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October 13, 2022

The 5 Rules of Building Nonlinear Growth Through Partnerships

A small seed turning into a plant over time

Partnerships are a great way to build nonlinear growth without having to spend as much money in sales and marketing. In my operating career, I ran business development for three SaaS companies: Cornerstone OnDemand, WageWorks and Upwork. Throughout my work with these companies, I’ve learned that there are five key rules to building successful partnerships, including common mistakes that can tank a partnership from the start.


Rule #1: Make Sure the Partnership is a Good Fit

Setting up a partnership is a lot like dating—you have to go on a lot of first dates to find the right match. I believe the best partnerships are those where you extend the product offering of another partner. I have three examples to demonstrate what I mean by that.

  1. Salesforce x Apttus
    A natural extension to Salesforce’s CRM product is CPQ. In the enterprise, Salesforce partnered with Apttus and in the mid market, the company partnered with SteelBrick. (Salesforce acquired SteelBrick in 2015; Apttus merged with Conga in 2020.)
  2. Gusto x Guideline
    Gusto is a payroll platform, which lends naturally to a 401(k) product extension. The company partnered with Guideline to offer 401(k) plans.
  3. NetSuite x FloQast
    NetSuite sells ERP and a natural extension to its product is close management software. NetSuite partnered with FloQast, one of my portfolio companies and the leading provider of accounting workflow automation.

Want to give your partner commissions when they sell your product? That’s great—but don’t treat that gesture as if it’s their primary motivation. I think that is a common mistake that people make when beginning their partnerships. There’s no amount of money you can give a partner to motivate them to represent you. What you can actually do to motivate them is help them sell more of their own product.


Rule #2: Partnerships are Key to Entering New Markets

It is impossible to get into every market in every industry without partnerships. When I was at Cornerstone OnDemand, we were strong in selling to the enterprise and mid-market. To help us sell in the SMB market, we found partners. We happened to also sell really well in North America and Europe, but found partners to help us sell in Latin America and Asia Pacific. Lastly, we sold well to most industries, but in higher education, most companies bought from a few, specific vendors so we partnered with one of those players called Ellucian. Those are a few standout ways that we used partnerships to enter new markets and industries.

One mistake that I see companies make is when they try to partner with too many players in any one industry or geography. It can easily backfire, especially when you have very limited resources to enable those partners to be successful. Additionally, you might create channel conflict and then those partners don’t want to work with you anymore.


Rule #3: Partner Enablement is More Than a Signature

Most people celebrate signing partnerships, but signing the partnership doesn’t matter at all. What really matters is enabling them to be successful. At Cornerstone, we partnered with Ceridian in Canada and enabled their sales, marketing, support and implementation teams to sell on our behalf. That partnership worked out so well, that we didn’t need to have any other partners in Canada. And a big reason why that was successful was our approach to onboarding and enablement.

You can’t walk away after day one, you need to train partners just like you would your own employees. I want to emphasize that last point and its importance because I think it’s a critical piece of advice. The value of comprehensive enablement will serve your partnership (and your company) more over time, especially as your product changes, the competition evolves, the market shifts or new people come in. Bottom line: treat partners like you would your own employees.


Rule #4: Send Business to Prospective Partners—They’ll Likely Reciprocate

This idea of reciprocation solidified during my time at Cornerstone. We wanted to get the attention of ADP, which, of course, is easier said than done for such a larger player in the space. ADP sold recruiting software, so we started sending them recruiting software leads. Eventually, they started to reciprocate, sending us leads for learning and performance software because they didn’t want the leads we sent to dry up. The referral relationship went so well they proposed a reseller arrangement. We started small, in the Northwest region, enabling their sales, marketing, implementation, and support teams to be successful. Once we had a repeatable motion, we transitioned to other regions across the US and the world. Before we knew it, there were more than 1,000 salespeople selling our product on our behalf.

But you also can’t expect large, potential partners to start sending you business day one. Another big company that people want to partner with is Salesforce. To be frank, their sales reps have so many products to sell, they keep building products, they keep buying products—it’s really hard to get their attention unless you start sending them business first. That can really separate you from all the other startups.


Rule #5: Partners are the Best Source of M&A Activity

Companies are not sold, they’re bought—and the partners that have the most intimate relationship with your company are likely to be the ones that acquire it down the line. A really good example of this is Kace, one of Norwest’s portfolio companies. Kace wanted to get Dell’s attention, just like we wanted to get ADP’s attention at Cornerstone. It played out similarly; Kace sent Dell leads, Dell wanted to keep receiving those leads so they reciprocated by sending Kace business back. Eventually, that led to a reseller arrangement and two years after that partnership began, Dell bought Kace. It was a great outcome for Kace and a great outcome for Norwest.

One thing I urge you to keep in mind, however, is to be thoughtful about the resources you put into a single partner to make them successful. If there’s too much revenue coming in from one partner, and that partnership goes away, it puts your business at risk. I typically recommend no more than 10% of your revenue come from one partner.

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