Excited to share our in-depth discussion with Allan Adler, author of GoToEcosystem, on how to grow SaaS businesses with the #ecosystem strategy and win even in the tech recession.
His message for 2023:
“You want to thrive, not just survive. That's the message for 2023 - it is scary, but it's more of a reason to double down, rather than a reason to hide.”
Allan is Managing Partner in Digital Bridge Partners, who has extensive experience in consulting tech companies. Allan knows what it takes to successfully transition from a channel business model to an ecosystem.
0:00- Intro
2:30 - Understanding and Leveraging Your Partner Ecosystem
4:30 - How to Prioritize Partnerships for Growth in 2023
6:30 - Creating a Reciprocity Loop: How to Drive Referrals to Partners for Lead Generation
13:00 -How to Drive Net New Revenue with Partner Integrations and ABM Strategies
18:30 -Partner Integrations: Strategies for Retaining Customers and Reducing Churn
23:30 -Proving Partnership Value and Partner Revenue Attribution Models
29:30 -Building Trust: How to Persuade Partners to Work with You?
35:00 -Setting Expectations: How to Create a Strong Business Case and Prove a Pilot
37:00 -How to Prioritize Integrations and Partnerships?
40:30 -Transforming Business Culture through Partnership Ecosystems in 2023
Hi, Allan, great to have you!
Roman, awesome to be with you. So good to be talking about partners and how we can make things happen in these turbulent times.
You are the author of GoToEcosystem framework, HBS graduate, Managing Partner of Digital Bridge Partners. You've been consulting businesses over many years about how to do partnerships and how to build ecosystems. In the last couple of years, you've been very active in the ecosystem movement and I’m really excited to talk with you about all of this. Anything you would like to add by way of introduction?
Just that I'm all about helping partnership teams really succeed. It's my joy, my pleasure, my passion to see us make businesses work a lot better by adopting partnership best practices.
Understanding and Leveraging Your Partner Ecosystem
We are entering a very interesting and challenging, you might say, year. Ecosystem was a banner and the buzzword of the last year. I would love to kick us off by asking, what's your latest definition of ecosystem? How do you think about ecosystems and maybe to add to that, if you think about this discussion, who is this will be most helpful for?
When we think about ecosystems, it's a big word, and oftentimes it's confusing. It's sometimes ephemeral, and therefore, CROs say “I don't have time for that nonsense, just let's just be practical”. In the most practical sense, I think that the first foundation of ecosystems is to think about it in the relationship to the customers and prospects that we're selling to. It's basically everybody that surrounds the people we care about, we care about customers and prospects.
Ecosystems are all the providers, the consultants, the value added resellers and system integrators and technology partners who surround the customer or prospect that we're interested in, through whom and with whom we can add more value.
Ecosystems are all the providers, the consultants, the value added resellers and system integrators and technology partners who surround the customer or prospect that we're interested in, through whom and with whom we can add more value. If we just start out by just saying it's that, which surrounds the customer and the prospect, we're in a good place. The next stage is which of those people become our partners, and that's our partner ecosystem. So really, we can think of ecosystems in terms of the ecosystem of the market. And then the ecosystems that are comprised of our partners. Those two macro and micro views of ecosystems pretty much cover most of the bases.
Talking about who this is for, is it mostly focusing on tech companies, different types of partners, like integrations maybe? Or is it an overarching theme about every type of organization that will be in your “ecosystem”?
Every industry is going to have ecosystems, every ecosystem has ecosystems. We happen to focus at Digital Bridge on the B2B SaaS industry, one of many industries. But what's cool about the ecosystem around B2B SaaS, and SaaS technology for that matter, is that it's the harbinger, and it's a leading indicator of where things are going. Increasingly as B2B SaaS ecosystems mature, we're going to see that same maturation start to take place inside of other industries. We're right at the vanguard, if you will of what my buddy Jay [McBain] talks about is the decade of the ecosystem. We're right at the vanguard of that. Everything that we see happening, and that we as partnership leaders drive in this next couple of years, is going to change business in every industry. We're really at a really pivotal time, these next couple of years in tech, will really define to a great extent how businesses will perform and evolve over the next 20-30-40 years across every industry. It's pretty heady times, we're right at the cusp of it.
Thriving in a Recession: How to Prioritize Partnerships for Growth in 2023
I agree with you that SaaS is leading ecosystem thinking. At the same time, what is ironic, is that SaaS first went into recession, or one of the first. I think the ecosystem is great, and I see a lot of excitement about the subject and the idea and the concept that everyone is feeding each other. But thinking about 2023, which is not going to be easy, you wrote a really good blog post about what are the things that are important for companies to prioritize at this time. Could you please summarize it in a brief version?
There's bad news in this good news. The bad news is that spendings has really impacted and customers are really confused. And there's a whole lot of pressure on revenue teams to figure out how they're going to make it work. That's the bad news. The good news is, they're still going to be spending. It's not like spendings go away. It's just that what was easy spending is going to become harder spending. So the real key for partnership leaders, and this is really the time of great opportunity, is to focus on that part of the ecosystem which has the highest probability of being associated with the spend that will take place. So what I mean by that, there's really three kinds of things that are going to get prioritized. Number one is workloads that existing customers have, because they need to make sure those things really work because they've already put the money into those workloads. And they're looking for ways to extend the workloads, without having to buy a lot of new stuff that's hard to do and complex.
So number one is existing workloads are going to get prioritized. Number two is any new thing that's connected to those workloads that has fast time to value is going to get prioritized. And three is any place where I can use an existing provider. So think about those three things, existing workloads, fast time to value, and existing providers. What a partner ecosystem, especially a tech partner ecosystem, brings to the CRO and the customer success teams, is connections to customers, existing workloads, whether it be a prospects' workloads or an existing customers' workloads doesn't matter. Too, is because we built these integrations, we have these fast time to value solutions, which are relatively easy to add to what they already have. I call it the "you already have half a pizza. Now we bring the other half pizza, still the same pizza, don’t have to get a new pizza."
And then the third thing is that we ride on the rails of existing providers. The same providers that provided workload in the first place, to whom we built the integration, are the same providers who will walk us in the door and work with us to drive those deals. That's the story partnership leaders need to take to their CROs and their customer success teams. “We have the best way to create net new revenues in a recession or increase net retain revenue in the case of an existing customer”. The only pivot is whether it's a prospect, meaning new revenue, or an existing customer, meaning growing NRR. If we follow that mantra and continue to push that pedal to the metal, we will see at the end of 2023 that the most productive growth engines for ARR and NRR growth are partner ecosystems. But it will require, this is the courage, conviction, and confidence part, that partner leaders don’t put their head in the sand and try to survive this time, they should go for thriving, not surviving.
There's no time for surviving, because many people will try to survive and inevitably, part of your team will get cut. There are already a lot of cuts taking place, such as Amazon and Salesforce, and more will come. You don't want to be on the cut side. You want to be on the safe side, by going for the goal of performance, not just persistence. You want to thrive, not just survive. That's the message for 2023 - it is scary, but it's more of a reason to double down, rather than a reason to hide, because many people are hiding.
Creating a Reciprocity Loop: How to Drive Referrals to Partners for Lead Generation
That's a great framework, and I love the 10X thinking as well. In your ecosystem framework, you start thinking from tech integration and then this integration drive leads to partners. Then partners reciprocate and drive leads to you. We'll be talking here about the same framework for 2023, right? Or do you think this framework should be modified?
No, it's even more important. Let me just speak a little bit about it. Because it's going to be an important part of a managed service offering that we're going to be bringing out. The basic gist is that if we want our partners to give us leads, we have to give them leads first. Now, in a recession, the last thing you think you want to get your CRO to do is to resource the providing of leads to somebody else. It'd be crazy. “We're in a recession. What are you doing, Roman? You want me to give you money so that you can give leads to someone else? No, I want to give you money so that you can give business to me.” This is the logic of the scarcity mindset, which by the way, we live in a scarce world. The business world is very scarce mindset is generally speaking a lot of greed, fear, and scarcity. It's even worse in a recession. People are more freaked out about mine, mine, mine, mine, holding tight, holding tight, protect the runway. You hear all these terms.
The best way to get a partner to give you business is for you to give them business. So, the starting point of this is that if you have integrations and you have a customer success team. Many people listening to this have both of those things, your customers want you to tell them which solutions are going to lead to the highest return on investment, at the lowest possible cost with the highest time to value. The customers want you to tell them that. That's a lead for your partner. And if you do that, and you do that continuously, we have data, unequivocal data that any CRO would have an impossible time refuting. That will result in leads back from your partner to you. Anybody in partnerships knows this “give to get”. We actually call it give to give, but let's just stick with utilitarian approaches to altruism. If I give you something, there's a natural tendency for you to want to give it back to me. So that's strategy.
That's actually a strategy - give leads to partners to get leads back. Now, the beautiful thing about that strategy is it's not just altruistic, because as I said earlier, when your customer success team tells that story, they're actually helping the customer. And we'll talk a little bit later about how to make this really practical and actionable in a short-term sense. But it's a strategy that every single tech partner leader should be embarking on today, which is how to drive referrals to partners, as a way of creating what we call the reciprocity loop to get leads to come back to you. And then we think that anybody who's not following that strategy is missing out on a ginormous opportunity this year.
Partner Integrations: Strategies for Retaining Customers and Reducing Churn
I agree with you, it sounds very right and noble even. But at the same time, we're living, as you said, at a time when every CEO is concerned, to say the least, about the future. And they probably, when their head of partnerships will approach them and say, "Hey, we need to build all these integrations," because we have the signal from the market, the CEO would probably ask, "Okay, this sounds good, but what is your business case? And when do we expect to see a return on this investment?" And the answer probably will be at the end of the, maybe next year.
I mean, the integration building cycle is not quick, even if you use middleware. It might be speeded up, but at the same time, it's still you need to build the entire loop. What about all this kind of channel, resell and other type of partnership that might help you to get to this result a little bit faster? Should you think in terms of, you know, maybe hedging bets?
Let's start first with some data. The vast majority of all series, A, B, C, D, E, F companies have some form of integration already in state. As you move closer to F, the chances are those integrations are built, proven, and validated. I agree with you, in 2023 this is not the time to be asking for a bunch of money to build net new integrations with unproven partners, that is complete failure. Because right now we want to monetize. We don't want to have long-tail investments that take multiple quarters to monetize. So the answer to the first part of your question is start with what you have. Don't start by asking for money to develop partnerships. Start with what you have. Secondly, there is only one data point that matters in a recession. And that's net retained revenue. That's it. There's no other data point that's more important than net retained revenue. Why? Because if you're looking for more money, and or you're looking to extend your runway, there is no faster, quicker way to do it than to retain your customers and grow them. That's it.
Because net new revenues are harder to get, a demand generation has cut back. But what you always have is existing customers using your tools. And here's something that's going to happen in the next 12 months. How do you think customers are going to reclaim their budget? They're going to terminate SaaS contracts, they're going to drive churn up because any product is not performing, forget about net new, they'll just knock them out.
In the context of the next 12 months, your customers will start churning unless you take action. The best way to increase ROI is to drive integrations. If you have existing customers who own both you and your partner solutions, there is no need for them to purchase. All you need to do is drive that integration. When you do that, churn will decrease and cross-selling up as well. Start with what you have and drive integrations into existing customers. You know Crossbeam overlap that says we both have a customer - that’s a first place to start. There is a 100% correlation, and even causation, between the increase in integrations and increase in retention. If you drive those integrations, you will see returns. Along the way, you will get to the next quadrant of your prospect and your partner's accounts or your partner's prospects and your account. This will turn on the reciprocity machine and is the next step.
However, to answer your question, you cannot just focus on tech partners, you must also focus on services partners. The strategy is similar. Anytime you see a customer with any level of churn risk, this is the time to engage your channel, because your channel is probably your best bet at addressing any kind of churn issues.
And what you should be focusing on is understanding the nature of churn, why it is happening, and what you can do to drive adoption and reengagement. Then, consider how your channel can play a role in facilitating that, either through a freemium or a low-cost managed service. But, at the end of the day, if you can get your channel partners, agency partners, managed service partners, to see opportunities to drive, even small ticket items to hold a customer, it will result in more sales for them, more sales for you, and happier customers. Once churn is under control, people will want to invest more in the partner team because they are keeping churn from going down. Make sure you track this stuff too, put a line in the sand for the current churn rate and show the activities you're doing on a set of partners. When you engage either of those channels, you'll see a lower churn rate, higher net retained revenue on the channel, higher on tech partners and that will result in more investment in your company. But, at the end of the day, that's the magic.
How to Drive Net New Revenue with Partner Integrations and ABM Strategies
I completely agree with you that more integration produces much higher stickiness. It seems to be the case in all kinds of big companies, from Atlassian to Zoom. I think multiproduct also produces a similar effect. Salesforce is talking a lot about multi cloud, which is effectively multiproduct, and 4 products retention rate is close to 80% and the growth is much higher.
At the same time, I have been in a situation where I was leading a partnership program in a sizable company. The program undoubtedly increased retention on a multi-million customer base. However, it is difficult to prove it and get management excited about these partnerships. They feel it is a sacred cow that cannot be killed because it seemed to be working, but it was not producing net new results. So, they were always tempted to kill it anyway.
I am curious about your thoughts on partnership leading new business in the next year, because a lot of people hire partnership managers with the idea of expansion and growth, not necessarily retention.
Remember I talked about the relationship between ARR and NRR. When I'm trying to drive retention, I am going to be driving ARR for someone and that someone is going to be a partner because they're the new prospect in my account. So, flip the script again, and let's take your partnership leader. If you have an integration with Stripe or NetSuite or Sage or any large player like Salesforce, and you've done your homework on what we call the total available revenue, which is to say, in every of my prospects sitting inside Salesforce customers, there's an eight-figure or seven-figure total available revenue in that group of customers, Salesforce customers who are my prospects. You have now got a business case to go back to your marketing department and say the following: "Where are you spending your demand gen, marketing department?" They'll say, "Oh, well we have a persona, we have our ICP, we have our segments and we're going after this persona and we're driving the top of the funnel." The business case on the return on investment to spend against the overlaps is between eight and 10x better than the spend on a generic demand generation program. The reason for that is because when those overlaps are mapped, you're basically walking in with a referral.
Let me give you an example. Let's say I want to go after Roman's accounts, and I have prospects in your accounts. I have a better together story, a better together solution. We've been doing this with a number of clients with an agency called Ampfactor, who we work closely with. They pioneered this BTS Better Together Story idea. We're running demand generation into the overlap between my prospects and your accounts. The return on investment of that spend is 8-10 times better than the return on investment of going after your accounts blindly. With respect to the recession, yes, it's going to be harder to get dollars. But when I produce a proper business case, with total available revenue, with average deal sizes that are 30% bigger, with conversion rates that are 70% better, using ABM Account Based Marketing techniques in the larger accounts, which produce two to three times the lift. That's how you get to that eight to 10x better return on investment. And what CRO, CMO, CEO, or CFO is going to say in a recession, "No, I want to keep doing it the stupid way"? When you present them with a solid business case, everything is cool. You can pilot it, test it, drive attribution. All of the nonsense about, "Oh, it's influenced revenue, we can't really see it." Now this is pure sourced revenue, eight to 10x better. This is the kind of story that partner leaders need to take to their CROs and CMOS. And in order to get there, we are going to have to pilot it. But that's okay, we have 12 months to avoid getting fired. Let's get the first quarter to thrive mode, rather than survival mode, as I said at the beginning. These are some of the techniques that you can use to have those conversations and get the ball rolling.
Just so I understand you right, you're still talking about tech partners who have their own set of customers or a variety of partners?
This can also work with a large system integrator. The challenge in doing it is that it's harder to scale the mechanisms with a partner. The nice part about doing it within tech partnerships is that the account mapping is easier to do and the mechanisms that drive the demand generation are more predictable and repeatable. So, it's harder to explain it to your CRO or CMO that it's different with Accenture than it is with Deloitte or Capgemini. Not to say you can't do that or CDW and whatnot in the corporate reseller space. But it's more repeatable and predictable across the tech partnering landscape. And that's why it's easier if you've got the integrations right. If you don't, you've got other problems.
Proving Partnership Value and Partner Revenue Attribution Models
There are three types of partner revenue - partner sourced, partly influenced, and partner attached. Three buzzwords that are used. Which one do you think is worthwhile focusing on? How do you see this revenue attribution model evolving?
Because for many partnership leaders, it is difficult to get revenue attributed to partnerships. I've been in those shoes myself. What would be your advice for those who cannot really connect with Crossbeam account mapping solution, because their organization doesn't allow them to? What are the ways to prove your value in the absence of a clean revenue attributed to you?
There are several ways to do it. On the NRR side, it's a little easier because the proof points are based on a function of integrations, lowering churn, and then triggering upsell and cross-sell. So, you have an attribution that is very strong there. Because it's like before churn - after churn. Before integration, no cross-sell, upsell. churn. After we prevent the churn with the integrations, now we see the customer retention, retaining high and then we see that cross-sell and upsell, so that one's a lot easier to prove. So, even though it is influence at that level, it's directly attributable. On the ARR side, where you get into trouble because it's hard to figure out who actually produced that lead. There are a couple of ways to solve that problem. One is to go the agency route. So, one of the reasons we have our partnership with Ampfactor, and our GoToEco revenue engine is because the agency is driving the demand generation, we actually have direct attribution. Because we're not in a system that's getting confused and conflated between direct and channel. It's all better together solutions, driven together with an ABM campaign that can actually be attributed from top of funnel to middle funnel to the bottom of funnel down to close one. And it's 100% attributed. So, that's one way to do it.
The second way to do it is to look at some tools, like we're pioneering some tools with a company called Everflow. And you may have heard of Everflow, it has a methodology where we can actually find the way to get past what I call last touch attribution. Last touch attribution is when you did a bunch of work in the partner team, the customer clicked on the Google ad. And then somebody said, "Oh, well, that had nothing to do with you. That was the Google ad." So having a methodology that can actually see the breadcrumbs that lead to the Google ad, allow us to say, even though the last touch was the Google ad, the six touches before it were partner-driven, and that sourced revenue. So that's a second way to do it. And the third way to do it, I think, is to basically start putting pilots and use cases together where you can do comparatives. And you can say, "Over in this space, where we did the Better Together story with or without ABM with or without agency, we're able to see this level of deal size, this level of conversion rate, this level of close time, let's compare it to these." So when you start seeing 80% higher close rates, 33% higher deal sizes, and 50% faster closes on this pool versus this portfolio that you didn't, you begin to show that correlation becomes causation.
It's difficult to do it in a casual way because cause and B2B are complicated. We're talking about the average customer having 7 partners and 28 steps in the sales cycle. Can you prove definitively that you created 100% of that deal? That's pretty hard to do. But when the correlations are at the level I'm talking about, any CRO can take that to the CFO and say, "We're investing more here, this works, this doesn't." Over the next three years, we'll see 50% or more of B2B SaaS being directly attributed to the ecosystem. Today, that number is between 5-10%, depending on the series. Of course Microsoft says 96% of its business is partner-attached, but Microsoft has been around forever. Many early stage companies over invest on the B2B side for direct, and partners are always this tail, but the tail will wag the dog until it becomes the dog.
That would be amazing of course if half of the revenue will be directly sourced and attributable to partnerships.
I said directly attributed, now will be sourced. That's a high order, but directly attributed, meaning that the predominant driver of the revenue will be a partner.
So it will be one of those touchpoints among others, but it'll be the most influential touchpoint.
Let's say this: if there are 28 stages in the sales cycle, the biggest and most important ones will be from the ecosystem. There will still be touchpoints, sales reps, BDRs, and customer success people. These are important roles, but they will be supporting the predominant partner motion rather than looking over their shoulder and saying “bring me some sourced revenue” - this is not going to happen.
Building Trust: How to Persuade Partners to Work with You?
How do you persuade partners to take a leap and work with you, especially in the beginning when you don't have proof points that would be compelling enough or partners would be reluctant to share their attention?
The most important thing to do is to make and deliver promises. These promises don't have to be grand, they just have to be promises that you make and deliver. Then, you need to figure out the degrees of freedom. The old adage - the most successful people are not the ones who promise the world, they are the ones who understand their degrees of freedom and promise and deliver accordingly. So, the key thing at the beginning is value creation through making and delivering against promises. You will always find a promise you can deliver on and then you can always build on that promise to build another promise and another promise. Eventually, what ends up happening is other people in your organization see that the promises you made resulted in value and they want to make promises. Gradually, we are making lots of promises across our organization and we see scale.
It's actually a very simple model. A lot of people talk about being on their own, okay, well, be on your own, make a promise, deliver against it, and show me that that partner now trusts you more today than they did yesterday, and next week, more than they did last week, and so on. Then turn that “make a promise, deliver a promise” into a roadmap that gets you where you're going. I don't care what stage you're at, there's always a way. People will say, "Oh, I'm working with Salesforce, I can't get them to talk to me." Well, what if a Salesforce agency talks to you who lives in the same area? What if you go to lunch with a Salesforce agency who's working for Salesforce? And they recommend you to a Salesforce account? If you did that times 100, what's the probability that the Salesforce AE or customer success team would not find out about that? So there are always, even with the biggest partners, there are always pockets of value creation. If you wake up every morning and say to yourself the following, "How will I add value today for my partner ecosystem and my partner's ecosystem?” It’s getting a little bit, but Salesforce has a partner ecosystem, if you add value to their partner ecosystem, you add value to them. So as long as you're in the continuous mode of value creation for the ecosystem, you cannot fail.
By the way, that ecosystem is composed of both people, companies, and individuals. The other thing that's key is that, although we are in B2B, we think about my company, Digital Bridge, working with your company, it's still Allan and Roman. So, if you can bring it back to human factors and say there is a person in the partner ecosystem that I can find and add value to, when I do that, they will want to reciprocate. And that reciprocity is the foundation of value creation for me, for them, for their company, and for my company. As long as you stay close to that, be generous, give continuously, look for ways to add value. Don't worry too much about the lagging indicator, even though that's what your boss is telling you. Remember that the leading indicator is the only thing that produces the lagging indicator. And the leading indicator is value creation and generosity. And the lagging indicator is reciprocity, that back-end loop that ever happened at scale. If the front-end isn't good, it's like soup. You gotta get good ingredients. Otherwise, the soup will never taste good.
I agree that you need to cheerlead your partner. If you cannot go to your partner, then you can go to your partner’s partner, and then building the relationship seems to be very crucial. One thing that I would probably add to this is that it's actually a good idea to not be afraid to ask as well. Set expectations and deliver is great. but also asking small things is also a very important way to build relationships. People forget about that. When you ask someone for something, the other side will be more inclined to have another conversation with you vs less inclined.
It's actually a good point. I call that the "don't pretend that you have your act together and you don't need anybody's help" mantra. We do need help and I actually need your help to host these sessions. “So, Roman, will you host a live Partner Insight session with me? I would like your help. Yes, sure. Let's do it.” Asking for the help you need is a gift. It actually seems like you're needing something, but you're actually giving the opportunity to get, you're giving a gift to the partner to let them give to you. It sounds a little crazy, but it's how it works.
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Setting Expectations: How to Create a Strong Business Case and Prove a Pilot
Let's not go too meta. Let me ask you a question: when people start a partnership, they think it is going to be great. I'm sure it will be if you put enough time and resources, but how do you manage expectations, especially today?
Some things that partner teams tend to skip are the first two steps in asking for money. The first step is, what is the business case, and the second step is, what is the pilot? Because, at the end of the day, if I ask for money and I don't have a business case or the pilot figured out, then inevitably what 's going to happen is we're going to get a NO. And they're going to say, "Go prove it to me." And that means that you didn't do a good job of setting up the business case. If you think like an entrepreneur and say, "In all the analysis that I've given you today about whether you're going after ARR or NRR, there's a business case there, there's a certain amount of total available revenue, there's a certain approach you can take, there's a pilot you can prove to show that it works." And I think that setting expectations really is about creating a roadmap of success, and then indicating what you're planning to do across that roadmap. And then back to the whole story of, you make a promise, you deliver a promise.
Setting expectations is a function of having the right business case, with attenuated risk factors. If there's a big upside in that business case, don't say you're going to hit that upside, say that it is an upside, that's a stretch goal. Here's a guarantee, and here's our best case. Go for the best case, or go for the moderate case, prove a pilot to show that you can get the first results in and then scale that pilot. There are a whole bunch of different techniques, but I think if you follow that approach and build a proper business case, which almost no partner teams do, I've not seen very many good business cases for investment, that's why you're getting NOs. By the way, if you got NO six months ago, you're going to get a lot more NOs now. I had one of my clients talking about how they have relatively straightforward business cases, and they're getting NOs, and I look at the business case, and I go, "Well, that's why you didn't get the money. There's no total available revenue."
How to Prioritize Integrations and Partnerships?
Agree - everything should be airtight. One of our viewers asks, "Our dev team has a major backlog of work and integrations to get through. How do you prioritize in this environment?"
I think the most important thing to do in this marketplace is to figure out which potential integrations will have a short-term impact on revenue or short-term impact on market associated with the highest need. The best way to do this is to talk to your sales reps. Your sales reps know which integrations are critical. They're the ones that customers say, "If you want me to buy this, it has to be integrated with such and such." If you're hearing three or four sales reps say this, there are probably 20 or 30 prospects that feel the same way. You can use the justification of, "I will be able to close these deals with this integration," to get the integration built. Once that integration is built, you can close those deals, then start turning on the ARR/NRR tap that I talked about. But you have to have the integration in place first. I think this is probably the best and fastest way to drive integration, if you don't have one, based on sales rep comments.
But would you even do it these days? Because previously, we had a discussion that you would maybe stay away from building a lot of new stuff.
Stay away from a lot of new stuff, but if there's one or two that really matter, you'd be foolish not to invest in those because those are probably ones that are big deals. So, if the return on investment comes from a few big deals, and you can show that you can't recover the cost, In all likelihood, the answer is probably going to be outsourcing that integration. Because if your dev team is booked, then you're going to probably get an SI to come in and do that integration for you. So the question is, what is the MVP on that integration? What's the return on investment across how many deals do you have to close and prioritize those. Because that's not something that's going to take forever, but it's going to stop this something that's going to ring the bell immediately.
One of our viewers asked “How do you grow the ecosystem rapidly?” I want to add to this question your initial suggestion to think 10X, which I think is great. We almost went the entire loop. So going back to this question, if you would have a CEO asking you how do you grow my ecosystem rapidly in this environment? What would be your answer?
I would reframe the question as, "How do I quickly monetize what I have to then have a self-justifying fund to do more?" I think that growing the ecosystem rapidly right now without monetization being front and center is not a smart strategy. That's exactly the reason I said earlier, don't spend a lot of time on things that are far away from revenue. But if you follow the mantra of "value add for the partners and fastest time to revenue for your company," and you just keep focusing on that, you'll see success. We have two axes "how long to market" and the other one is "how big is the market." So if the time to market is low and the amount in the market is high. That's total available revenue is high, time to market is low - those are your parados. If you continuously graph, "here are all the integrations I have, and all the partnerships I have. These are the ones that are not quite ready and have moderate revenue. These are the ones that are almost ready and have high revenue. Focus there." And if you continuously just iterate on that upper right-hand quadrant, it's really going to be a much more efficient way to think about growth than to think about just generically growing the ecosystem. I don't think you're going to see much of that happening this year.
Transforming Business Culture through Partnership Ecosystems in 2023
Thank you for reframing the question in a compelling way. I guess my very last question is, looking forward to 2023 after a couple of crazy years, what are you most excited about in terms of the ecosystem or your business or anything else in the industry?
I'll go a little bit into philosophy and transformation just for a second. I believe that the world of business desperately needs partnership ecosystems to transform the culture of business. The culture of business in 2023 is toxic and dysfunctional. The function of greed and scarcity is prevalent. And if you think about what partner ecosystems are all about, they're all about abundance, love, and the ability to turn human relationships into a new way to do business. I'm most excited about partnership leaders and partnership ecosystems transforming business by creating this new DNA of abundance. I use the word love mostly because that's what the world needs right now. Business can lead with love if it's properly invested with vision. What we really need is to give our leaders the tools to make partnership ecosystems the norm. But in the meantime, we need to infuse into our businesses a new culture, a new DNA, and the partnership community is already imbued with it. So I'm most excited about the fact that I don't feel like I'm on this crusade of business transformation alone. I feel like all of us, you, me, and everybody in the partner ecosystem, understand that partnership ecosystems are a new way of doing business. If we can take that new way of business and inculcate it into our overall business, we can transform business for good. That's my devotion. That's what I'm most excited about.
World needs more love, that's for sure. I think this year is probably not going to be easy, as last year was difficult for tech. But at the same time, the culture of building communities and partnerships is already entrenched in the industry and I think it's going to grow even more. Alan, thanks for joining us today and sharing your insights. For those watching this as a recording, what is the best way to connect with you?
I suggest messaging me on Slack in Partnership Leaders or DMing me on LinkedIn (Allan Adler). You can find me in either place.