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Why tech companies double down on partnerships and what is the gap they need to bridge to succeed?

#Partnerships (JVs and alliances) have been growing 📈 14% YoY compounding since 2016 (McKinsey). The tech sector continues to power deals to drive #growth as a primary goal - we discussed details.

💬 We discussed with Jay McBain from Canalys on why tech companies double down on partnerships today and what is the gap they need to bridge to be successful.

🗽 "In the last two major global recessions, 2008 and 2000, the technology industry has led everyone out of the recession. It tends to double down and partnerships tend to double down during these times.

Based on our research, 51% of partners are investing more in marketing during the downturn to come out of it stronger than they went in. This is a time of competitive advantage where you can invest more in partnerships....

💡 The trick is, it doesn't happen immediately.

When you have a new partner, they don't offload any costs, they add cost, because you have to hold their hand through the marketing cycle, the sales cycle, and the integration implementation cycles. They're not doing anything on their own.

The second deal gets a bit better, the third deal gets a bit better. But in the first six to 12 months - it's a double cost. I'm funding to channel, I'm funding my own internal teams. This is expensive.

But again, on the hockey stick curve, when that partner can start doing it on their own, get a deal, sell a deal, and service a deal, and you're starting to win deals in your sleep, your cost to acquire customer almost goes to zero,

📈 The lifetime value goes up because the churn rate goes down on those types of deals. And when you start to see those deals happen in your sleep,

Very early on, you got to recognize partnership leaders and put them to the highest parts of the organization. Because in an 18 month build of a channel - most people get fired at month 12. Especially in these macro economic times.

🏆 You got to find some early successes and make those very visible to the organization and let everyone know that even Microsoft was on a journey of partnerships early in the stage and a little bit of jumping into caution that this was going to work at some point."

NB: Today MSFT has the most developed partner #ecosystem with 400K partners. For every 1$ in MSFT revenue , partners who build differentiated software solutions on the their cloud generate 10$ more.

Image: Stablediffusion


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