Saas Leans on Channel & Marketplaces, as Partners Cut Sales Cycle 25%

In the last year, companies with >30% channel revenue 🔜 shortened sales cycles 25%. Those who sell directly? They saw 10% longer sales.

This is driving a major YoY increase in channel revenue across SaaS. Let's dive into the data.

But first, my key highlight: Cloud Marketplaces are now a top 3 partner channel, used by 47% of software companies.

ICONIQ Capital, managing $83.5Bn in tech investments, recently released a report on the state of SaaS GTM 2024.

Drawing insights from 150 GTM executives at leading B2B SaaS companies, it reveals major shifts in sales strategies of software companies.

📈 Channel Revenue Share Increased Across Sectors YoY

Infrastructure companies are leading the charge, increasing the share of channel revenue from 25 to 30% (+5%) YoY

This share of channel also went up in horizontal SaaS, where it's now 24%, and vertical SaaS (+2%).

🎯 Chanel Efficiency Gains

But it's not just about revenue diversification.

Channel partnerships are proving to be a more efficient sales motion.

Companies with >30% in channel revenue decreased their average sales cycle by 25% between 2023 and 2024.

Those without channel focus saw a 10% longer sales cycle.

📊 $100M Inflection Point: How Partnership Share of Revenue Increases with Scale

Data reveals a clear trend: as companies scale, they increasingly rely on channel partnerships.

For companies <$25M ARR Channel/partnerships revenue hoovers at 22%.

Channel/partnerships revenue share grows to 26% for those $250M+ ARR.

Companies in the >$100M range see a notable jump in channel revenue to 24%, suggesting this may be a critical scale for partnership maturity.

Infrastructure companies with 100M+ in ARR drive 33% of revenue on average.

Horizontal SaaS - 24%

Fintech - 28%

🛒 The most striking trend?

The rise of cloud marketplaces of Amazon Web Services (AWS), Microsoft Azure, Google Cloud, now leveraged by 47% of software companies.

ICONIQ underscores:

"While reseller, system integrator, and referral models have been historically common across the SaaS ecosystem, channel leaders are turning their attention to cloud marketplaces as the future of partnerships."

📊 But Why the Channel Shift? SaaS Sales are NOT Getting Easier

Headlines from the same report summarize the challenges:

❌ Over the past year, top quartile ARR growth has decelerated for companies amidst a challenging go-to-market environment

New logo velocity has slowed as well, with the exception of companies <$25M ARR

Net dollar retention has decreased in conjunction with ARR growth

LTV:CAC ratio and net magic number have declined year over year for companies regardless of ARR scale

Measures of Sales and Marketing productivity have declined for most in 2024....

💡 How are your adapting GTM strategy in response to these trends?

What's your take on this shift towards channel partnerships and cloud marketplaces?

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