The partnerships industry isn’t the same as it was even a year ago. A dramatic shift towards the partner ecosystem, a network-wide orchestration of indirect channels, is in full swing.
Analysts predict ecosystems will be worth $80 trillion – one third of global revenue by 2030. Companies like Microsoft already made 95% of their revenue through their global ecosystems. Meanwhile, IDC predicts that Salesforce will generate over $1 trillion in new business through its ecosystem by 2024.
How can you adapt your partnerships to be ecosystem-ready? It’s clear that understanding how partner ecosystems work is essential to poise your programs for maximum success in this new industry environment.
By the end of this guide, you will know exactly what a partner ecosystem is, how to build your own, and how to manage your partner ecosystems so you can get the most value out of it.
What is a partnership ecosystem anyway?
Partnership ecosystems are many (very cool) things. From revenue-drivers to efficient relationship builders, here’s what a partner ecosystem actually is and what it does:
Partner ecosystems make it more efficient and cost-effective to drive revenue
A partnerships ecosystem is a network of relationships that make it easier to sell products or services while delivering more value at a lower cost. In an ecosystem, all involved companies orchestrate all indirect distribution channels to scale.
Remember the project management rule that said you can only have two out of the following three things: a fast timeline, low cost, or high quality? Ecosystems are the exception to this. Within a partnerships ecosystems, you can often deliver all three.
Let’s break this definition down further. The “network of relationships” is the connections between different companies who can have a mutually beneficial relationship. This extends beyond a straightforward partnership.
For example, Mailchimp and Salesforce, GoPro and Red Bull, and HubSpot and Unbounce are all examples of partnerships. Under the old partnerships model, partnerships are unidirectional and the balance of power is titled towards one company. Company A, usually the bigger company or vendor, creates a portal where they share all of the information Company B needs to sell their products.
On the other hand, ecosystems are a network of relationships. Company A may be the big dog that everyone wants to partner with, but Company A actively encourages its different partners to work together. This creates more value for the entire ecosystem. HubSpot is a great example of a company that has created a robust network of relationships. The customer relationship management (CRM) platform has over 1,000 integrations available in its App Marketplace. Its ecosystem is worth $7.4 billion and is expected to hit $17.9 billion in 2025.
Put differently, HubSpot’s ecosystem is five times bigger than HubSpot itself and expected to be six and a half times bigger by 2025. IT services companies, infrastructure providers, marketing and sales software companies, and more all play a role in the HubSpot ecosystem, allowing the ecosystem to offer valuable partnerships that extend beyond straightforward reselling.
Plus, many of these companies already work with each other. For example, Stripe (payments platform), Microsoft Teams (collaboration platform), and Quickbooks (accounting platform) all have integrations with HubSpot. This means that the overall value for customers using these solutions is amplified. Making the most of HubSpot’s solutions is easy, because they have a one-stop shop for implementation, add-on services, and more. The benefit of this network of relationships is that you can do things much more quickly, much more cheaply, and extract more value for your business.
Partner ecosystems Are carefully planned and Executed
A misconception around partner ecosystems is that they happen by chance. The truth is that a true partner ecosystem is carefully orchestrated. One company — let’s use HubSpot as an example — makes intentional decisions about its ecosystem based on the value different partners deliver, each partner’s performance, and future technology and strategic projects they can embark on together.
And as industry expert Jay McBain explained in a newsletter excerpt, ecosystems consist of different kinds of relationships. They’re not just co-selling relationships or reselling relationships. They’re an interconnected web of “technology, strategic, and business alliances as well as the non-transactional influence, sales-assist, and retention roles that partners play. An ecosystem is 10x larger than a channel at most companies.” says McBain.
Within an organized and orchestrated partner ecosystem, each partner’s role is defined, they know what their incentives are, and they know the nature of their relationship with the vendor. They also understand what the vendor’s goals and objectives are and can use this understanding to raise their position in the vendor’s eyes.
PartnerSHIP ecosystems are centrally managed using robust partner ecosystem platforms (PEPs)
This orchestration is hard to manage with manual tools like spreadsheets and even more traditional tools like standard partner management portals. Modern ecosystem strategies require partner ecosystem platforms that offer the following functionality:
- The ability to share data between partners and collaborate
- The ability to put data in “data escrow” so that companies are incentivized to share all of their data
- On-the-go access so users can access their deals through the cloud, from any device
- Interactive features that make it possible to offer demos
- Granular metrics that focus on the health of the ecosystem (e.g., # of interactions, # of employees at partner organization with vendor’s certifications) rather than just transaction level metrics (e.g., # of deals won)
- Granular access controls that can assign different role levels within each organization access only to the data they need
- Learning management component that allows employees at the partner organization to pursue training and certifications in the vendor or other partners’ technology
In this platform, partners can find everything they need to deliver outsized value. They can also collaborate with other partners in order to deliver much more effective customer solutions.
How can you set up your partner ecosystem?
Now that you understand what a partner ecosystem is and isn’t, it’s time to go over how to make one happen.
Define your ideal relationship
The main benefit of a partnership is that it allows you to enter new markets and access more customers without having to do everything yourself. But as Gianvito Lanzolla and Constantinos C. Markides explain in Harvard Business Review, there are two factors that companies must consider when deciding who to partner with and how to partner with them in today’s digital world:
- The value of the data they’ll receive from the partner
- The partner’s ability to contribute to scalability and provide operational support
Within these considerations, potential partners should be evaluated for their operating resources and capabilities. This measures a partner’s ability to help with scalability. Additionally, Lanzolla and Markides suggest considering potential partners as one of the following:
A satellite is a company that doesn’t offer much in the way of either valuable data or resources that can help your organization scale. Lanzollo and Markides point to app developers in the iPhone App Store. While they are partners, the balance of power tilts heavily in favor of Apple. That said, there are still challenges associated with satellite partners. If there isn’t enough reciprocity, resentment can brew leading to collective action on the part of multiple satellites.
Complementors are companies who don’t offer particularly valuable data, but who do offer valuable resources that make it easier for a company to scale or enter another market. Lanzollo and Markides offer Salesforce’s app developers or Netflix’s scriptwriters as an example. The challenge is potential reputational risks. A partner’s resources may help reach more people, but the way they operate can also impact the main company’s brand.
This is a partner that offers valuable data, but not a significant amount of resources or reach. Lanzollo and Markides point to GE’s Predix platform, which was meant to be a platform for other companies’ Internet of Things devices that were generating data. The challenge with a supplier is ensuring rock solid technical integrations to maintain the value and integrity of the platform.
- Strategic Partners
A strategic partner is a company that offers both rich data and extensive operational resources to support activities like manufacturing or distribution. Lanzolla and Markides use Google and Apple’s attempts to partner with automakers as an example. While identifying a strategic partner is a dream come true, it’s only half the work. Strategic alliances take much more negotiation to develop due to their highly involved nature, but the potential of this kind of partnership can be very impactful.
You can also look to your competitors to find partners
Partners are rarely exclusive to one company. If your competitors already have a fleshed out partner ecosystem, take a look at what companies are participating. The competitor has done most of the research for you already and you can use their list as a starting point. That said, you’ll have to take time to consider what value you can offer to each of these partners and why they should invest time in working with you. Because while partners don’t have to be exclusive to a specific company, they do make strategic choices internally about where to dedicate most of their resources.
Recruit ecosystem partners
Once you have an understanding of the kinds of partners you need, it’s time to start recruiting them. Here are a few things to keep in mind while crafting your partner recruitment strategy:
- Design a partner-first strategy: At every stage, ask yourself, “What can the partner get out of this?” and “What can we offer to our partners?”. Your goal is not to enter into a one-directional relationship with one other company. Instead, your goal is to generate significant shared value with your partner and for your partner to eventually do the same with other partners in your ecosystem.
- Know your partner’s target customer: This goes back to designing a partner-first strategy. How does your partner make money? Who is their target customer? And how can they use your product to deliver even more value to that target customer?
- Build up your brand in places your partners frequent: Whether that’s guest posting on specific sites, getting your company’s name mentioned in certain publications, or attending industry events, start making yourself known to the companies you wish to partner with.
- Promote existing partnerships and case studies: If you’ve already got partners, make it known. Share what you’ve done with these partners and the value both of you got out of the partnership. This can entice other companies to consider entering your ecosystem.
- Promote your ecosystem management solution: Make it clear to your partners that you’re offering a seamless partnerships experience with easy access to information and shared data. If you’re using a partnerships ecosystem platform rather than a traditional vendor site, this is a perfect element of your program to promote.
Manage and evaluate your partners
Once you’ve found your partners, don’t make the mistake of phoning it in. You want to avoid becoming an ecosystem in name only. Having a partner logo on your partner page isn’t an ecosystem. What you want is a thriving, bustling ecosystem that generates way more value than your company alone. This is only possible if you’re doing the following:
- Engaging your partners: Are you communicating with your partners and giving them updates?
- Educating your partners: Do you provide access to training on how to use your products? Sell your products? Write about your products?
- Making life easy for your partners: Is there a user-friendly partner ecosystem platform where partners can log in, communicate with you, check the status of any deals, get market development funds, engage with other partners, and more?
- Evaluating your partners: Have you developed success criteria and key performance indicators for your partners? Are you routinely checking to see where each partner stands?
- Prioritizing your partners: While all of your partners should be treated well, you won’t have the resources to give all of them VIP treatment. With this in mind, index your partners and decide which partners will get dedicated partner managers and which will get access to helpful, online resources.
- Recognizing and rewarding your partners: Depending on the size of your ecosystem, you may want to give out rankings (Silver, Gold Partner) or partner awards to recognize those that are contributing the most to the ecosystem as a whole.
The other thing to keep in mind is that a partnership ecosystem incorporates different kinds of partners, whether they are affiliate partners, referral partners, reseller partners, technology partners, or strategic partners. The goal is to create an environment where all of these entities work together, so that there are vendor-partner relationships and partner-partner relationships as well. As you build your ecosystem, keep in mind that the mutually beneficial relationships should happen in a criss-cross pattern.
Customers have big problems. Ecosystems offer even bigger solutions by bringing the world’s best companies together into one mega value generator.
But these ecosystems don’t just spring up and thrive the way they do in the natural world. In the business world, they take time, effort, and orchestration, and by using this guide as a starting point, you can enjoy the benefits of a partner ecosystem in your own ventures.