Should Tech Partner Teams Report to Product or Revenue?
Nikita Zhitkevich lives in the world of partnerships. He leads partnerships and alliances for PartnerStack, which is a leading PRM and partner marketplace.
Nikita shared his insights on when you need a PRM, identifying your ideal partners, strategies to avoid channel conflict, and how he sees the partnership landscape evolving over the next 5 years.
Can you tell me about PartnerStack and what makes it different from other PRMs?
As a graduate of Y-Combinator, PartnerStack has been rooted in helping some of the world’s fastest growing SaaS companies scale. Companies like Asana, Monday.com, Unbounce, Intercom, and Intuit all use PartnerStack to manage and scale their partner programs, and onboard thousands of partners into our platform.
There are a few unique aspects to PartnerStack, which has led us to becoming the #1 platform on G2.
PartnerStack is the only solution that has both the PRM and a B2B focused marketplace that connects vendors with partners. On average, our marketplace drives a 30%+ lift in revenue for customers.
We are extremely focused on partner experience, which is a big distinction for us. Most PRMs are focused solely on the vendor experience. But if both sides of this equation are not having a good experience, then it becomes a problem.
And with PartnerStack, all of your channels can be managed from a single platform - affiliate, referral, reseller and ambassador. We see a lot of companies, agencies, and resellers choosing our platform to help them consolidate their channels into a single view.
How is your partnership team structured at PartnerStack?
Our team is still relatively young, as we launched it in April. The majority of this year has been building relationships and working with both agencies and resellers.
I lead the team, and we have an incredible Account Manager that works closely with our partners, as well as a partner marketing manager that works on any co-marketing efforts we run with partners.
Our partnership team is currently focused on two core areas:
First, working with agencies and resellers that are currently reselling SaaS vendors, bringing those vendors onto PartnerStack.
Secondly, working with agencies and resellers that are looking to shift their existing customers onto a modern partner management solution.
We often work with sales when one of their SaaS prospects wants to launch PartnerStack right away but doesn’t have the internal bandwidth. In those cases, we connect them with an agency partner who we know can do it right away and do it well.
Technology partnerships are also on our radar. We have recently built a number of integrations. One of our goals in 2021 and going into 2022 will be to further build out our technology partner program and our own integration marketplace.
We also plan to enter the app marketplaces of other SaaS vendors, especially CRMs like SugarCRM or Hubspot. CRMs are good partners for us because, with the exception of Salesforce, no CRM has a PRM as part of their product offering. So our software is complementary rather than competitive. And it benefits our customers to have those systems integrated.
“If you’re planning to scale your partnerships at all, you need the infrastructure in place to do this.”
What advice would you give for organizations trying to think through who their ideal partners are?
Ultimately, everything has to come down to revenue. Whether you’re pursuing referral, reseller, or technology partnerships, you have to tie them back to driving revenue.
Especially since you need the support of other departments in your organization, whether it is collaboration with the sales team or the product team to help build integrations, the benefit to the business needs to be very clear.
For agency and reseller partners, I would advise looking to see if they power similar products to yours. I’d also think about whether the partner will continue to evolve over time in the direction you are going and whether they truly understand your product and space.
When a SaaS company plans to scale their technology partner program, they face a core dilemma: whether the tech partner team should report to Product or a revenue-focused department, like Marketing or Sales.
With the exception of managed service providers or implementation partners, who may be focused on supporting the product, channel and affiliate partnerships are all about driving leads and sales. As a result, channel and affiliate partner teams naturally report to a sales or marketing executive.
However, technology partnerships do more than drive revenue and acquire new leads. They also enhance the functionality of the product and improve the customer experience.
Because of their shared goals with product and their reliance on product and engineering to be effective, technology partnerships may be better suited to reporting to Product.
So which structure is better and how do you decide? Let’s look at 6 factors that should frame the decision. But first, let’s examine who is on a tech partner team in early and mid stage programs.
Early Stage Tech Partner Program
When a partner program is young, technology partnerships are usually managed in an ad hoc fashion. A Partner Manager usually works with a product manager, engineer, and marketer to execute on the relationship.
When a program is first launched, tech partners are most likely handled by a person who is also managing channel partners. This person usually reports to the CEO or a revenue executive. Part of doing the job well requires working with product and engineering, and partners’ product and engineering teams.
Here is what the structure usually looks like in the first and second step.
It is unusual to have tech partnerships reporting to Product at this stage, as it is most likely Product is heavily focused on developing the core product and does not have the bandwidth to attract and sign tech partners, or to optimize the go-to-market side of tech partnerships.
An exception might be if a company does not have any people in partnerships but still needs to build product integrations. Some companies need certain keystone integrations to be sold into a market, and they may not be pursuing channel partnerships yet.
In that case, Product and Engineering might build these keystone integrations as a product requirement needed to close deals. These technology partnerships will be heavily focused on building and supporting the integration, and very little on co-marketing and co-selling opportunities.
Mid Stage Tech Partner Program
Regardless of whom the tech partner program reports to, when it is a mid stage size, it should have, at a minimum: tech partner program managers, partner marketers, developer relation associates, a product manager, and engineers.
This team will also have to work with the marketing, sales, product, engineering, and customer success teams. The nature of those relationships will depend on where the team reports and its core objectives.
This team can report to revenue executives (a Chief Marketing, Chief Sales, or Chief Revenue Officer), or the Chief Product Officer. More unusually, there might be a Chief Partnerships Officer in the C-suite which oversees both tech and channel partnerships.
6 Factors For Deciding the Tech Partner Team’s Executive
Once an organization decides it wants to seriously pursue technology partnerships, it has to decide whom the team should report to. There are 6 factors to consider when you make this decision.
Strategic Goals for Your Tech Partner Program
The first step is to crystalize your strategic goals as an organization and for your tech partner program. Most tech partner programs are designed to grow revenue and enhance the product. But different organizations view those objectives as more or less important.
Consider the following objectives for technology partnerships.
Attracting new leads - Prospects can discover you in the integration marketplaces or products of your partners. Co-marketing with tech partners will expose you to new audiences.
Influencing Revenue - For prospects, integrations can be deal breakers, requirements, or of significant value. An integration with a tech partner might be a significant or deciding factor in closing deals.
Direct Revenue - Prospects might purchase your product through your partners’ integration marketplaces or because of their recommendation.
Higher ACV - Prospects might be willing to pay more because of integrations.
Customer Loyalty - Integrations can increase customer retention and referrals.
Brand Equity - Raising your profile in your ecosystem through co-marketing and being present in your tech partners’ website and products can increase your brand equity.
Product Adoption - Integrations might cause your customers to use your product much more frequently and to use more features.
Retention - Integration usage usually increases customer retention by at least 15 percent.
Customer Satisfaction - Integration usage can improve the product experience and customer satisfaction as a result.
Increased Functionality - Integrations can improve and increase the functionality of the product for fewer dev resources.
If your objectives with your tech partner program lean more toward product objectives, then, other things being equal, the team should report to Product. And vice versa if your goals are more heavily tilted toward revenue objectives.
Product or Sales Led Growth
Closely related to the objectives of your tech partner program, you should consider the growth strategy of your organization as a whole.
In general, more organizations are adopting a product led growth strategy. This approach focuses on getting prospects exposed to the product as soon as possible and letting them explore the product rather than emphasizing trying to pitch them value in a sales process. It also entails focusing on growing through retention, upsells and referrals by giving customers a great experience using the product.
Due to the fact that they enhance the functionality of the product, tech partnerships can fit well with a product led growth strategy. If this is your organizational ethos, it makes sense to have the tech partner team report to Product. With this structure, integrations can be continuously improved and refined to better align with how customers want to use the product.
Complexity of API and Product Integrations
The more complex your API and product integrations, the more you will regularly need product and engineering resources to be successful. Whether you are building the integrations or your partners are, if you have a complex API, you will need to work closely with third party developers to ensure that the integrations work as intended and meet the needs of customers.
You will also need to ensure integrations are supported and updated when product changes occur. API updates and updated documentation are key to a good third party developer experience and a positive customer experience.
While a tech partner team should have a product manager and engineers on it, the more complex the API and integrations, the more the team should report to Product. This ensures that the product roadmap and API remain in alignment, and that integrations are able to evolve seamlessly alongside the product and other products in your ecosystem.
In contrast, if you have a simple API and integrations, then you will need far fewer resources from product and engineering, and can focus more heavily on the go-to-market side of tech partnerships.
Size of Your Tech Ecosystem
Some products, like CRMs, e-commerce platforms, or ATSs, have a very large tech ecosystem around their products. The number of systems that could be beneficially integrated with them is very high.
Other products, like online courses or e-gift cards, may have many fewer potential technology partners.
If there are not many potential integrations that will benefit your customers, then there will be fewer engineering and product resources needed on an ongoing basis. In those cases, tech partnerships can report to revenue executives and be more heavily focused on co-marketing and co-selling.
Very large ecosystems require extensive product and engineering resources to be effective. They also, however, can drive a large amount of revenue through coordinated and programmatic co-marketing and referrals. As a result, having a very large ecosystem does not impact whom the team should report to.
Internal Knowledge and Leadership
When a tech partner program is growing, an organization already has an existing team in place.
An important consideration in setting up a reporting structure is who in the organization understands technology partnerships, has experience scaling them, and is passionate about their value. Another valuable trait in a partnerships leader is the ability to successfully work across departments.
In any given organization, it might be the Chief Product Officer or it might be the Chief Marketing or Revenue Officer who has the most experience and passion about tech partnerships. A seasoned leader is extremely valuable in partnerships, and, even when there are reasons pointing the other way, it is a compelling reason to have the team report to this person.
Internal Resources and Communication
Effective internal communication is crucial to the success of partnerships. Tech partnerships must work with product and go-to-market departments, no matter where they report.
If your organization has poor internal communication and heavily siloed departments, tech partnerships should usually report to Product. Tech partnerships who lack engineering and product resources will fail to drive revenue or product KPIs as integrations that do not work well will not satisfy customers or partners.
Lacking marketing and sales resources is a wasted opportunity for tech partnerships, but an organization can still derive value from the integrations if they work well and are supported from a technical perspective.
In addition to silos, consider what resources will be given on each team. If a tech partner team will be reporting to Marketing but have three full-time engineers and a product manager, they might be more successful than reporting to Product with only part time engineering resources and minimal marketing resources.
When deciding where a tech partner team should report, you should consider all 6 of these factors. While they all have an impact, if you have factors pointing in different directions, aligning revenue vs product objectives and having a seasoned leader are the two most important factors. And if you do have a seasoned leader in your organization, they can ensure that a tech partner team has objectives and a reporting structure that aligns with the strategic objectives of the organization.