Partner Relationship Management (PRM): The Ultimate Channel Sales Podcast

16 - The Current State of Partner Ecosystems: What You Need to Do Differently

January 05, 2023 Magentrix Season 1 Episode 16
Partner Relationship Management (PRM): The Ultimate Channel Sales Podcast
16 - The Current State of Partner Ecosystems: What You Need to Do Differently
Show Notes Transcript Chapter Markers

In the past year alone: “Partner ecosystems” has become the hottest buzzword in the channel space. Forrester reported an even split between channel, direct, and marketplace revenue.

And that 90% of IT sales will be partner-assisted before, during, and after a sale.

All this to say that the channel looks shockingly different than it did just five years ago.

If a vendor’s channel team fails to jump on this partner ecosystem trend, will they be left behind?

Today’s guest is Balthasar Wyss, the Vice President of Customer Success at MerdianLink - a digital lending platform. He brings years of business development wisdom from both sides of the channel and helped earn VC funding and successful IPOs. 

In this episode, we’re going to:

  • Look at how ecosystems affect the channel.
  • And what channel leaders can do differently in the ‘age of ecosystems’.

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To learn about Magentrix PRM, please visit www.magentrix.com

Paul Bird: Today's guest brings years of business development, experience, and wisdom from around the globe, and from both sides of the channel. He has decades of experience building channel and partner ecosystems.

He served as the Director of Channel Strategy and Partner Marketing for Microsoft and holds a Ph.D. from the University of Zurich.

He's the Vice President of Customer Success at MeridianLink, a digital lending platform. He's here with us today to talk about the current state of channel partner ecosystems and what you need to do differently.

Please welcome Balthasar Wyss to the show. It's great to have you here.

Balthasar Wyss: Thanks a lot, Paul, and hi everybody, I'm super excited.

It's a great topic that's near and dear to me and I look forward to a great conversation.

Paul Bird: So let's get a little bit of some of the highlights of your career as a channel chief leading ecosystems so far.

Balthasar Wyss: I play multiple roles.

From more of the business development side to more of the programmatic side. More recently, on the deployment, ongoing engagement, and customer partner success side.

First of all, I enjoy working with partners, just as I like working with customers.

There's this thing to it, where they provide you with great feedback, they make you better, and they typically help you build a business.

And for me, that's one of the coolest things about being in the partner space to learn and, at the same time, grow together with those partners.

And I can give you some examples, if you want, at some point, during this podcast as well.

Paul Bird: Absolutely. What about what you're doing now, at MeridianLink? What's your role there?

Balthasar Wyss: More recently, I've been more on the customer success side, which if you think about it, is not all too different in the world of SaaS.

It is all about usage and engagement.

My team and I, focus on engaging with the customers, as well as with partners.

Because we sell both directly at MeridianLink, as well as through the channel, making those customers and partners highly successful using our digital platform.

And for us, whether it's partner success or customer success, we look at this fairly holistically.

Everything, post-sales would be on our team. Think of onboarding and training, then the ongoing engagement, and growth of usage.

And then on to customer support or partner support, as well as further down the line – the upselling, cross-selling, and renewals.

We do just everything on the customer success team in our business lending group.

Very holistically, the way we look at isn't the way we build the function.

Paul Bird: On today's topic, looking at the evolution of ecosystems, let's set the stage.

What does today's channel ecosystem look like to you?

Balthasar Wyss: I see a number of trends, but before we get to the trends, maybe can talk a little bit about the status of the channel, as I see it.

And the first thing I would say is that we see a lot of companies going opportunistically after this and not always, very intentionally. To give you an example, when you are at a startup, the first thing you want to do is make sure you integrate into all the platforms.

So what do you do? You build an API and then integrate it. So you go opportunistically about those first partners. We're not thinking about what else those partners could do with this technology and what we can do with the integration partners.

If you're more on the sales side and a sales-lead company, you might also stop by opportunistically, just by signing up a few partners who give you leads.

That's not just a startup. If you think about Amazon, in the very early days, back in the ’90s, Amazon started with an affiliate network.

You could literally put a button on your website. And if somebody clicked on it to buy a book or a CD back then, that's what Amazon was about.

You got a little commission if the purchase went through.

They essentially used affiliates (hundreds of thousands of affiliates) to generate sales.

In some ways, very opportunistically, even a big company like Amazon was not necessarily always very intentional.

And the question is why?

I'd say one thing is, companies often are either product-led or sales-led. They don’t necessarily start with a partner in mind first.

They just said, hey, I have a great product I need to integrate. Or I have a fantastic go-to-market sales engine. How did you generate more of that?

The second thing I'll say is that the partner function can be at times to be a bit misunderstood.

It's either just seen as an integration play, or revenue play, and sometimes a necessary evil.

So I think it's important that we understand the function of what you can do with the potential of it.

And the last thing I want to mention is this: you see short-term thinking, for example, we need to close the quarter, and we need to have more revenues and everything.

Balthasar Wyss: What we do is let's talk to our partners rather than thinking long-term building about a sustainable ‘moat’ that lets us build a company over the long term.

So, that's how I would summarize what I often see, but there are also lots of positive trends to change that, particularly more recently.

Paul Bird: So, what are some of those noticeable trends that you're seeing in the ecosystem space?

Balthasar Wyss: Yeah. Good question.

There are a number of them.

First of all, I'd say, often partner organizations today have more than expanded scope.

Rather than just being a lead source or a source for integration, so that things work well together, partners and customers can be sold off. Both along a whole life cycle, so partners can be used in the discovery process.

Customers or prospects discover your solution.

Partners are used to evaluating your solutions – you know that old RFP is still alive and kicking.

And then along with the process of closing a deal with co-selling. Microsoft started to make wholesaling in 2010 or so. It's still in its infancy if you look at the whole IT industry over time.

So, wholesaling, and then enabling a great purchasing experience, and then a fantastic post-sales experience, where the partner will take on certain things, like the ongoing management, or maybe even the renewal.

That's one of the trends: an expanded scope of partners or the channel function.

Related to that, there's a broader variety of go-to-market models: selling with partners, selling to partners, and then they integrate your solution, and resell a package.

Related to that, a broader set of business models, i.e. simple MDF funds and market development funds. This could be commission-based, bounties, there could be revenue share and ongoing subscription models.

It could be an OEM license if you integrate it into a bigger platform, and so on.

So, a broader business model differentiation, if you will.

And the last thing where this all sort of comes together in my mind is the relationship between the vendor, and the channel and the ecosystem becomes way more bidirectional.

Balthasar Wyss: It's not just hey, put that bottom up on your website and then, at the end of the day, we'll give you a few dollars if somebody buys a book from us. It's way deeper.

For example, partners help a vendor to understand their prospective customer base, to help them get the strategy, how to deploy it, and those kinds of things.

These are sort of the few trends that I'm seeing.

The last point I want to make is this no surprise that more recently people started talking about partner ecosystems or the Chief Ecosystems Officer at a company.

Where we look more from an ecosystem perspective, holistically, as opposed to just sort of a point solution we’re engaging with.

Paul Bird: You mentioned Microsoft. I worked for a couple of Microsoft Gold Partners, pre-co-sell.

It was left to us, as the reseller, to take discovery through to closure.

I can think of some, you know, sizeable opportunities that I was involved with where a co-sell model would have brought more authority and probably moved the deal along a lot quicker.

It's interesting that you notice that trend towards more co-sell.

I saw it on the other side when I worked in the channel because it became a little bit more difficult to onboard all of our staff to educate them, teach them, and get them to produce revenue.

It looks like that co-sell model really did work out for Microsoft.

Balthasar Wyss: Yeah, and even before, they had the co-sell model, back when I was in my last role at Microsoft (I had different roles) and in the last role I was in the partner organization.

This was 2008- 2010-ish when the cloud became big, and we really had to, in some ways, disrupt our channel.

Before you had software licensing models. Partners would get three years upfront, or cuffed at a fairly high percentage on a three-year license model to the end customer.

And then the cloud came and things changed radically. Microsoft is one of the most channel and partner-oriented organizations.

We have to bring over 100,000 partners into a new world of the cloud, with new engagement moments.

It was very disruptive. I mean, look at distributors – what is the role of a distributor today versus what it was 15 years ago? 15 years ago, they had warehouses and the software was on CDs, and books from Microsoft

That's not the real world today in the cloud.

And so, it's quite interesting, how dynamically things changed in the world with the cloud.

And generally speaking, as people move more online.

Paul Bird: You mentioned that when we first met.

You mentioned it's important to look back at our past in order to move forward.

So, is that the thought behind it? Is there anything else from the past that you'd recommend channel chiefs pay attention to?

Balthasar Wyss: Yeah.

I always think it's helpful, whether that's in your personal life or your business life. If you put things into context if you take a step back and say, You know, where are things today?

What is different from maybe 10 years or 20 years ago?

What might happen in the next five years?

Balthasar Wyss: Although sometimes it's very difficult to predict what's going to happen and so forth.

So building context, I think, is helpful.

And if I would have to name one thing that I think is truly looking backward and forwards.

The theme that I think is critical is working backward from the customer.

Balthasar Wyss: And what is ultimately the customer experience?

And then, how do partners drive customer experience?

And that leads then to the next question: What kind of partner experience, do you want to provide?

Is this just, you gave me a lead and I'll give you a bounty engagement?

So very, simple, straightforward, commercial arrangement or you try to understand each other's strategy so that you really build engagements with these partners.

And, also understand their experience.

What are they going through? What do they need to be successful? And so on.

I think that is even more important.

We talked about, the expanded scope of partners and with this expanded scope and engagement with partners, the experience becomes much more important.

Paul Bird: For sure. As we kind of look at the future of partner ecosystems, and we look at the changes we need to make, what are some of the common missteps that you think channel teams might make when they're executing their ecosystem approach?

Balthasar Wyss: The first thing I always see, is that partners are often seen just very tactically. Very narrow.

It's just, I need some integration because my customers use all the systems as well. Or, I need to grow my revenue, so let's sign up a few partners who can bring new leads. Very tactical.

Balthasar Wyss: And I think what's really critical going forward, is to think more strategically on how do you build a partner moat?

I’ll give you an example, I used to work at Avalara, which does tax compliance; helping people with the transactions to calculate the sales taxes, or whatever the tax type might be, and then remit those sales taxes to the government.

It is a company who are extremely focused on the channel.

Early on, this was even before my time, we built an incredible partner channel. We looked at this as building a moat.

Meaning not just to enable integration, you need to do that too. Avalara wouldn't exist without a transactional system, whether that's an ERP or an e-commerce platform.

So we needed that too, but we then said, wait a second.

All these transactional lenders could also be our go-to-market partners. What kind of engagements do we want to give them so that people or companies pick Avalara?

And we did a really sick men-specific approach and strategy that was very well thought through.

But the outcome was this we outgrew the competition massively.

When I joined in 2013 or so, we were a third of the revenue of the market leader.

When I left, we were over two times as big as the leader. We completely outflanked the competition, because we went strategically about this and built a partner ecosystem, that was sustainable, that was with us, and then we had a real big moat.

So it was very difficult for anybody else to break into that system.

Paul Bird: I like the concept of calling it a moat, because of the visual aspect of it, being completely surrounded by all of the people that are helping you grow.

Balthasar Wyss: One thing on this moat theme.

If you think about this product, it may be a moat for a period of time. But very few companies build a moat with a product.

Google might be one of the exceptions, for example, with their search engine.

There are so far ahead of everybody else, including what they do now with artificial intelligence, and so forth.

But many other companies that the product is over time are not necessarily a moat. All other companies can innovate as well and I have experienced this myself. I worked at Netscape.
And I worked at Realnetworks and Dell. Arguably they had the better product compared to Microsoft. But both companies got out-competed by Microsoft because they had a better business model.

Product often is not a sustainable moat. Partners can be if you do it the right way and if you provide a great partner experience and are rightful to use partners. Over time it can be a competitive differentiator to compare with other companies and competitors.

Paul Bird: Interesting.

So as you talk about this makeup of your partner ecosystem, one of the things that people have always said is that you have to be able to identify and recruit the ideal partner.

So how does that approach to an ecosystem level where you may have so many different types of partners filling that moat?

Balthasar Wyss: That’s where segmentation comes in. There are multiple segmentations that need to happen, in my mind.

So first, what are you going to do? That goes back to the comment about starting with the customer experience.

What's the buyer journey? In the enterprise space, it's completely different than in the mid-market, or at the lower end.

I'll get back to that in a second, but that's just one of the segments.

The other way you can go is obviously geographically.

How do you expand?

Let's say you start your company in Canada, where you are based. How do you expand?

Do you build a beachhead with partners and then validate your model? Or do you go into Asia and Europe and other parts of the world as in geo-segmentation? It is very helpful. But how do you tackle that?

And then the third thing that comes to mind is segmenting by partner type.

What kind of partners do you fundamentally need to be successful?

Is it more, on the technology side you need to integrate with a lot of different systems? For example, Avalara, later expanded into the accounting space. And I happened to lead that team at the end of my tenure there because accountants do tax compliance for businesses.

So, what kind of partner types do you need, whether on the technology side or more, on the sales and marketing side is another sort of segmentation that I think you want to go through.

I think it's important that you understand the environment that you're operating in. By that, I mean, where your customers ultimately are.

So how you go about this?

The company I work for right now, for example, we are purely U.S. based. We don't have any partners really outside of Europe.

We're getting there for some data. Partners that provide this data are useful.

So we focused on U.S. market and built that up. But that's not true for many other companies, because they are global in nature.

Paul Bird: Absolutely.

And in my background managing channel, we basically did our channel management locally in Canada and the U.S.

And then we used value-added distributors (VARs) globally, so we could spread our footprint.

And that was a model that really worked for our software platform.

To be able to have that kind of regional representation and give people the ability to get localized support and things like that.

So I guess that was kind of an early ecosystem 20-plus years ago.

Balthasar Wyss: Yeah.

What I always recommend people do, is sort of build a channel, or a partner ecosystem map. Really map it out.

How do partners get the customer? How do customers purchase? How did you get trained?
How do they engage in which parts of the world? What do they need in terms of the products and services that you offer? Again, is it just a simple integration? Or do they need more than that?

So it’s building an ecosystem map and then updating it on a regular basis because you might expand your product or your services might shift in a different direction or your audience might shift.

Another good example, if I go back to Avalara, is where we started the mid-market. There the strategy was all about dominance. Market share and never lose a deal discount if you hire and so forth.

Therefore you wanted to have a lot of referral and resell partners.
But then they expanded into the enterprise and in enterprise, the strategy was more opportunistic.

The platform wasn't 100% ready for some enterprise functionality, and also, there wasn't too much implementation work to be done.

So we expanded more on the accounting side into the enterprise market.

And similarly, on the lower-end, where we expanded it, that's more of a defensive move to avoid disruption from the low end.

So we started working with the likes of BigCommerce and Shopify, and other transactional systems.

And we figured out that, you know, they might be not as much money as in the mid-market and enterprise.

Therefore, we had a different go-to-market strategy, where we simply just integrated our functionality or parts of our functionality into Shopify or into Big Commerce, and sort of had an OEM-type of relationship.

So that's what I mean, we're building a whole map, of your segments, a specific map of your partner ecosystem.

And then, regularly review and adjust it as you learn as you move forward.

Paul Bird: That's kind of a different way of looking at a channel strategy or an ecosystem strategy, is to really look at it like a map.

It allows you to visualize the concepts and practices that you should be engaging in.

Balthasar Wyss: One more advantage, in my mind, is that it helps you prioritize.

You have this big map now. If you take a comparison, a world map, you can’t travel to all countries at the same time.

So you can engage with all the different types of segments, at the same time.

So a map, if you have sort of a holistic view, you can say, OK, what is most important for the next six months?

What is next in importance, over the next year or two? And what's more long-term?

It helps you prioritize along.

Paul Bird: Definitely shows your background from a strategy perspective working at Microsoft.

And basically what you're saying from Avalara is that the best way to defend yourself is to have a good offense to make sure that you're taking as much business as you can off the table and away from your competitors.

So let's talk a little bit more about how people can thrive in this age of ecosystems.

There was a report from IDC back in 2021 that said, 30% of partner-to-partner engagements would involve more than two parties.

So when you're talking about going after a customer, 30% of the time, we're going to have more than one partner inside of that sales process.

How do you think vendors can encourage collaboration across their ecosystems?

Is there any way to innovate or spark collaboration between members of the ecosystem?

Balthasar Wyss: Great, great question.

I think the first thing I would say is, why is that?

Why do you have suddenly two, three, maybe even four partners involved with the same customer?

That's incredible because before you usually have one partner bringing you a deal or integration.

And now suddenly we want a particular customer but now you have three or four partners involved with the same account.

And that's stunning.

I believe the reason for that is the proliferation of SaaS applications.

If you look at statistics like a mid-sized company, or enterprise, how many SaaS applications do they use daily? It's dozens, if not hundreds.

So what does that mean?

First of all, you have to make sure you work nicely with all these other applications, or at least with a subset that are relevant to your own solution.

Which is why you see so many companies shipping APIs so that you can integrate them into all these different solutions.

That is what I mean about starting with the customer.

Customers have dozens, if not hundreds of subscriptions to all sorts of services.

They might use Salesforce for CRM. Then they might use HubSpot on the marketing side, or Zendesk for ticketing, Airtable, for development and onboarding, and so on.

This is, in my mind, the reason why you often have multiple partners involved with the very same account.

Now, to your question, how do you address this knowing now that it's often not just one partner but multiple partners in the equation?

I think it becomes critical to have what I call a partner community.

So that you as a vendor, don’t just keep Partner #1, #2, and #3 separate, but you bring this community together somehow.

That could be many ways. You could have a partner newsletter.
You could do gatherings where you bring all partners together at an event. Let's say, you do webinars and training whatever that might be.

But that you build a community, mindfully and proactively so they all see, oh, wait a second. I'm not the only partner here.

There's a Partner #2 and a Partner #3, and #4, and it's actually beneficial if I understand what their role and function is in relation to an outcome.

So, this idea of a partner community and building that, seems to me to be, as a vendor, really vital.

Paul Bird: But they used to call it partner conflict, right? They would think that partners were fighting. The thought was, let's keep both partners on an island. We don't want two people fishing in the same pond.

And it seems like the ecosystem now has completely reversed that. When it comes to you're not encouraging conflict, you're encouraging collaboration as opposed to worrying about channel conflict.

Balthasar Wyss: Totally spot on, Paul.

Paul Bird: One of the things where we started was you talk about, these new concepts when it comes to things like co-selling and collaborating.

We talk about building this community of partners, so any other concepts, you think, that channel leaders should really consider as they're developing their ecosystems and getting them to thrive?

Balthasar Wyss: I mean, the one that comes to mind, is so basic it's sometimes lost. I see this quite often, which is, people just think because I have a need to work with a partner, because that partner might have a platform I need to integrate with. Or they have a great customer base, I want to tap into.

But me as a vendor, I'll think, because I have a need, they also have a need.

And that's not always the case.

Understanding what value you bring to the table to these partners, is absolutely critical.

I literally have seen it, where people would run against the wall and say, hey, why are you not partnering with us? We have such a fantastic solution.

But these partners don't understand what you're doing. They’re asking, why would I spend resources on you, as opposed to many other things?

Balthasar Wyss: The very basic idea of being clear – what is the value you bring to the partner as opposed to the partner, to you? And that despite a directional understanding is absolutely fundamental, in my mind, to make things work.

Sometimes you have to just realize and admit to yourself, probably not a good match here.

I gave you the example of Avalara where some people internally said, we should sign up Infosys and Wipro and Accenture – all these big guys who do the big implementation.

But the matter of fact is that almost all implementations, back when I was at Avalara were super easy, maybe, a few hours, maybe a few thousand dollars.

Why would Accenture invest in a business like that?

Having this realization that maybe that partner type - these big SIs – changes; it becomes a more mature platform and everything.

But back then, it was just really relevant. Having that courage to say maybe in 5 or 10 years from now as you build out our platform and make it more versatile, and deeper, maybe at that point the global SI plays an important role, but today it doesn't.

It's also really key to understand that, not every partner is necessarily a good partner that you want to work with at a given stage.

Paul Bird: So let's take it even further. PartnerStack says that competitors are now colleagues.

So what are your thoughts about also going a step further and collaborating with your competitors?

Balthasar Wyss: First, let's define what usually is meant by a partner stack.

The partner stack at least, where I use it, and the people around me is that it will be the systems and solutions you use internally to manage those partners.

We said the scope is broadening how you engage. Now you have to do to think about how you train those partners.

What kind of certification management do you have? If you have certificates.

Gold partners, Silver partners, Platinum partners, and so forth.

Then questions like, how do you pay them? How do you manage partners from a payment perspective?

Particularly if you have different go-to-market models. In some cases, you might share revenues.

In other cases, you may just pay a one-time bounty and on and on and on, and then different percentages.

Balthasar Wyss: You need a partner system to manage that as you scale up. And it goes on and on.

How do you manage leads? How do leads flow into whatever CRM you use? Is there somebody there for partners?

Normally that is what is meant by partner stack.

What internal technology do you use to scale your partner ecosystem and engage with them?

What’s critical, is what often is not used is an underlying notification and an alert function, so that you can reach out to your partners. I’ll give you an example from back from my Avalara times.

We developed an alert that so if a partner brought three deals or more in a given calendar year, they will get a higher commission rate. They had to bring in three deals or $25,000.

Balthasar Wyss: And so we said, well, wouldn't it be cool if they brought us a second deal and automatically sends them an alert to say, hey, guys, you’re one deal away from moving up in your payment schedule.

That's like Delta Airlines, sending you an e-mail to say, hey, 2,000 more miles, and you have gold status, why don't you book a flight with us?

That's what we mean by a partner stack, and I'm not sure if your question is related to that.

Paul Bird: If we go beyond now, where we were now encouraging our channel members, people that are in our channel, to collaborate together?

Do we take this a step further and start collaborating with our competitors in the space, too? Looking at the companies that you were dominating at Avalara, do you go and start collaborating with people that may be competitive, but potentially don't fill an area where there they fill a gap that you don't?

Is there a purpose to extending that ecosystem to also include your competitors?

Balthasar Wyss: A few fourths there.

First, I'm sure it exists, that you do deep collaborations with your key competitors. I have seen it, very rarely, work.

And that goes to the principle, number one. I learned it when I was at Microsoft, in the business development area, where we did global deals (now the Microsoft Teams group).

The number one predictor of whether something will be successful (a partnership over the long term or strategic alignment), competitors, generally speaking, are not strategically aligned.

Balthasar Wyss: Because otherwise, they wouldn't be competitors; it violates that principle. And I'll give you an example, from Microsoft Teams.

Early on, we wanted to go against Avaya, Cisco, and Nortel, who back then used to own enterprise telecommunications and all the web conferences.

We were very deliberate about having a mindful strategy. We said, sure, we can try working with either a JV with Nortel or an investor like Honda Million, and it didn’t go anywhere because, again, Nortel ultimately wanted to call control as well.

And so there was a complete aspect that didn't work well.

What did work well is partnering with companies, think of Logitech, Chhabra, and Polycom – these partnerships still exist today.

Why? Because there was very good strategic alignment.

They didn't necessarily want to control the desktop, but they wanted to ship great conferencing, phones, and other types of endpoints.

So it was a fantastic strategic fit. Polycom together with Microsoft, sold millions of devices, into thousands of companies and businesses that use Microsoft Teams to this day.

And this is 15 years later. Strategic alignment is really critical.

Now, can it work that you work with competitors? Yes.

But I think then becomes critical is what you said between the lines, which is, they must have something you don't have.

So they fill the gap that you don't have.

And then, you can say, OK, let's bring that competitor in because let's say we don't have this feature or this functionality, or we don't cover that market or whatnot.

So then I can see it happen.

But it's not easy if you aren't strategically aligned.

Paul Bird: And I'm sure there are a number of Channel Chiefs right now that are shaking their heads and would never, ever collaborate with a competitor.

But one of the things that we are seeing is this emergence of a new role a the company is a Chief Ecosystem Officer.

Do you think that will replace the channel chief, or do you think it will be somebody that will work with the channel chief? How do you think those roles will be tied together?

Or, do you think it's simply an evolution that the channel chief will be the Chief Ecosystem Officer?

Balthasar Wyss: Yeah, I'm more in a camp of evolution.

And for me, I get this question asked in some different ways sometimes.

For me, what's really critical is not the title.

Is it the channel chief, or the Chief Partner Officer, or Chief Ecosystem Officer? Whatever it is, what’s much more important is two things.

Number one, where's the board and the executive team, the CEO in particular, sitting? Do they understand the partner ecosystem and partners and channels in general?

Do they look at this as a moat building, as a critical part of a go-to-market strategy, or is it more because I need to end the quarter with two million more? And get some more deals tactically?

That's one thing.

The other is where's the board and what's the experience of the board? And the CEO as far as part of the challenge because if you have that support, everything else flows from there and it's so much easier.

Avalara is again a good example. So is Microsoft.

There is an inherent understanding that partners are vital, and not just as lip service, but they are truly vital to the business.

Therefore, we invest in it, we believe in it, we are in it for the long term, and so on.

The second piece is executive input to put a stake in it, is really critical.

When I say executive, I mean also the board.

The second piece is organizationally, how does the organization fit into it?

Is it just sort of a low-level function somewhere deep down in the marketing? Then I can guarantee you, it's mainly used as a lead gen source or is more of a top-level function.

That’s typically reporting into the CEO, or at least into the Chief Revenue Officer.

What's the reporting structure and the organizational position of the partner?

These are way more important things in my mind as opposed to the exact title of the person who leads that at all.

Paul Bird: Absolutely.

Measurement of success, what are the key performance indicators that you would suggest to measure the success and engage the health of the ecosystem?

If we get through the tactical side and we built the moat, how do we know it's working?

Any recommendations on the types of metrics people should be monitoring?

Balthasar Wyss: There's a bit of confusion sometimes in the marketplace and in this community about what is what. You often hear partner-influenced versus part-sourced versus partner-driven or partner-managed.

I think for every organization, the first thing you want to do is you want to define those.

What does that mean?

Partner-influenced in my mind is sort of the lowest level. That's just a partner might say, hey, check this vendor out, we’ve heard good things about them.

Partner-sourced will be the next thing. And then obviously, you have metrics around those.

Partner-sourced means they bring you a deal, and include you in that deal, possibly all the way.

Co-selling, that's very partner-driven, then comes in; where the partner drives the whole engagement, and you just go along the ride.

And then, finally, partner-managed, as it's more when you sell through the partner and they manage everything; all the rest.

So that's when I first want to say there are often terms, used a little bit differently. I'm not saying, the way I described, is this the right way. That's just one way of describing it.

Now, to get to your question, you then have metrics around these different motions– influenced, sourced, driven, and managed.

And I could go on for hours describing the different KPIs used.

You can start at the top level. What's the revenue contribution to the total revenue, brought in by partners? So looking at the total revenue of say $100 million, and in the spring $30 million, that means they are 30% off the top.

So that's one statistic that's really important.

Rather than sort of rattling down to all the different KPIs.

What I find one of the most interesting KPI or metrics that predict success is your understanding of the partner organization and how many of those you have trained and are familiar with your solution.

We tracked this and multiple companies specifically, at Avalara. And you have a similar concept to Microsoft, where you can be certified in Azure or whatnot.

What's really critical, is that they understand what you are doing.

That one metric, I think, is really critical to measure whether you will be successful. If they on the partner side, understand your solution and they might be even certified in it, they can talk to it, it's a totally different level as opposed to them.

Balthasar Wyss: Like, yeah, I have heard of those guys, and maybe I give them a lead here or there.

I didn't comprehensively answer your questions around KPIs, but there are so many. Start at the top level, the revenue contribution.

On more of a tactical level, I believe it's very important to measure the know-how and understanding, and familiarity with your solution.

Paul Bird:
So you've shared some really great advice today.

What do you think are some of the challenges an organization would face if they simply don't adopt a partner ecosystem? What pitfalls do you think they would fall into?

Balthasar Wyss: Well, first of all, they might miss opportunities.

Have a simpler start. I remember a colleague of mine back at Avalara whom I have tons of respect for.

He said, in the internet space, you don't need partners anymore, it's all about direct because you know, you can reach everybody directly.

And maybe that's true in a super idealistic world where you have a huge database of millions of businesses. And you just e-mail bombard them.

But that's where our trouble starts because these e-mail campaigns typically don't work, and the success elements of his e-mail campaigns can be super low.

You need to have a deeper engagement in it.

You might miss an opportunity that's in the start. But also, this goes to the previous point, you might miss on building a partner moat.

What's really critical for long-term businesses is to have a moat as a differentiator.

And I'll give you an example. At Avalara, when I left, over 50% of net new deals were from partners. And that's just unbelievable.

And that's true for other companies as well – where they built that moat.

We knew that some of those partner deals came to us where the competition even didn't know about this, because they didn't work with partners.

So build in that moat is another aspect.

And then maybe the last point I want to mention here is learning.
Policy can really be your source.

If you do it the right way, that can be a source that you will learn from the marketplace in a very scalable way. Because partners get exposed to lots of prospects and customers whereas you may not have a relationship with them.

They might come to you and provide you useful feedback where they say, look, this product doesn't fit the following scenarios; it's not a good fit for these customer segments.

We hear this. So learnings from the partners.

I find sometimes, it is underestimated because there are so much insights partners can bring to the table.

Just alone for that reason, it's worthwhile engaging partners.

Paul Bird: Well, this has been a great conversation, and I appreciate all of the advice you gave us today. It was fantastic.

Thank you Balthasar it was a pleasure having you on the show. And thank you again for your time.

Balthasar Wyss: Thanks, Paul for having me, and you do great things. I really appreciate you giving me the opportunity to talk to you today, and to your audience.

Paul Bird: It's a pleasure to have you. Thank you so much.




Introduction
Guest Intro
What does today's channel ecosystem look like?
What are some noticeable trends in the partner ecosystem space?
Is there anything from our past that channel chiefs should pay attention to?
What are common missteps you think channel teams might be making when executing an ecosystem approach?
Often you hear the advice, "Identify and recruit your ideal partner". How do we go about recruiting these different partner types?
How can vendors encourage collaboration across their ecosystem?
What new concepts should channel leaders consider with regards to co-selling and collaborating on deals?
PartnerStack says, “competitors are now colleagues”. What are your thoughts on collaborating with competitors?
A new trend is the emergence of “Chief Ecosystem Officers”. How will they replace or work with channel chiefs or are their roles tied together in any way?
How can vendors measure the success of their ecosystem and strategy? What are the most important metrics today?
What challenges will you run into if you don't adopt a partner ecosystem?
Conclusion and Balthasar's key takeaway on partner ecosystems