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The Partner Channel Podcast Episode #8

What Your Partners Really Want From You 

Show Synopsis

In this episode of the Partner Channel Podcast, Daniel Graff-Radford is back and talking with Sunir Shah, CEO of AppBind and President of the Cloud Software Association. Sunir and Daniel discuss the importance of building trust with your partners and why it is crucial to keep your channel simple in the beginning.

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The Script

Daniel: Welcome to the Partner Channel Podcast, The Voice of the Partner Channel community. In this episode, I Daniel Graff-Radford sit down with Sunir Shah President of the Cloud Software Association and CEO of AppBind today we’ll be discussing how to have better relationships with your channel partners and a heads up for your listeners. This was a webinar that was incredibly well-received. And so we are packaging up for you guys here on a podcast.

Sunir: Thanks for having me. I really appreciate it. I’m the CEO. I’m Sunir CEO of AppBind and the president of the Cloud Software Association. And my whole schtick the last 10 years has been sassed partnerships and impact, in particular, how to bring SaaS into the massive distribution network that actually exists for B2B software that for some reason we’ve all been struggling to get a hold of. But things are trying to turn around. And I’m really excited to talk to Daniel because of all the people I’ve met in this industry. You were one of the few people who really understand what’s working and not working. So I’m happy to have this conversation with you.

Daniel: Thank you so much for saying that.

Sunir: So let me just table set what I’m what we’re talking about today. So my background actually started off the partnership team at Fresh Books and later became head of marketing at Olark Live Chat and from the beginning of my partnerships career. And SaaS it was really technology partners we’re talking about. But all through this whole thing, I’ve been struggling to figure out the service partner, the channel, because my background actually, as I was a software developer working in a dev shop in the licensed software channel, and I’ve always known how much more money there is in the licensed software world, it’s just so much bigger than anything we’re doing. And I just give you a couple of numbers. B2B software, they sell three to sixty-five percent through partners.

That’s 325 billion dollars of B2B software sold through partners, Sarcelles, less than twenty billion dollars through partners. And I’ve known this forever. And my very first partnership call at Fresh Books, which is an online invoicing service for agencies, was one of our agencies who said, “Hey, I love your product, how do I sell it to my customers?” And because I’m a dummy, because it’s 2008, I thought it would be a five-minute call. It’s like anything else, you would just ship them a box of stuff at margin and they would sell it on to their customers. Everyone’s making money, high fives all around. I thought it’d be really easy, but with subscriptions, that was extremely difficult and I couldn’t really understand why. But really, it comes down to two things. Subscriptions are really hard to resell because customers have to own their own data and the billing is really, really difficult. So this has been the journey I’ve been on. I started the Cloud Software Association, which is all the SaaS partnership leaders. Our trade association is over three thousand less us and they’re trying to work on this problem. And along the way I started AppBind as a tool to solve the problem of how you take a subscription and turn into a managed license so that service partners can sell it. I’ve talked to a lot of service partners over time, over my time at Freshbooks and at Olark and now with AppBind.

And I also was an agency myself and I learned a few things. So that’s where I come from. I’ve been an agency, I’ve been a SaaS partnership leader. I’ve been in the channel. I’ve gone I’ve lost a lot of hair and I have some wisdom and pain and suffering I care to share with you. So just table set. You know, I think a lot of people look at their service providers and go, “why is it so hard to work with them”? Sometimes you put a little bit more me is like “they are impossible to work with” and “what’s wrong with them”. But I’m going to explain to you a little bit from their point of view what’s going on. And if you understand what they’re doing, they’re doing things rationally from their point of view. And if it’s not working, it’s because we’re just not lined up with them. Look, it’s all begins with the customer, right? So we talked about this. This is like every human has had this experience. It’s been around for ten thousand years, almost maybe a thousand years of commerce. Now, clients are the source of money, like the end customer. But why are they involved in this conversation? Why are they going to a service partner like a marketing agency or a dev shop or a SI? You know, why are they doing this? What’s the same reason you would hire a plumber to fix your sink or a mechanic to fix your car? You don’t have the time or expertize to deal with this or the special tools or anything.

You know, you don’t have the organizational capacity or capability you have to hire outside help. But they have an acute problem. They need fixed. They feel like anxiety and the feelings. But it’s a business risk they want to deal with and they need to get it done. So they’re looking for someone with time and expertize to help them. You know service partners are not selling technology. They don’t sell technology. And if you treat them like they’re selling technology, you’re going to have a hard time because that’s not what they’re selling. They’re servicing, they’re service partners, the service, their customers to solve that problem. They’re trying to sell time and expertize ultimately to deliver a high-performance result done reliably and quickly for the clients. And really, it’s all about reducing the risk for the client. They do need that technology, though. They need you because they’re leveraging your technology, because it gives them that high performance result reliably and quickly. But ultimately between them and their customer, it’s all about solving that problem for the customer, lowering the risk, providing in there their point of view, the reputation of time and expertize and trustworthiness, that I’ll get the problem done. for you now does that make sense.

Daniel: I love that that that result part of that, I would say that that is one of the things that is most important. And I think before you think about finding partners, you know, thinking about how your solution, your SaaS solution in combination with that service leads to some sort of result, you know, it’s great if they can make tons of money selling your software, but it’s even better if that end customer gets some value from that service provider and your software in some sort of combination. And the better you can articulate that result, the better. And we see that over and over again. That’s a really good point.

Sunir: One hundred percent. So what does this mean? Like so if you’re working with a partner, right. They’re not selling technology. They’re not interested. They like they need the technology. They might like you, but that’s not important. And there’s always another tool or part or technology, you know, if you don’t work with them. So what’s happening? Like, don’t forget, they’re selling trust and their reputation. If you ever dealt with an agency owner, know some people call them their ego-full or whatever. Well, they’re not ego-full, they’re selling trust and reliability and the reputation, the customers and a lot of them have imposter syndrome because a lot of risk on trying to sell knowledge, but something they may not know. They never use your tool before. Right. And so I’ve always had this view personally that partnerships are just like dating.

In fact, most of us prosecute our partnerships like we prosecuted our dating history in high school. Honestly, I swear to God, and it’s really like dating is like building trust with another person. You’re trying to build more and more of your life together with them. The partnership is like building more and more of your business with them. And what is the what is a partnership? You’re going to market together to serve the same customer. Your partner they don’t know whether they can trust you yet. They’re selling trust, so they need to trust you. It’s a layer, so it’s really about building a relationship over time. It starts with a coffee date, you know, in fact, it’s not even a coffee date. First, they’re going to look at you. It’s going to make eye contact. It’s like when they make a recommendation to a client, it’s like, yeah, I heard the problem.

I heard of a tool that might help you. You know, you should check this out. They’re not putting their reputation on the line. They’re just talking to their client and giving them, “hey, I saw this. You should check it out”. That’s actually how it begins. Then they will make a recommendation and try to make an introduction, maybe be part of the sales process. That’s where they’re working with you. They don’t know yet how to sell your product. They don’t know how to implement it. Maybe they’re hoping you do more of the services, but they’re trying to see whether your product can solve a problem for one client, which means they can probably solve this for other clients and as they build trust and they see that it’s a repeatable process that they could probably take over. They’ll want to move into a much more direct sales where they’re actually pushing the product into their client base because it would be a natural part of their own sales cycle, because it’s part of their solution. That’s when you’re basically getting married. I mean, the ultimate case is when they actually take you over as a vendor and manage, you just basically load your right into the retainer or whatever they’re selling. They’re just going to implement it to every client. No questions asked. You’re going to get this. Like email marketing agency going to implement HubSpot. They’ve managed to achieve that, which is pretty admirable. But that’s marriage, right? You really want to get to that point, but you can’t start with marriage because they don’t trust it.

Daniel: And I love how you kind of look at sort of the escalation of the relationship. And, you know, a couple of things that we see customers doing really well in that early dating side is, you know, when someone refers you in somewhere and it goes great for your now joint customer, not only to give that person who brought you in some level of credit, but keep them in the loop. You know, don’t just sell, sell whatever you’re going to sell and get out. You want them to know that their introduction help their relationship with their customer because you did a great job. And so treating that relationship as such as core to the end relationship with that new customer is really important. And a lot of people skip the step of keeping the person that brought you in in the loop and that that’s a big mistake and will definitely not lead to a marriage down the road.

Sunir: No, absolutely not. I mean, because what’s going to happen, I’ll tell you this, like what happens what goes wrong in the channel is you screw up like you don’t know you’re screwing up. You start saying things to the clients that they don’t know. They don’t know. The agency doesn’t know that you’re saying. And you start making chaos. I’ve heard the story. There is one company where they didn’t really have a proper channel set up so they would have partners managing a sale. But then the inside sales team would look at those accounts and say, “mine, thank you”. And they start talking to the client and start pushing the prices up and turn up, sell them and start adding more things and trying to do a lot of pressure cooked sales. And on the renewal and the clients go back to the agency like, what is this and who do you think they’re going to blame? It’s not going to be the vendor because like the relationship, the clients closest relationship is a service partner, the agency who brought them into the deal, they’re going to blame that agency and that agency that their client thinks the agencies deal with. The vendor agency has to go back to their partner and deal with this. And it could be very risky. They could lose the client. I mean, I saw that happen to one company is like very, very adamant this is their process. Please stop doing this because you’re going to collapse or channel. You can’t you can’t randomize your partner. You have to realize whoever’s closest to the customer controls that customer and you support their sale. They don’t support your sale.

Daniel: We have a customer in the financial services space, in the payment space that was doing some partner interviews and realized that they weren’t really paying out a great commission, per se, for the relationship of being brought in. But the real desire was to be looked at by the end customer as a hero for bringing in a great tool. And so they were considering whether they change the commission to drive more, more business. But what they did was did some highlight spotlights on their partners that we’re bringing them in and making sure that those end customers knew that these guys were wonderful at what they did. And those, you know, I think they were accounting firms were able to get more business out of it and to use it in their own marketing. And that helped lead to what was a marriage where they were able to be brought into a high percentage of those accounting firms, businesses. So those early communications and highlighting and showing them to be the heroes can help lead to those marriages later.

Sunir: You know, it’s actually it’s it brings up a really good point. So this comes up a lot. Commissions, how much, how much more, how much even more before it works. It doesn’t make a difference. You can give 3000 percent. I mean, does it make a difference? Because the problem is. Commissions are important. You need to give some margin to your partners, not because it’s going to motivate them to sell more your stuff because you’re not where they make their money from. They make their money from the customer. You are secondary. They need the margins from you like any business relationship and any value chain, because they’re investing time in you. So they need margins back from you to cover your relationship time because they’re selling time, they need something back. And by the way, the positioning I’ve heard I’ve talked to so many agencies and they say we will not sign up for a partner program whose partner page says we not even, you know, recommend this technology because it looks so bad on us when you’re talking about basically giving them bags of cash for their customers like it makes us look like we’re selling out our customer and we’re selling trust.

And I’ve had it. When a customer sees that page, often the page goes up midway through the relationship. The customer sees this page. What’s up with this, Did you sell me out like, is this really the best tool? Are you getting paid under the table? What’s going on? It looks, you know, bad, corrupt. They don’t like it. Like you’re not supposed to don’t talk like that and not you’re not going to get your money at the worst, agencies where absolutely money-oriented to coin-operated is the term people use that term. It’s so so not understanding what’s going on. Only the only people looking at dollars will look at that. Most agency’s vast majority are client-oriented. Just like you said, success for them is not your commissions, it’s how many more customers, how better serve those customers, how long they keep those customers, how many recommendations, referrals from their customers they’re getting from you, working with you. Remember the customers, give them all their money. You give them very little.

Daniel: I remember years ago when I was running the first channel, I ever run was at OmniLink Systems and I had a partner call me from an Aston Martin dealership to renegotiate the rev split. And I realized I needed some new friends and that, you know, the people that I really enjoyed working with were it wasn’t they were making good money, but it was more about, you know, how we were creating mutual value for that end customer. And we ended up being able to move on to some other groups where the interaction with better. So I think it goes both ways. You know, it’s one of those things to your point Sunir, you get the money-oriented one and it becomes kind of just a relationship about that. You should also wonder what they’re like out there in the wild talking about your product if they’re not the right partner for you to. 

Sunir: One hundred percent. And like this dating relationship, I think if you if you can’t wrap your head around it, the dating relationship. Explains all this creating value for the customer. Like that’s setting a vision for your children together, like that’s what the customers are your mutual child, so to speak, and get married, like, that’s what you’re trying to serve as, your relationship. Think of it like that where it’s like if you’re thinking about money only, that’s for the one night stand. You don’t want the partner’s money to be the overriding factor. It has to be the customers, the mutual customer. That’s the overriding factor for you guys to be in business. I always like to say I had this thing called the Indecent Proposal after that movie, but in a partnership and I’m really leaning into this one. The so what I do, the indecent proposal wasn’t that indecent. It was always about, I always thought, a big vision for the partnership about what is the customer getting out of this, because if it’s not rooted in the customer. Every partnership fails ultimately, because, again, that’s where all the money comes from. So if you know what, how we serving the customer together, what are we doing together? If we put our two business practices together, how much of the whole product solution will the whole service solution can we deliver? We’re working together there for close more customers and perhaps get more opportunities and marketing opportunities.

Daniel: What does that mean to that end-user and can you help them articulate it? So transactional relationships are all about they sell something or you guys sell something together and what happens at the end? What we’re very fascinated with here at Allbound is the leading indicator that we call monthly partner engagement. What are the types of engagement and activities that they’re doing with you? You’re doing what they’re doing to engage with you they’re doing whether it’s in a portal or with other types of ways to work with your content that lead to outcomes that are mutually beneficial? That could be a transaction, might not, but you might have non-transactional relationships where they’re an affiliate or they’re helping create awareness for you. So what are these relationships and what’s the result you want?

Daniel: And so there’s things that we really believe are great around training. Are they properly trained on how to represent things out in the wild? Are you guys engaging together on some collaborative sales in Allbound? We have a collaboration feature where you can collab on sales together. And also we would tell you that there are ways that you can gamify so you can assign points and they can win gift cards and you want to just deepen that monthly partner engagement while measuring the outcome that it leads to. So, you know, we’ve had customers tell us that they have partners wasting a lot of their time. Well, what is the engagement and the outcome that you want from that engagement? And are they doing the right engagement? And is it leading that outcome? And to be introspective about those things?

Sunir: You know, actually, this gamification Allbound, I can’t highlight enough how critical that is on this thread. We’re talking about what are the KPIs for partnerships and what you guys are doing. Is what we did at Fresh Books because I’m a crazy person, I’ll do whatever I want. I set our KPIs up as hearts won. That’s what I wrote as my KPIs to the to the CEO hearts won. I told my team to win hearts and this meant something to us. I view partnerships is not about revenue per se, it’s about winning the market, because each of these people, or each of those companies is one of the places your customers are going to go to to make a decision around purchasing something like your solution. And the partnership team, in my view, is to establish access to these markets, these channels of the market that your direct marketing team can’t get to because they’re controlled by other people. But that’s how I view partnerships. What I consider hearts won is at the beginning you’re doing proactive stuff. You’re targeting you have a launch plan, then you start sending co-marketing and you are doing effort to engage with them. Your goal is to enraptured them and make them feel this is what I told my team, your goals and enrapture them, make them feel like we’re the best partner they ever had.

And when they start sending you opportunities unsolicited for no reason, just because you’re top of mind, you’ve won their hearts, you think you’ve won them over because you’re such a pleasant partner to work with, they know that they are relying they can rely on you, you’re dependable. They can build a business based on you. And they want to like dating, you know, occasionally buy you dinner. And this is how dating works it’s a two way relationship. Partnerships that you give them something, they give something back to you. You build trust this way. This is how it works. Now, you can systematize that with Bob Moore at Crossbeam with account mapping. Right. To share leads. But that’s part of the I’m putting stuff in to help you. You’re helping me. It’s I’m doing it because I care about you. You’re doing because you care about me as well on the emotional level. What you’re doing in Allbound you have a system inside to make it easy for managed to do that across not just one relationship and dating, but across hundreds or thousands. Right? That’s such a great thing about Allbound.

Daniel: If everyone’s making money on offering a really well thought out joint solution where that’s the expectation of the end-customer that you want to reinforce, whether it’s on your website or in any sort of literature because people want to know that they’re getting paid well for doing good work. But what they’re not looking for is that, you know, you’re getting sold as as as a lead or something like that, that these people really are caring about the outcomes. I think this is a great, great lead into this. So Sunir do you want to help kind of understand the low impact, high impact from that customer’s perspective?

Sunir: Yeah. So here’s the deal. Like, so why are clients hiring agencies? Remember, they have actually they feel it is anxiety almost universally. OK, there’s that’s a reason to go inside the organization going inside your organization’s great trouble with your staff. So when they go outside, usually clients are feeling anxious. And I was in an agency, too, and I’ve learned this you the good ways and bad ways that what you want to do is an agency. Ultimately, often it does even matter what you deliver them if the client feels like they’re more in control and less anxious. After engaging with you. They will love you if they feel more, if they feel when you’re working with them that things are getting more out of control or more anxious or more risk, they will fire you because they hired you to deal with it and you’re making more problems. They will get rid of you. And so in the range of, like, how agencies look at things, it’s a time versus risk or actually clients time versus risk. They can’t use the client’s time willy nilly because they don’t have time. That’s why they hired them. So whenever they use client time, it has to be around things that are good risks, that where they where you’re working on risks, that the client will feel like they are more in control.

Sunir: They’re happy to work in an agency. They are more powerful because they bought this agency. They’re better situated in their organization. The client is in a better situation. They do not want to spend time with the client or we use the client time for things that are actually increasing problems for the client. So good things that agencies do is they help set a strategy like this is what are what is your techstack supposed to be? What is your marketing strategy supposed to be? Whether the tech that you should use, what are the right vendors? What is the right amount of money we should be spent on this campaign to get ROI? Is there organizational change involved? That’s a big risk. But I’ll help you train. I’ll help implement. I’ll help get your staff on board. Is there compliance issues, you know, that have to come along that I can help you deal with it, to make you feel like you’re going to be successful? These are all risks that come with a project. These are risks that only happened because of the project with a good risk, because you make the company actually better off for having spent time on it. Bad risks are when I was like, I don’t want to I don’t know this vendor at all. I want you to deal with a vendor. I was talking to someone today. We’re getting referrals from agencies, but they don’t want actually want to do any of the stuff. So they said you handle it. Well, that’s not going to happen. You’re not going to get that transaction to come through because the agency doesn’t trust you.

 Like they don’t know anything about you. They’re still like looking at you from across the bar. They don’t know whether you’re good or bad. So just send the customer straight over. It’s like high school. You talk to her like.
If you believe in my product. You’re going to handle the sale, right. Because you’re project manager clients. They’re not there yet. You know, if it’s like the contracts and billing and the process, you know, you’re doing it inside sales and they’re creating a lot of confusion like they’ve change. Like the agency said one thing and then you’re selling them like three other things. You know, you’re not aligned with the partner. You’ve just, like, made problems if you’re inside sales is to try to push as much ACV out of that client as possible, selling them more product. You know, the agency is going to be on the hook to make sure all that thing is successful. You’re not maybe not be prepared to do that. They don’t have the internal processes to, like, add, you know, like HubSpot and maybe they just want to do the sales process. They don’t run the blog or social media may be outside their scope. I don’t like Hubspot doesn’t do this, but like, imagine you sold them extra products you wouldn’t be able to handle as an agency. I would say no, you’re going to be aligned with your agencies. You know, make sure that you’re supporting their sale. They’re not supporting your sale because they’re the ones closest to the customer.

Daniel: Right. That’s a really good point. And the more you can be aware of what they’ve put in writing and what they’ve said before you go in there, the better chances of that happening. So some things that we see go very badly is there’ll be an agreement between you as a SaaS provider and your partner on how you’ll approach things in general. But then where the rubber meets the road for that specific customer, for that agency, they’re doing things differently, which is why they’re there. It’s very bespoke what they do. And if you’re not aware of what those differences are and how you’re going to handle it in that deal with them, then you’re going to seem like you’re giving a pretty jarring experience because you’re giving the formulaic response. And so it makes a very big difference if you can, you know, get aligned before each interaction. And if you start having separate interactions, having ways that you can touch base and make sure that that the interactions are aligned, because the quickest way to lose something for both of you is to have something very different what they hear from the agency versus what they hear from you.

Sunir: Yeah. And, you know, honestly, that gets into some of what is an incentive for agencies. So they want to know they can trust you. You’re going to be there to support the. So number one position yourselves like I’m here to support you, that actually immediately makes things a lot better, like, oh, you’re going to you’re here to back me up because they don’t even know you. And second, you know, they’re going to be responsible for implementation one way or the other. So they want to know whether you have good teams that they can manage for the client or you’re going to train them. You know, HubSpot, SEOMoz or Moz.com are famous for having great training communities. Like they want to know that they can build up agency practices. And in fact, if they can even show them how they can build retainers around your product, your software that they can sell and become repeatable, revenue gets even better. They don’t know like they don’t know. How do they know if you can show them kind of like a McDonald’s franchise, where they give you a binder, like here’s a step by step playbook, how to be successful.

So the client just takes a lot of risk out for them. In fact, that’s probably the first thing they want to know. Besides the product, does it work? Because how do I get service retainers?

And then finally, you know, they want to know if they invest time in you. It’s not just about you then giving you customers that you’re going to end up supporting them with co-marketing referrals, client referrals, putting them in the agency directory, that there’s a give and take there, that it’s worth their time to invest in you and you’re going to invest more time in them so that they can actually build a sustainable business based on you. Like, definitely sending them clients or showing on your partner page the best compensation is not money, it’s actually client referrals. Right. So this is all the stuff that makes an agency feel confident in you.

Daniel: I think this is great. You know, there has been a lot of very rapid change in businesses. So a business that was projecting a certain 2020 outcome and now projecting a different one, we saw a very big divergence between channel leadership and executive leadership in a very short period of time where there are some really important ways for you to engage with your executives to make sure that if they’re making some some changes in the overall strategy, how channel can really help with those changes and be a seat at the table without that executive buying it is really hard to get resources. It’s really hard to get attention. And it’s a much more likely you’re going to have conflict between direct and indirect sales. So you really need to have that sorted out right at the beginning. Sunir anything you want to add to that?

Sunir: Oh, man. The perennial question, how do you convince your CEO to invest in partnerships is something that comes up endlessly. We’ve been talking a lot, actually, the Cloud Software Association. This year there have been successes and failures because of the disruption. So where you’re going to have trouble is when your company is on the treadmill to try to keep revenue up because they are freaking out and you can’t, again, emotions, right? So they have unmet needs, your CEO or whatever. Their unmet needs are freaking out because they have like revenue targets to hit. They’re not going to be interested in a strategic change right now. You just have to be empathetic that you may think it’s a good idea, but they just have the mental space to deal with it. Conversely, depending on, their humans right. Conversely, they may be open to new ideas because there’s no more event marketing. There’s a lot of digital transformation going on. They can’t go to market. They can’t they don’t want to hire anymore. They might be very open to experimenting in general. They might have budget freed up from the event marketing budget. So you can say, well, can we use some of that to try this out? We might open that door. And my argument is, I mean, getting to Allbound means you’re probably fairly developed, but you want to if you’re not, don’t have a channel program yet.

What you’re doing by not having one is you’re closing the door to all these people. You say, I love your product, how do I sell to my customers? All you need to do is open a door a little bit to see how you can get somewhere. It really is a matter of putting up a partner page and seeing what comes in. Right. And you probably also have customers who are actually already attached to partners. You have this shadow channel and you know, you might actually have a shadow channel that you can start interviewing and maybe just a few phone calls you might find there’s an opportunity there, but that’s how you convince management. You’ve got to show them something they can’t see so that they go, OK, this is achievable and  keep it simple, stupid. You just need to start with something simple and prove it out. And then once you have the traction, then you can invest more in it. Right.

Daniel: And the more you can do to engage those initial partners to learn from them and how they’re engaging, you know, the end customers and understanding what everyone’s caring about, that very early stage is going to really help you before you go big and invest in meeting a lot of people and, you know, start small. See, with those types of companies are get rid of the ones that don’t. And by talking to the end customers and then that will help you to model over the people that you really want to have. All right Sunir final four questions, if you could have one superpower, what would it be and why?

Sunir: Are you kidding me? It’s 2020, it’s the cure pestilence if I can go around and clean this mess up, you know, everyone would that would be a superhero strategy.

Daniel: That’s right. That’s that’s a good choice. All right. So back into the channel. If you can talk about one mistake and one success that you’ve had in the channel for people to learn from.

Sunir: You know, I’ve been pretty honest about this because there’s my own idiocy, which I think is great because you need to be able to face the fact that the channel has been hard for everybody.

And I made the same mistake a lot of us make because I came from the software side coming at the same problem I do with AppBind is our original messaging was telling agencies and resellers and MSPs that they could buy technology using AppBind. And after some amount of yelling at me at a cocktail party, remember those cocktail parties, the cocktail party Dreamforce by not just one but three different agencies I cornered because I was like wondering what is wrong with this message? I learned that these service partners don’t buy technology. They just don’t buy it. They need it. And the messaging changed as a result. And it was much better and aligned and it actually changed the way the product is positioned and created and how we think about things and it’s been resonating. So here’s the deal. Service partners don’t buy technology and software companies. You think of these companies as buying their stuff and selling it. They have a completely wrong they’re not really reselling. What they’re doing is providing selling to their clients a high performance, reliable results delivered quickly and with expertize like they’re selling themselves services, time and expertize they need that technology because it gives them leverage to deliver that result, know the high performance, reliable result.

And they need to do it efficiently because they’re selling labor. And so they need the technology because it gives them the power to do it. It fit, you know, within the ways that they can make it profitable. So that’s where technology matters to a service partner. But they don’t care about the technology. They replace you in a heartbeat if it solves the client’s needs in a different way. And so that’s why when you message and work with them, you’ve got to think about how you are giving them the superpower to be the super hero to their client. Right. They need the capability to solve a different, difficult problem in a way that with their services, that’s all that matters. You know, your plumber doesn’t talk to you about a gasket. They just need that gasket. So they go by it all. They buy the best stuff they need to solve the problem. But they’re not going to tell you about it. But it’s part of them fixing it and, you know, being reliable plumber, that’s really what it comes down to.

Daniel: That makes sense. So the mistake is not understanding the partner’s end-goal or problem that they’re solving and the success is figuring out a more innovative way to solve it.

Sunir: Well, it’s basically the idea of treating your your your your service channel like channel partners as a sales channel. And their only goal in life is to sell your technology. Whereas anyone if you’ve been on long enough in partnerships, you know, your partners do not do not care about selling you. You know, ultimately they have to sell themselves to the customer. You have to work together to sell that customer. And when they’re leading the sale, you have to support their sale. So when you are a technology company going to a service partner, there are selling services and solutions. You are only one component of a much larger project. You’re going to figure out how you fit into that rather than them taking you and your top sales points. You know, your value unique value prop to the customer. They’re not going to do that because there’s nothing to do with the customer.

Sunir: You know that the customer has a bigger problem and they’re solving that. And you’re just part of it.

Daniel: That makes a lot of sense. And, you know, if our listeners that aspire to move into channel leadership is their business book that you recommend for them to read that that you like.

Sunir: Well, there’s a lot of books, but I think basics there are two books that I recommend consistently because they’ve taught me more about how partnerships should work and have, for me, been very successful one. I mean, you’ve heard of these Crossing the Chasm by Geoffrey More and The Innovator’s Dilemma by Clay Christensen. And what both these books tell you is how the network of companies inform a market and how you fit in and work with other companies in order to create the overall solution. So in Crossing the Chasm and this is, by the way, how I view partnerships and this is why we were so successful at Fresh Books and later Olark, because this is how I think about things. It’s a partnership, not just a transactional thing. It’s about quarterly business results. They’re about bringing yourself to the places in the market where the customer is looking for information or solutions, where the customer is going to the market looking to solve their problems. They’re not necessarily going to come direct. They’re going to go wherever they need to in order to solve their problems, whether it’s them doing research, you know, whether it’s reading magazines or watching TV or on the Internet or in search. That’s your typical digital marketing direct marketing channel. Sometimes they go to service partners because they don’t have time or expertize, so they hire an expert. You know, if you’re going to take over a market, you’re going to have to go and place your brand at the top of mind in each of these places.

And that includes working with service partners, because that’s where a lot of your customers are going to go. And then you have to then think about from Clayton Christensen’s point of view, Innovator’s Dilemma. He talks about the network and component model of technology. How do you fit in? All right. And so service partners, like I said, are creating a bigger there selling something bigger than you. They’re selling an entire project. You’re a component in a bigger product. Just like our hard drive is a component of a MacBook. You know, you don’t buy the hard drive from Apple, you buy the MacBook, the customers buying. You know, I need more customers off the Internet, you know, not buying a landing page. So they’re buying from the agency that the marketing agency, the result. You’re just a component to create that result, you know, and you have to think of yourself from a partnership point of view about how you fit in to the other to the rest of everything. And that’s how you actually go to distribution through markets, through other companies is thinking of yourself as a component of their overall solution that they’re selling. And they might be it could be a component of something else. You know, it’s a could be Russian dolls.

Daniel: I think that’s I think those are good reasons to read those books. That’s great. And then the final question. All right. Five years from now, what are the major changes going on right now in the channel that will affect our world five years in the future?

Sunir: Well, it’s happening, and I like William Gibson’s point of view that the future is already here, it’s just unevenly distributed. So the future is here, which is the past. We’re back to the future. Microsoft is here and they brought their channel with them. And so they’re bringing this idea of a CSP and they’re just multiyear distribution. And that’s why they’re now the number one B2B SaaS company outstripping Salesforce as they sell through the channel. And so what’s happening? And this is no denial where AppBind comes in and why and building it the way we did, because this is unevenly distributed. You can’t not everyone can be Microsoft. You need some way of providing to your potential partners a way of retailing and distributing subscriptions, which means converting them into something that looks more like a managed license, you know, which is why Microsoft is a trillion-dollar ecosystem around them, you know, and other companies don’t. They are a massive force because they work through the channel and they invented the idea of license software in the 80s. And that’s their model. And it’s extremely successful for reasons because it creates a value chain. So in five years from now, the Microsoft Channel is going to come and restructure all of cloud software and subscription software so that it can reach every corner of the Earth through every value chain and every distribution chain, every service partner, every retailer. You know, Staples will be back, you know, reselling software again, you know, Dell and Gateway or whatever will be selling software when they build computers again. You know, these things are going to happen. And, you know, the idea of going direct or having your partner team talking to every single sale as they come in is going to go away because it’s just unmanageable at scale that the Internet provides. That’s what’s going to happen.

Daniel: I think that the network effect that people talk about is only a piece of it, to your point, there’s a layering and a stickiness to having this community fight for you. I think that’s great. Well, I want to thank our guest Sunir Shah from the Cloud Software Association and AppBind and I want to thank you, our listeners, for joining us here at the Partner Channel podcast. If you like what you heard, subscribe to our podcast episodes wherever you listen to podcasts, if you want to learn more about Allbound. Please visit our website in the description below.