5 Types of SaaS Partnerships for Business Growth

One day, after your business begins to mature, you will likely encounter a slowdown in your business development initiatives. All of the quick wins have already been accomplished and easily accessible markets have been won. The next step to growing your business will require a higher risk and investment that you may or may not be ready to take. But letting the company become stagnant is not an option either.  One strategy to consider is establishing partnerships with brands that have mutual goals. In this article, we’ll explore different types of SaaS partnerships. Let’s dive in!

Why SaaS Partnerships?

Partnerships as a strategic approach to business expansion and development have long proven their effectiveness. In today’s highly competitive and rapidly changing technology market, they’ve become even more relevant and prosperous. 

Through partnerships, companies can share efforts, costs, and risks. At the same time, they can gain new market segments or jointly develop products to create powerful offerings for existing and prospective customers. 

Capturing the attention of new audiences or deploying completely new expertise within your company often requires a serious amount of time and funding. Establishing a relationship with other businesses or providing partnership programs for your customers can help you to make these big steps happen faster while being more cost-effective.

What benefits you can expect and your risk level will depend on the type of partnerships you choose. Keep reading to find out what they are and how you can employ them at your business.

5 Types of Saas Partnerships: Sales & Marketing

As the name suggests, sales and marketing partnerships primarily focus on developing the sales process together and sharing the marketing efforts. In most cases, these partnerships will not directly affect the product or service of each party.

Sales partnerships with other companies can be both simple and complex. For example, if your partner primarily uses their communication channels, that eases the burden on your team.  They can also be more complex in the example of your partner taking over the promotion, providing additional services, or organizing customer support in addition to providing support to the mutual sales process.

Sales partnerships can be organized not only as a cooperation with another business but also as a program among your loyal audience. If you already have customers who recommend your product, a little extra motivation can turn them into true evangelists for your brand, and solidify their loyalty even more.

Partners receive their profit either in the form of a discount on a product that they can subsequently resell or in the form of a commission for each successful transaction. This is the most common option that can vary depending on what you are willing to offer. What remains unchanged is that you only pay when you successfully sell.

Some popular types of sales and marketing partnerships include:

• Reseller Partnerships
• Referral Partnerships
• Channel Partnerships
• Co-Marketing partnerships

Pros and Cons of Sales & Marketing Partnerships

+ Access to new markets

Partners can help you expand faster into new markets where they are already successful. When your offer goes from someone who has audience access, visibility, and market credibility, your brand gets the juice from that established relationship. In this way, you can win the attention and interest of new customers much faster without expensive advertising campaigns and cold outreaches.

– Lack of Control

Since your product is promoted and sold by a third party, you will not have full control over the advertising and sales process. If your partner also provides value-added services such as support or customization, you will also have limited control over how this work is done.

+ Increased revenue and reduced customer acquisition costs

As mentioned earlier, you only invest in successful trades. You either immediately make a sale at a discount to the reseller and further sales aren’t your concern, or you pay a commission for closed purchases. 

– Revenue sharing

Since you are either selling the product at a discounted price or giving commissions, you can earn a smaller percentage of the income generated from each sale.

You might say, why couldn’t I make these sales myself and not pay anyone? In this case, it’s a matter of volume. You must decide what will be more profitable in your case—giving a discount or commission to a partner or significantly expanding the sales force and investing in advertising.

Product Development SaaS Partnerships

In product development partnerships, companies come together to create an entirely new product or supplement their existing solutions. 

Working together, partners combine their resources, experiences, and technologies to create a better product than they could individually. Thus partners can develop innovative solutions that would not be possible in other ways.

One common form of product partnership is integration. As part of these relationships, partner companies integrate their stand-alone products with each other, providing users with an improved seamless experience of interaction.

In addition, product development partnerships can include them doing customization of your products to meet specific customer needs or establishing the integration process into your customers’ business environment.

Popular types of product development partnerships include:

• Technology Partnerships
• Integration Partnerships
• Co-development Partnerships

Pros and Cons of Product Development Partnerships

+ Access to new technologies and expertise

By entering into a product development partnership, you can gain access to new technologies, knowledge, and resources that your company didn’t have. By using these resources, you can develop more innovative products that meet market demands or customize an existing solution for important customers.

– Integration problems

Integrating different technologies can be complex, and time-consuming. Compatibility issues that need to be addressed may involve more work. You’ll have to understand how to set up all the processes within another company that might have other cultures and rules. You also need to ensure that integration brings value, rather than makes your product too complicated for end users. 

+ Advanced product offerings

By integrating your product with another company’s solution, you can improve your product offering and provide customers with a more comprehensive and functional tool. This can be extremely effective in highly competitive markets where it is impossible to break through simply by making a quality product. 

– Problems with intellectual property

Collaborating with another development company may raise intellectual property issues such as ownership of a jointly developed technology. In order not to be in a legal conflict situation, it is necessary to agree in advance on the rights of each of the parties.

+ Shared risk

By separating the development costs from the potential income associated with a new product or service, you can reduce the risks and share them with a partner.

– Dependency risk

Relying too much on a technology partner can create a dependency risk, which can be problematic if the partnership ends or the partner experiences financial difficulties.

Educational SaaS Partnerships

Educational partnerships are collaborations between companies and educational institutions. A business works with an educational organization or training program to provide learning resources to students or trainees. This can involve providing access to the product as part of a course or creating custom training materials that are specific to your solution. 

Pros and Cons of Educational Partnerships

+ Reach a new audience and increase brand awareness

By making your product or service available to students or interns, you will introduce a new audience to what you do and possibly start long-term relationships with future customers and possibly even future employees. If students learn materials with examples of your tool, there is a high chance that they will want to return to it in their future work environments. In addition, the connection of your name with a reputable educational institution will support recognition and brand credibility.

– Cost of time and resources

Educational partnerships can require a lot of time and resources, as well as significant investment in developing learning materials and providing support to students or trainees.

+ Train your customers

Educational partnerships can help you inform customers on how to use your product more effectively, which can lead to higher customer satisfaction and retention.

– Limited audience

Educational partnerships may only reach a limited audience, depending on the size and scope of the educational program.

Joint Venture SaaS Partnerships

In a joint venture partnership, two or more companies pool their resources, expertise, and capital to form a new entity or partnership to undertake a specific business project or opportunity. Each partner contributes to the venture in a specific way. For example, one partner may provide the capital while another partner may provide the expertise or technology. The partners share the responsibilities and decision-making authority for the venture, and they often establish a joint venture agreement to formalize the partnership and outline the terms and conditions of the collaboration.

Pros and Cons of Joint Venture Partnerships

+ Shared risks and costs

Risks and costs are shared between the parties involved, making the new project less risky and more cost-effective.

– Complex legal and financial arrangements

Establishing a joint venture relationship involves complex legal and financial arrangements, which can be time-consuming and costly to set up.

+ New market opportunities

Joint venture partnerships can help companies enter new markets by leveraging the resources and expertise of their partners.

– Conflicts of interest

Control and decision-making are shared between partners, which can lead to conflicts of interest.

– Limited lifespan

Joint venture partnerships are often formed for a specific project or purpose, which means they have a limited lifespan.

Strategic SaaS Partnerships

In real life, partnerships are often a mix of the options above. So, by teaming up to develop a new product together, companies can also establish a co-marketing partnership to promote it. Another option is to create a separate legal entity forming a joint-venture partnership.

When two businesses form a long-term relationship to achieve a common big goal, this can also be called a strategic partnership. A strategic partnership may include combining activities in various aspects. The benefits and risks, respectively, will depend on the areas in which you start collaboration.

Strategic partnerships are characterized by longer-term lifespans and broader joint goals. Therefore, they can be harder to find and get started.

Choosing the right partnership for your SaaS company

If you’re already into the idea of finding a partnership opportunity for your business – here are big-picture steps you can take:

1. Identify your goals: Determine what you want to achieve and choose a type of partnership that aligns with your goals.

2. Evaluate potential partners: Look for partners that have complementary strengths, expertise, and resources that can help you achieve your goals.

3. Define roles and responsibilities: Clearly define the roles and responsibilities of each partner to avoid conflicts and ensure a successful relationship.

4. Establish clear communication channels: Communication is key in any partnership, so establish clear channels for communication and ensure that both parties are kept up-to-date on progress and developments. Learn more about creating exceptional Partner Experience (PX).

Explore SaaS Partnership Opportunities Straight Away

At First Line Software, we know the value that partnerships bring to a business—after all, we use some of these strategies ourselves! We act as integration, implementation, and customization partners for leading companies in their industries. Some of our long-term partners include Optimizely, InterSystems, and viastore Software.

We know how to do business in such a way that our partners can be sure that they can rely on us, and that their end customers are satisfied with the service and the results obtained from our direct collaboration.

If you are looking for a technical partner to enhance product capabilities, improve support, answer complex requests from important customers, or outsource some other technical tasks, contact us today!