How do companies with successful channel marketing programs increase customer lifetime value by 150% while decreasing the cost of customer acquisition by up to 75%?
This week onThe Inbound Success Podcast I'm joined by Bryn Jones, the CEO of PartnerStack - a SaaS platform that enables companies to build and manage partner channel marketing programs.
PartnerStack's clients range from startups to publicly traded companies like Intuit and Shopify. What they all have in common is channel marketing, and the insights that Bryn has gained by working with them have made him an authority on what it takes to build a successful partner channel.
In this week's episode, he talks about the types of companies that are a good fit for channel marketing (TL;DR - it's just about everybody), when to start a channel, what it takes to build a successful channel, how much it costs, and what kinds of results you should expect.
This week's episode of The Inbound Success Podcast is brought to you by our sponsor, IMPACT Live, the most immersive and high energy learning experience for marketers and business leaders. IMPACT Live takes place August 6-7, 2019 in Hartford Connecticut and is headlined by Marcus Sheridan along with keynote speakers including world-renowned Facebook marketing expert Mari Smith and Drift CEO and Co-Founder David Cancel.
Inbound Success Podcast listeners can save 10% off the price of tickets with the code "SUCCESS".
Some highlights from my conversation with Bryn include:
PartnerStack helps companies grow through partnerships by providing the technology layer that enables them to build a partner channel marketing program.
Approximately 30% of the software sold every year is sold through channel programs.
Partner channels are the best way to get in front of the late adopters and laggards in the market, which is the majority of the market.
Bryn believes that partner channels can work for any type of business.
The best way to start a partner channel is to identify four different potential types of partners, and the work with ten companies in each category (so 40 total). From that initial 40, you will be able to identify which category is the best fit for your business.
Companies with partner channels, on average, have customer lifetime values that are 1.5 times higher than those without channel programs.
When it comes to partner incentives, start with basic recognition (ex. thank you notes). When you're ready to scale up, cash rewards tend to work better than coupons or gift cards.
HubSpot, Shopify and Intuit are all companies with best-in-class partner programs.
Bryn says that companies that have partner programs aren't selling an opportunity to earn a commission. They're selling an opportunity to do business.
The most successful partner channels aren't selling incentives, they are selling value that the company (that offers the partner program) can go through and then provide to the partner.
When creating a new partner channel program, start by building out a portal and automating communication with partners. Make sure to create case studies about your partners' successes.
Companies with $3 to $5 million in annual revenues are generally a good fit for starting a partner channel.
If you're serious about doing this, and doing it well, be prepared to hire a dedicated full time person to work on your partner channel and give them at least six months to become successful.
The typical partner channel program can increase customer lifetime value by 150% and decrease the cost of customer acquisition by up to 75%.
Resources from this episode:
Save 10% off the price of tickets to IMPACT Live with promo code "SUCCESS"
Listen to the podcast to learn more about what types of companies are a good fit for channel marketing, when to start one, and what the specific characteristics are of the most successful partner channel marketing programs.
Kathleen Booth (Host):Welcome back to the Inbound Success Podcast. I'm your host Kathleen Booth, and today my guess is Bryn Jones who's the co-founder and CEO of PartnerStack. Welcome Bryn.
Bryn Jones (Guest): Hey how are you? Kathleen, how are you?
Bryn and Kathleen recording this episode
Kathleen: I'm great, thanks. How are you doing?
Bryn: Good, good. I'm in California today, so doing some last minute travel right before the year ends, getting in front of customers.
Kathleen: Nice. The last minute hustle. Hopefully you get to wrap that up soon and have a little down time for the holidays.
Bryn: Yeah, yeah. No, it's ... I mean, that's the great thing about enterprise software is it's pedal to the metal, but the holidays does leave a little bit of time for people to rest and recuperate, so looking forward to getting back into the office next week and putting a solid plan together for next year.
Kathleen: Yeah, it sure beats being in retail this time of year.
Kathleen: So before we jump into our conversation for today, tell our audience a little bit about yourself, and about PartnerStack, and what it does.
Bryn: Yeah, perfect. Yeah so PartnerStack, we're a three year old company.
Three years ago we got into a business incubator called Y Combinator. We went in as an idea, and we came out as a semi-functioning product.
But what it is that we do is we let companies grow through partnerships. What that means is we're the technology layer that lets companies go and build partner or channel programs.
So an example of this would be Intuit. They drive about 20% of their revenue through accountants, bookkeepers, and financial institutions. Except this whole process is incredibly challenging to 1) manage, and 2) actually ensure that it's in fact successful.
We're the layer of technology that lets marketers get back to being marketers, and get away from being administrators.
Kathleen: I definitely feel like it shows that you went through Y Combinator, because you have your value prop and pitch completely nailed down, which I know that gets drilled into you when you go through these incubators and accelerators, that being one of the, obviously the most famous ones.
So what led you to wanting to create the solution? Was it something from your background or experience? Did you see that pain point?
Bryn: Super interesting. So my other founders and I, we actually built another company while I was in graduate school. The company was like Slack, except it was pretty much worse in every other way in that the product wasn't as good, we certainly didn't have the revenue growth, and we definitely weren't able to go fundraise.
But what we realized is we could instead innovate on business model. I don't think enough technology companies go through and do this, and so we started working with a network of agencies.
These networks of agencies, they would send us business, and we'd simply send them a commission. This was incredibly interesting, because people started reaching out to us saying, "Hey, how are you managing your channel program? How are you managing your partner program?" Quite frankly, we just said, "What's that?"
It took us down this big path where we realized, there's a ton of software sold each year, and 30% of the is coming through channel partners.
This is kind of like the last fossil inside of a technology company, that technology hasn't had to go through it and understand distribution. But really it's the best way to get in front of the late adopters and laggards in the market, which is the majority of the market.
Kathleen: Yeah, that's really interesting. I have been a participant in channel programs. I've been a value-added reseller, a partner, whatever you want to call it, for quite a few years, with several different technology companies. But I have never been in a company that had a partner or reseller program.
So if somebody is listening and they're the in-house marketer, what would you say are the questions they should be asking themselves to understand better whether a channel program is right for their business?
How To Know If A Channel Marketing Program Is Right For Your Business
Bryn: Gotcha. We firmly believe that channel works for everyone's business. The reason why we believe that, is because we can see that is in fact true. Specifically in software, it works really well.
What it really it comes down to is: Who are your channel partners? Is it more of an affiliate? Is it a larger partnership with a bank? Is it a partnership through accountants and bookkeepers?
Everyone has a specific channel partner that will work for them, and you might not get it right the first time. So really it's a process about running experiments where you're first off, trying to determine the channel partner profile.
You do this by finding 10 channel partners and making them successful, and then replicating it over, and over, and over. Now the best way that we recommend for companies to go on and do this, is to write down four different channel partners they believe will work, and go and try to backfill it. So it ends up resulting in you actually getting 40 channel partners onboard.
The reality is, is one of those groups will work really well. One of those groups will work sort of well. The other two groups will in fact fail, so that's the starting point of a channel program.
It does work for everyone. It depends on what your goals are.
This isn't a marketing channel that you turn on overnight and it immediately starts pumping out lots of revenue. But the reason why people need to go through and invest in it early, is because the lifetime value, sorry, the cost to acquire customers through channel is actually less expense than through any other means.
Then the lifetime value of those customers is significantly more. We're seeing in our customers it's up to 1.5 times more, and so it's an investment worth making early days, because it's the only thing that's going to let you go through it in scale.
Kathleen: Now you said when you were talking about that this, that channel can work for everyone. Do you mean everyone in software, or everyone period?
Bryn: Well, it's interesting. I think everyone period. Technology companies are the ones where we've gone through it and focused, but most other sectors are using channel in some way, shape, or form today.
The best example would be the way Toyota sells their cars through a network of dealerships. They don't think of that as channel, but certainly it is channel. Those dealerships are owned by independent business people, and that relationship is always challenging.
So nontraditional sectors have done a very good job at understanding channel. It just hasn't been formally called that, and so what we're seeing in the space is actually some of the most innovative stuff, is really coming out of agencies, in the way that they go through and manage their referrals, because it drives so much of their business.
Kathleen: Yeah, it's funny when you say that these other industries are doing it without calling it channel, because what first came to my mind was specialist physicians.
For example, I've worked for years with a client that does laser eye surgery. They get all of their business through referrals. I had a call the other day with a company that just does medical imaging, so MRIs, all of their business. Nobody goes in the phone book to pick out where they're going to get their MRI. It all comes through a referring physician.
So in the medical field, it's incredibly common. I think we as consumers experience channels all the time. I think a lot of people just don't know that there's a name for that.
Bryn: Yeah, it's the infrastructure underneath of the way that those referrals go through and work, and so our thesis is that this is actually much more scientific than it has been.
There is a way to go through and do it. You can optimize that process, and when you optimize that process, you just get a better ROI.
How To Start A Channel Marketing Program
Kathleen: Yeah, so if somebody is listening and they think a channel could work for them, you mentioned that the first step is to figure out four, let's call it buckets, of types of channel partners, and to backfill those buckets, 10 partners in each bucket, so you've got 40 partners.
Then it sounded like what you were saying is to do almost an A/B test, only I guess in this case it would be an A/B/C/D test, and figure out which of those is working the best. Is that accurate?
Bryn: That's 100% accurate. You create the buckets, and you're trying to build a persona behind it.
Where is this person located? What is their age demographic? What is their occupation? Maybe most importantly, what is the reason they are sending me business?
You go through and you run those A/B tests, and you try to figure out who's going to most effectively send you the business. When you do, you have to figure out what's the incentive you will then go through and provide them. Is it a discount? Is it a coupon? Is it a reward? Is it cash?
We've seen companies go through it and work through this. It could just be as simple as co-marketing material, writing a blog post, or featuring people.
People like to be recognized for the work that they do. I mean, it could quite frankly be as simple as sending a thank you letter.
But no one has enough process, we believe, behind the way that you go through it and recognize, and incentivize people to help you grow your business.
Structuring The Right Incentives For Channel Partners
Kathleen: Have you seen any evidence of what types of incentives tend to produce the best outcomes in channel programs?
Bryn: It depends on what the goal of the channel program is.
We find, as funny as it sounds, very basic things work, so just general recognition; thank you letters, acknowledging that you did in fact receive benefit, and that you appreciate that.
Most people drop the ball there, and so that's a very basic step that can be done. "Hey, you know what, thank you for sending me Sally over. Got her all setup and it was really great. You really helped me out here." That's the most basic version of that.
Then it can go all the way up to cash rewards. Though some people sometimes think, "Oh cash, that doesn't feel very good, maybe that's not what I want to go through it and do," the reality is, it works more often than gift cards.
From the data that we've seen on our platform, cash works more in building a program that can infinitely scale, than just coupons, because what ends up happening, or gift cards, what ends up happening is you just bring in people to your program that just want to get gift cards. There's a very small segment of the population that only wants that, and so it's a very misleading idea.
I mean, we always tell people, "If you were to go through and partner with Amazon, you couldn't pay them in Amazon gift cards, so why do you think that you can build a longterm scalable program where it's like this?"
Kathleen: Yeah, I would tend to agree with that, having been on the partner side. I would think that gift cards could potentially work if your ideal partner is an individual, truly an individual person, because then their incentive is, "Sure this is money I can spend on myself."
But if your partner is any kind of a company, gift cards have to be used by somebody. I think what's attractive about it ...
I used to own my own marketing agency, and we were partners with a lot of different organizations, probably the most prominent of which was HubSpot, which has a very good partner program, 20% in perpetuity of any monthly recurring revenue that you sell.
What was attractive about it for me was that I was in a business where there wasn't a lot of - what's the word I'm looking for? - residual income, if you will. You're selling your hours, your time, it's not super scalable.
But a partner commission changes the game a little bit, if you can accumulate enough to make it meaningful, so I would agree with that.
Bryn: Yeah. No, and that's what we're seeing. I mean ultimately if you go through and invest in the channel, what you want to do is you want to enable people to be able to earn a living, build a career, build a business off of the channel program that you go through and build.
If you accomplish that, then you will have an incredibly successful channel program.
That is an optimal end state that I think that everybody can go through it and work to, as long as people understand that it's doing the basics really well. But you have to be working towards, "How is this a longterm sustainable channel that runs and operates completely on its own?"
There's many different touchpoints that get you there to that.
Bryn: It's interesting that you mentioned HubSpot. I mean, we always point to them as the leader in understanding channel at a very early day. Peter Caputa, and the work that he did to really create a community around it, it's not just about money. It's teaching people how to build services around software, and that had never been done before.
Yeah, it was incredibly impressive the way that that's happened.
Kathleen: Yeah, Pete Caputa, he's an amazing guy. He's also who introduced us, so shout-out to Pete.
I have to underscore what you just said, because it's kind of blown me away. I mean, becoming a part of that partner program was a major game changer for my business and therefore as a result, for my life. I've said that to him. In fact, I said that to him on his birthday this year.
But the thing that amazed me about it was how almost religious people got as part of that partner program. I mean, I always saw a ton of value in it, but there were partners ...
It was incredibly common to hear people say, "I bleed orange, or I drink the orange Kool-Aid," because HubSpot's logo is orange, which are pretty extreme statements if you really think about the meaning behind them.
People who would paint their office walls orange, buy orange clothes, I mean it really was this incredibly evangelical approach to being a part of a partner program. You don't see that very often, so I think that that's to me the clearest manifestation of the value that Pete delivered to the partners that joined in the HubSpot partner program.
Bryn: Yeah, and you know what, there are other programs that are like this that work well, specifically in SaaS I can point to Shopify.
Shopify has built thousands of agencies in this point in time that help people go through and service Shopify stores. Excuse me. It all comes down to the fact that they know they aren't selling an opportunity to earn a commission. They're selling an opportunity to do business.
"They aren't selling an opportunity to earn a commission. They're selling an opportunity to do business."
Though it sounds very different, you're selling a partnership. What are you bringing to the table when you're setting that partnership up? It starts very low in the funnel, all the way from the thank you letter, to the coupon, to the recognition and the co-marketing stuff, and then all the way up to cash.
So there is a step by step process in which you go through and built this. But it's just having a key, like, treat your partners the same way you would treat your employees.
Bryn: If you come at it with that type of approach, and though it sounds very soft, you can unpack it, and they are very, very, very specific things that you can go through, to do to make that work.
What Makes For a Successful Channel Program?
Kathleen: Yeah. Now in my experience, as I mentioned, I've been a member of quite a few partner programs.
What's really interesting to me anecdotally, is that, I think in every case the platform that I was a partner for, and I'm thinking of SAS software partnerships right now, in every case the platform was a great platform that delivered plenty of value.
But the degree of value that I would say I derived and the platform did out of the partnership really varies. So there would be some companies like HubSpot, where my company, myself, the company I'm with now, we're very invested in that relationship.
Then there's others where it's just like a failure to launch. It never really gets off the ground.
At least in my experience, very little of that has to do with the actual incentives. You might have comparable incentives across five partnership programs, and have five very, very different results.
So can you talk a little bit about ... For a company that wants to start a channel program, once they put that incentive in place, what are the other building blocks that are necessary to set partners up for success, and to have a longterm, really thriving partner relationship?
Bryn: Yeah, so I mean the first and most important thing is that you aren't selling incentives, you are selling value that you can go through and then provide to the partner. That's not some abstract thing. You actually need to teach and train the partner how to go through and sell your product, or make the recommendation for you. You need to invest heavily, heavily in training and education materials that partners can through and access, so that they can understand how to sell your product.
"You aren't selling incentives, you are selling value that you can go through and then provide to the partner."
Bryn: It's not like selling to a customer. It's again, selling a relationship. It's the same way as you would onboard an employee, so that's the first step that needs to occur.
You need to understand that there needs to be an investment into understanding the value. For you as a company, you need to understand what the partner wants out of the relationship, because again, it's not just money, and so you need to spend some time to go through and do that investigation.
They may not tell you. In fact, they probably won't, because they even know. But often what we find it is, is you as a company understand the value of your product, but I need to be trained the same way as an employee would be. That takes a lot of hand holding, beyond ...
Specific things, you could put a learning management system in place, invest in technology. If you're going to invest in technology to employees that you bring on, whether that be through Slack, your CRM, many of the marketing automation tools that are in fact out there, you need to invest in technology to go through and then support your partner ecosystem.
That technology starts with a learning management system. You should probably go through and create a basic portal. I'm not going to go through and hawk our platform, but then there are other things you need to go through and consider.
You need to be building email campaigns to ensure that partners, once they come on board, they are in fact getting engaged.
You need to think of it like a pipeline. Top of funnel is opening up and bringing new partners in, and then mid funnel is really how do you ensure that partners are moving through that pipeline.
You need to determine when you should go through and reach out to them. If you can go through and do it, you're not going to make everyone successful all the time, but there's at least a lifeline. You're building a lifeline for them to reach out to you when they need help.
That's why channel is a longterm investment. But those are some of the specific things we can think through.
Then there's even more granular stuff. Build case studies, not where you talk about your product, but where you talk about your partner, and their company, and their clients, and the way that they're going through and selling, and the struggles that they're going through and facing.
If you can build those case studies, and you can work alongside the partners to actually promote them inside of your blog, that's how you quickly build a community.
Kathleen: Absolutely. That's been my experience, is that a lot of, especially if you're working with agencies for example, well, and I would think that this is true of most partner relationships, that that agency, that company, that is your partner is running their own business, they have a lot going on, their number one focus is not the partnership generally. So the easier you can make it for them to be successful, it's almost like, "Can you spoon feed success to them?"
This is what HubSpot did really well. It had phenomenal partner onboarding. The partner success managers are great. They gave us a ton of content that we could white label and use in own marketing.
I mean, that's making it easy. We needed to get leads as an agency, and HubSpot would just give us all this content, whether it was eBooks, or infographics, or what have you, that we could put our logo on and send out, and even change, customize copy.
Making it that easy made it easy for us to invest in the partnership, so I would definitely agree with what you said there.
Bryn: Yeah, just treat your partners like they're employees. For the people that are the marketers really driving these initiatives inside of organizations, I recognize one of the hardest challenges that everyone has is actually getting buy-in from executives.
The best way to go through and communicate this to executives when this comes up, is to walk them through that. If these people are going to provide us a lower cost to acquire customers, a higher lifetime value, why aren't we willing to treat them the same way as we would any salesperson, or any other marketer that were to come on here?
If you really push that and understand how aggressively you can go through and push it, it's very surprising how quickly finance comes in and says, "That makes sense."
It's also important to understand that this isn't something that gets turned on and works overnight, but is the only way that you will truly continue to scale up longterm in the business.
Then the other thing where we see people fail often is when they think there's one partnership that will work. "Oh, this one partnership is going to change the direction of our company." That's where you see a lot of scar tissue, you know? People have learned their lessons.
Lots of scars have come from thinking through this one partnership with this one big company, that's going to change everything. Where reality is, those partnerships, to be frank, I have never seen them lead to anything, and so don't do that.
That's certainly not the place that you want to go through and start with, because it costs so many resources, it takes so much time, and the likelihood of the payoff actually happening is actually very low.
Kathleen: It's also incredibly risky. When I hear that, I think about a portfolio investment strategy. If you went to your financial advisor, they would never say to put all of your money into one stock. It could be an incredibly well performing stock, but they would never say put everything into that one stock, because you would have all your eggs in one basket.
If that thing disappears, if that partner disappears, even if it is a successful relationship that does bear fruit, if all of the sudden in year two something happens and it goes away, what are you left with? Nothing, you have nothing.
Bryn: I feel so bad. I'll tell you from our experience. One of the most challenging things for use when we first started PartnerStack in 2015 was customer development. The reason being is, we would go out and talk to partner, or channel, or community managers.
No joke, we tracked it in our CRM, and 30% of the time, they would end up losing their job within six months of a conversation happening. We went back and looked at why they were losing their job, and very often, very high percentage of the time, it was because the pursuit of one single partnership.
To this day, we've never seen that payoff. It's something that we always, always, always warn people about.
You cannot under invest in this channel. It takes time, and there is no silver bullets, there's just a lot of lead.
If you get that buy-in, and you communicate that across the company, it ultimately will be something that's successful.
I mean, look at HubSpot. 40% of the revenue comes through channel.
You can go through and look at companies like Shopify. When they IPO'd, 25% of their revenue was coming through channel, and so it's a huge, huge, huge opportunity. It's the only way you'll go through it and hit scale. It's just making sure you have buy-in.
When Should You Start A Channel Program?
Kathleen: So is there a certain point in a company's maturity when starting a channel program makes sense? It sounds like it's somewhat resource intensive to do it well, so is this something that you've seen companies do right out of the gate successfully? Or do they need to have a little time, and experience, and track record underneath them before they should move to starting a channel?
Bryn: It's my belief that channel, when you make the investment, you can do it very early.
The way you can do it is, it's very important to collect the data required to build those personas that we discussed, those four different buckets. The sooner you can start collecting that data, the better those personas become.
We think that starting early is good. But when you start, you have to think of it as an experiment. All you're doing when you put a channel program in place, is you're putting a sign on the door that says, we're open for business. You should expect nothing to come through. You should just track it, and collect the data on it.
Where we see it start to really work is when companies hit that three to five million inflection point, and it's because, simply put, companies have it figured out. They know where to collect payment information.
We've seen people, and have had instances where people got really upset where channel programs didn't work. We've gone through, dug into their program and realized, they actually forgot to collect payment information.
This doesn't fix a broken product or a broken process. But it will accelerate growth once you hit those inflection points, so I say three to five million is typically when you want to ... you know you ... If you're in a three to five million dollar revenue run rate, in order for you to hit 15 to 20, you're going to need to invest in channel in some way, shape, or form.
The sooner you do it, the better.
But that being said, we've worked with companies who have had less than 250,000 dollars in revenue, and have now grown revenues upwards and over three million dollars in revenue, because they really invested and understood channel. So there's no wrong time, but there's certainly an optimum time.
What Does It Cost To Start And Run A Channel Marketing Program?
Kathleen: Yeah. From a resource standpoint, walk me through what a company should be prepared to invest, in terms of staff to support this; level of effort, budget. I know you can't give me specifics, but give me a general sense of it they want to go in with their eyes wide open, what does it take to do this well?
Bryn: You need a dedicated person on this program at the very least - one person where their job is to figure out channel partners. That is what their job is. You can't pull them off and having them do case studies. Or you can't pull them off and doing smaller tasks that go through and then pop up.
You need to give one person a responsibility. You need to make one person responsible for channel. That one person can, within a six month period, should be able to generate significant revenue. I don't mean cover the cost of their salary by any means, but we've seen it go through and happen. But it will be a substantial amount of revenue, and you can see the path of growth going forward.
If you interrupt that person, if you put them on different projects, if you say, "Okay, not only are you managing channel, but you're going to manage community too" very, very clear and concise in what their role was.
Their goal needs to be, first to recruit partners, then to take those partners and turn them into people that actually engaged. Once they are in fact engaged - engagement looks like training, day to day communication, opening and reading emails - once they are in fact engaged, they are actually starting to send you business or have ideas of how they will go through and send you business.
But you need at least one person dedicated to it. I cannot stress that enough.
Then after the fact, you hit a point where you decide, do you want to solve this with people, or do you want to solve this with technology?
That's typically where PartnerStack comes in. We've seen companies, you would be very surprised at how big companies can become, just managing this with people. Though it's a really good thing, because they're figured this thing out, it's also very expensive.
So there are companies where there are several hundred people working on channel alone, manually at the end of each month calling people and asking, "Hey, did you close this account? Did you close that account?"
Oh, there's a channel conflict. That being where a partner sends business, and then a sales rep goes and closes it. Who are you paying the commission to? That's why it's important, once you hit that one to three mark, that you need to put technology in behind it.
I mean, we've talked with companies where they've overpaid channel partners millions of dollars each year, because it wasn't gone through and tracked correctly.
So there does need to be technology at some point in time. You do need to convince finance that it's worth an investment. But it's very easy to go through and point to.
Kathleen: I can definitely speak from the user standpoint about why that is important, because I remember ... Again, we're part of several channel partner programs.
I would say HubSpot is, again, is the most professional in terms of how it's run. But it's also evolved a lot over the years. When I first joined that partner program, we were still entering our leads into a dedicated Salesforce portal. Now they've got lead registration seamlessly a part of their CRM, which is genius. You don't have to leave the environment you're working in.
To me, lead registration is one of the biggest pain points. I'm part of other partner programs where there is no good system. You have to email your partner rep. It's so imperfect.
Then once you've done that, you don't know how to track it, because there isn't a portal that you can look in. So it's messy, and if that's messy, then I think that slows things down quite a bit for the use.
I know for myself, if you don't have a clear sense of, "Alright, what am I working on? What is closed? What's in the pipeline?" it's hard to be effective. It's hard to get excited about it too.
Bryn: Yeah, I think that this is all about optimizing for the partner's experience, and so everything that we do, every investment that we make is to try to enable that.
So we try to automate programs as much as possible, as much as you possibly can, because that improves the partner experience.
If you can improve, build the perfect partner experience, those partners will more likely than not be successful on your platform.
But the reality is, is where partnerships and channel, today in 2018, is where sales operations was in 2000, where is didn't exist before things like Salesforce and HubSpot.
Where marketing automation was in 2005 to 2008, that's the state of things today. So if you go back and compare to sales operation and marking automation, and you see the structure, the infrastructure, the requirements, and ultimately the returns that the investments in fact made, it's easy to go through and justify something further up front.
Fortunately today, there are ... We're not certainly the only people in this space. We see other people do a really great job of stuff, and there's a lot of options for when that comes up.
But at the end of the day, you have to optimize for partner experience. Your partners are going to tell you. Quite frankly, if they're not telling you, they're telling you. Silence is negative feedback, and I don't think people quite realize that too often.
PartnerStack's Partner Channel
Kathleen: Now, does PartnerStack have a partner channel?
Bryn: Yes we do. We do have a partner channel. We've had a partner channel since day one. Since year one in our business, it's driven revenue for us.
Certainly like everybody, you can through ... There are improvements for it to go through and be made. But for us, working with agencies has been, it's so much fun, because all the sudden, we're training people how to add another service line to their business. We're training them that they can go to their clients, and they can differentiate themselves on the market and say, "Hey, not only can we do email marketing, can we manage your website, can we do PR, but also we can know how to go through and manage the channel."
When we walk agencies and our partners through that, the level of excitement that they have is unbelievable, because quite frankly, there are only so many new services that can be launched. This is something that's unique. We've seen agencies be very successful and generate a lot of new business of it.
What Kinds of Results Can You Expect With A Partner Channel Marketing Program?
Kathleen: Yeah. Walk me through the results. You have your own partner program. You work with companies. Obviously by definition, everyone that is a client of yours has a partner program.
Can you tell me a little bit about the kinds of results you're seeing, either for yourselves, or for the companies that are using your platform?
Bryn: Yeah, so I won't use specific customer names, but I will talk about some of the results that we've seen. We've seen early stage companies go from 250,000 dollars in revenue, to over a million five in revenue, in less than 16 months.
This is completely bootstrapped, a team of four people moving upwards of a team of 10. We're driving upwards of 50% of their revenue, and it's awesome to see.
We work with larger companies where people have hit annual milestones for their partner program within 24 hours of launching with our platform, because all of a sudden there was a way to go through and track stuff. Those people go through and get promotions because of it, which is incredibly exciting.
I think that there are over 100,000 partners that are on our platform, that companies go through and work with today. What's unique about us is we believe very firmly, again, in partner experience. For us, that actually means enabling partners to join a broader network, where they can go through and pick other packages, and services that they can go through and promote. Companies go through a buy-in to this, so it's worked really well.
It's been fun to watch. It's so fun to watch people go through it and be successful in their jobs, whether they be partners or companies that we've gone through and worked with.
I mean for us, it accounts for 30% of our revenue, and drives 40% of our leads. We have a unique system in that there's a tiered version of it where you're dropped in. We give you an opportunity. We train you, and if you are in fact successful, we can move you to the next tier, and so I know that my customer success and sales teams love our partners. It's just fun to work with them.
Kathleen: Now you started out talking about how prevalent channel programs are for software companies. I know for that particular vertical, two of the most important business metrics that they track are cost of customer acquisition, and lifetime value of a customer. In fact that ratio of LTV to CAC also is very important.
You mentioned in the beginning that partner programs can really help optimize that. What have you seen, as far as how much does having a partner program enable you to bring that CAC, or cost of customer acquisition, down? How much does it extend the lifetime value?
Bryn: Yeah, so we're seeing lifetime value for some of our customers to be over 200%. Median is about 150%, more than what they're currently used to. Anything over what they have now, everyone is happy with. But median returns, 150%. But we're seeing people as much as over 200%.
The CAC is the thing that is incredibly interesting. We enable companies to go through and experiment with different incentives. Today you could go through and launch a bonus program where you pay an extra hundred dollars. Next month, maybe that that's not what you're going to go through and do, so we've been able to go through and test that.
We've decreased CAC upwards of 75% in some companies.
Bryn: Yeah. Some companies get really aggressive with their programs in the beginning and over invest, and actually try to not do that, because they're looking to improve engagement so much. But it's a result of not only are you unloading the cost of sales, I mean, this is the thing that people don't talk about enough, it's actually the cost of support after the fact. It's very hard to go through and quite frankly quantify that.
But with our big customers that have those resources, those massive, massive finance teams, they've gone through and done it. That alone is enough for their finance teams to go through and invest in the tech to through it and support it.
Kathleen: Wow, those are some impressive numbers. Well, so interesting, and this has really been the first time we've talked a lot of about channel programs on this podcast, so I'm really glad we had an opportunity to chat about it.
Kathleen's Two Questions
Kathleen: I want to switch gears, because I want to make sure we have time for the two questions that I always ask all of my guests.
My loyal listeners will have heard me say this time and time again, but I would love to know from your standpoint, we're all about inbound marketing on this podcast, so company or individual, who do you think is doing inbound marketing really well right now?
Bryn: That's really interesting. One of the companies that we see that has been doing a really great job of this, and that have been actually using their partner network to go through it and do it, is Intuit.
Intuit has turned to their community to build content, and it's working really well. It's been very cool to see such a big company go through it and move so quickly, to go through it and take advantage of the opportunity.
There's of course smaller companies that we've seen do a good job on this. But Intuit is the best example. Of course, I'm going to be biased with it. Intuit is the best example because they've leveraged their channel, their partners to actually create the content required to drive those advanced sales.
Kathleen: Yeah, that's interesting, especially because they're such traditional industry, that a lot of people think of as very stodgy, so knowing that they're at the forefront of that is really fascinating.
Now I'm going to have to take a look at Intuit's content, which I would normally not look at, now that I'm not a business owner anymore. But I did used to be in and out of QuickBooks every single day of my life for 11 years, so maybe I'll pay it a visit again.
Kathleen: Second question, the world of digital marketing is changing at a lightning pace. How do you personally stay up to date and on top of all the new developments?
Bryn: It's so tricky. One of the things that I've been doing lately is actually cutting the number of tools and technologies that I use way down. So instead of being spread out across all these social media platforms, I just focus on one.
Kathleen: Which one?
Bryn: Oddly enough, I go through and focus on LinkedIn. That's where I get most of my value from. I'm also following things on Twitter. That's certainly an area.
But at the end of the day, with all this extra noise in the environment, I actually listen to people. I'm going through referrals more. I'm talking with my peers and asking them what works.
I actually have a number of people through Y Combinator that I have biweekly calls with them still, that we've been continuing for three years now. We talk about it, what are the best things that we're seeing in the market.
We also ask our customers when we're in the middle of doing any type of sale. We say, "Hey, just out of curiosity, do you have any new tools or technology that you're using?"
As much as it's going through, researching and seeing what's out there, it still goes back to the basics.
For me, it's limiting my consumption of technology, and going to the source, going to people, because I think with this influx of tools that are on the market, it's so hard to know which one is the best one to go through and pick. You have to go through and use referrals the way that you've always had to.
So it's interesting, it's this weird thing that kind of through it and happened.
Kathleen: Yeah, for me it's my podcast. I call or email people like you, because I'm interested in learning more. I interview you, and that's how I learn. If other people listen too, great, but I always say I would do it even if nobody listened, because it's-
Bryn: Yeah, that's such a ... Maybe we'll have to start doing one, because that sounds like a really great idea to go through and learn how to, to go through it and talk with people. Talking with people is very underrated.
Kathleen: Yeah, I would so agree. I've learned more doing this than I have doing anything else honestly. Well if you start a podcast, let me know how it goes. I'd love to hear about that.
Bryn: I'll be calling you and we'll get you on there, first thing.
Kathleen: There you go.
How Reach Bryn Jones
Kathleen: Well, so much fun talking with you. I've learned a lot about channel marketing, and I'm sure there are people listening that want to learn more, might have questions.
What is the best way for them to learn more about PartnerStack, as well as connect with you as an individual online?
Bryn: Yeah, so I mean, reach out to me on LinkedIn. I spend a lot of time on there. Connect with me, message me. I usually get back within 24 to 48 hours.
People can reach out to me through email. It's first Bryn, B-R-Y-N @PartnerStack.com.
You should check out PartnerStack or PartnerStack.com. Message one of our support or sales reps. We'll get you on the phone, and mostly walk you through what the potential is.
One of the biggest things we push on people is like, "Hey, maybe now isn't the right time to go through it and invest in technology. Maybe you need to figure out your four buckets before you come through it and buy the platform." We love talking about this. We don't think enough people are talking about this, and so if you're interested, feel free to reach out any time, happy to always have a conversation about this.
Kathleen: That is the mark of a great salesperson by the way - the salesperson who tells you, "You're not ready for us," and tells you what to do in order to get ready.
As always, if you know someone else that's doing kick-ass inbound marketing work, tweet me @WorkMommyWork because I would love for them to be my next interview.
That's it for this week. Thanks Bryn.
Bryn: Thank you so much.
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