In their earliest days, many software-as-a-service (SaaS) companies are built almost entirely on the blood, sweat, and tears of their founders. As these businesses grow, savvy entrepreneurs realize that true success can only be found in collaboration. They come to understand that strategic partnerships with other developers, software vendors, and hardware vendors have the potential to take them to entirely new heights.
Those who have it in their head to eventually sell their business realize that these partnerships, if they can survive a transition to new ownership, tend to be extremely attractive to prospective buyers.
On the surface, it’s not difficult to see why. A well-executed partnership can add a great deal of depth to both a SaaS application as well as one’s overall business plan. It’s about more than distribution networks, too — much more.
Here are just a few ways the right partnership can impact (and improve) your SaaS application’s value.
Value-Added Resellers (VARs)
Particularly in the business-to-business space, VARs are the bread and butter of SaaS sales.
How it works is simple. When a business (often, but not always, an existing client) decides to sign on as a VAR, they begin marketing and selling your app on their own. They can do this in a few different ways.
- Selling the application on its own and bundling it with professional services such as training, management, and tech support.
- Integrating the application into one of its products and selling that product as a unified solution.
- Adding extra functionality or new integrations to the application as part of the selling process.
A VAR effectively serves as a new revenue stream for your business, allowing you to break into new markets and reach clients that might otherwise never see your product. As you might expect, this also means they’re an excellent source of business growth. Through VARs, you can increase your customer base with minimal investment.
Even better, this type of partnership is relatively migration-proof. As long as a buyer doesn’t completely mismanage your software, VARs generally aren’t impacted by transfers of ownership.
Marketplaces
Although not technically a direct partnership with a vendor, specific application marketplaces do employ their own salespeople. Again, the advantage here is the same as if you were working with a VAR. You’re getting your software in front of as many eyes as possible while also opening up an additional sales channel for your business.
The main drawback of application marketplaces and directories is that they position your software side-by-side with its competitors. Provided this isn’t your only sales channel, this isn’t much of a disadvantage, however. Mainly if you work in the B2B space, most customers will already be investigating multiple options before making a sale.
Software/Features
Selling isn’t the only way partnerships can improve your application. See, no matter how skilled your development team, there’s a good chance it suffers from a skill gap or two. And no matter how comprehensive your software, there will always be features you can add to enrich your users’ experience.
That’s where Independent Software Vendors (ISVs) come in. By working together with other developers, SaaS, and others, you can enrich your application by integrating new features and functions it might otherwise lack, and vice-versa. This could be as simple as deploying a new API that allows your software to connect and integrate with an expanded set of tools or a new payment option, or as complex as integrating your software into an entire ecosystem.
As noted by CMSWire, one of the most significant frustrations of the B2B landscape involves a lack of integration between multiple SaaS apps. Users are frequently forced to jump between numerous software platforms over the course of their day, none of which are designed to work well with one another. Some businesses have sought to address this problem by building large, collaborative ecosystems that incorporate multiple applications and vendors.
Instead of having to sit through multiple sales pitches and suffer through a series of onboarding processes and tutorials, customers that tap into a unified ecosystem can deploy multiple applications in whatever fashion best suits their needs. Particularly if a larger organization offers such a program, this provides your application with a level of scale which might otherwise be impossible to achieve, with the added benefit of working with a trusted and well-established brand.
It’s worth noting that some application marketplaces have begun to adopt this approach, as well.
Hardware
The last partnership we’ll talk about doesn’t relate to your application’s value so much as your business. If you have the in-house expertise to do so, working with original equipment manufacturers (OEMs) to develop custom software or firmware for their products represents an entirely new revenue stream. This means that, even if the revenue generated by your business’s primary application begins to decline, there will still be money coming in from another channel.
How Do You Find The Right Partnership?
So, we’ve gone over some of the ways partnerships can help your application achieve grander scale, growth, and ultimately, value. But how exactly can you find these partnerships? And more importantly, how can you tell if a particular vendor would make for a good partner?
When evaluating a prospective partner, I’d advise asking yourself the following questions:
- What specific value would this partner bring to my organization?
- What value do I bring to the partner’s organization?
- Does this partner fill a feature gap or market gap for my application?
- What are people saying about this partner online? Are they receiving largely positive reviews, or is the sentiment around them generally negative?
- What happens to this partnership when the business is sold? Will it be able to continue as before?
- Will the partnership benefit my current customers or primarily draw in new clients?
About the Author
Christopher Moore is the Chief Marketing Officer at Quiet Light, which specializes in helping clients sell their internet-based businesses. Additionally, he founded Gadabout Media LLC to inspire, educate, and unite others by creating visually stunning content for clients.