We got together with Lukas Hertig, SVP of Business Development in Plesk, who has more than a decade of successful experience in building channel and digital marketing functions. His advice is: “To think big, start small and scale fast and combine partnerships with digital marketing efforts.” 🚀
Enjoy our conversation about channel partnerships, where we discussed:
2:30 – Why a tech company should work with channel and integration partners
4:00 – Which types of partners to focus on first?
6:00 – How to combine partnerships and digital marketing efforts?
7:30 – How to convince partners who already work with one of your competitors?
8:30 – How to scale from 3-4 partners to hundreds of partners?
Today we have Lukas Hertig from a great company Plesk, which has been around for a while, but still has been innovating fast. Lucas has been in partnerships and channels as well as in marketing previously, both on a corporate side and on a startup side. He also has been advising many startups. Today, we will dig deeper into why channel partnerships are essential, what is the best practice and what are the secrets there. Lukas, would love to hear a little bit more about Plesk and your experience.
I have almost 20 years in IT. As you mentioned before, about 18 years in software business, I have a bit more than 10 years background in sales and business development with partner channels. Later, I built up a whole marketing team. Today with the WebPros group where Plesk is a part of, we are a bit more than 200 million in ARR with subscription business, we're super profitable, we have acquired multiple well known brands. We run about 900,000 servers across 2800 channel partners and they collectively run more than 70 million websites. We are also the largest operator of WordPress websites out there.
Obviously you know a lot about channel partnerships and how to work with partners. But for somebody who is new in this space, or a new CEO, why should a new company consider partnerships?
There are multiple options. First of all, if you are in the modem SaaS and cloud world, you may think you will sell everything directly and you don't need partners, neither channel partners nor integration partners. But the concept of partnerships, and especially reseller channels is actually a very old concept in IT. There are multiple reasons for it. We are a software company, but we still sell via subscription. So traditionally, you would be an independent software vendor (ISV) and you would be selling through Tech Data or Ingram, these large distributors and they go to hundreds of thousands of channel partners. The reason is, if you want to scale globally, you need localization, you need to speak the local language of your customer. Maybe as an IT company, you don't have professional services, so your partners might do the customization for regulatory requirements or for other professional services that your customers need. It's really about scale I would say. Also for SaaS companies, when you look at smaller startups, they often say “we don't need partners”. But when you look actually at the bigger ones, Salesforce, Workday, you name it, they all have huge channel partner programs. That is exactly the reason, because they could not scale on their own. They need the channel partners to scale on a global level.
As a startup we need to figure out our product and then we can scale through partners. While deciding on which types of partners to focus on, how would you recommend choosing between co-sell, marketing and so on? Where do you start and how do you scale it?
Obviously the reseller channel is the most difficult one, because you need different capabilities. Also on your software as a service platform, for example, you need API's, or even other things. This is super interesting, but if you have integration partnerships, that's probably easier to reach, because it's all standardized technically today. With Zapier and other tools you can build integrations to partners that provide complimentary solutions. In our case, we also have a special kind of go-to-market partnership. And that's the partnership with hyperscale cloud - with Amazon, Microsoft, Google and others, with their marketplaces. Interestingly enough, in the beginning that was just like traditional software vendors, where you really need to install something and you add it to make a deployment, so you become SaaS. Today, Amazon, Microsoft, Google, they are also brokers for SaaS companies. And I think the key reason why to do that, to partner in different directions is when I advise startups, I often get the request like, what is this magic growth hack in digital marketing that will bring me immediate scale and start producing money, right? In most cases, building up a digital marketing funnel is super difficult, and it takes a lot of time and testing and experimenting, whereby with partnerships, you literally almost don't need any budget. It's your time personally, that you invest to build these partnerships, and if they're successful will get you much more awareness and hopefully sales out of it as well.
I would challenge you on this a little, because time is money, right? And the time you spend on partnerships you don't spend on something else. I think you previously had a really interesting argument that partnerships make sense because the cost of customer acquisition is skyrocketing. I would love to double click on that, and maybe talk about where do you start? What is the easiest way to do partnerships to see early results?
I think you probably would need to see the whole digital digital marketing funnel and what you build yourself in terms of marketing in combination with building partnerships. Also I would not try to build 50 partnerships at once, I will try to figure out, what is the one that brings the most, maybe one or two. Also maybe test a little bit or what would bring you most. And also, I think it's important where you can attach yourself to a brand that is much bigger than you. This is where a bigger brand gives you a lot more free awareness than if you partner with some smaller company. I definitely think if you spend time with one or two, or maybe three specific brands in the beginning, and be very focused based on what your ideal customer profile is. To think big, start small and scale fast and combine the partnerships and the digital marketing efforts.
I couldn't agree more, it's great advice. You just mentioned that it makes sense to work with companies who are much bigger than you. But these companies, especially on channel partnerships, are probably already working with someone else. How do you convince them to work with you, in addition to, maybe, three of your competitors?
There you really need to discuss with your channel partner who their customer is, who their audience is. Often they are not serving just one single audience, often they have multiple different segments, especially if it's a bigger company. Sometimes there are different regions. The one product that they're selling and implementing fits much better for one specific region or one specific target segment, and your product that you want to sell to them would fit into another segment. I always try to convince channel partners to offer both and that we would work together to make this successful, even if it means they will have an additional learning curve to do it. But often when it comes to the day-to-day business, it's easier for them if they can offer both. We've done that many, many times in our case.
You mentioned that for a new company, they need 3-4 partners to start with. But now you have hundreds of partners. How do you scale?
When we scaled it's very clearly that we only did custom efforts with our top top clients or top partners, where we have lots of materials and people in place that closely work with their marketing teams that set up the campaigns, content, newsletters, social media, and developed custom campaigns that run over 3-6 months. So that's for the top level partners, because they also have the biggest impact for us in terms of revenue. And again, on the on the long tail, we have just standardized marketing materials where we say yes, we help you with co-marketing, we can even give you marketing development funds as well, based on the how much revenue you do with us within the tiers, but it's very standardized, very automated in comparison to what we do with the top partners.
TBC in part 2.