they cannot be everything for everybody. But many smart ISVs leverage partnerships to form complementary solutions to address the needs of audiences outside of their own, and still capture the opportunity at hand.
Many SaaS vendors will provide a recurring commission to partners who drive valuable customers. This strongly aligns the incentives of the SaaS vendor and the partner: both want to attract customers who stick around. This can provide a steady, reliable revenue stream for referral partners who are great at attracting and converting high-quality customers, and servicing them to ensure that they keep paying their SaaS subscription fees.