Editor’s Note: This post was written by Tim Kopp, a General Partner with Hyde Park Venture Partners, and was originally published on his website, CMOVC. Previously, Tim spent nearly 20 years in operating roles. He began his career at P&G and Coca-Cola before transitioning into the world of B2B, where he spent 10 years as a CMO with WebTrends and ExactTarget. At ExactTarget, he served as CMO for 6+ years and helped grow revenue from $40M to well over $400M, through IPO, and ultimately acquisition by Salesforce.com.
The fastest way to build a brand is on the shoulders of giants.
However, I often see companies struggling to know how to unlock the power of partnerships. It’s certainly one thing that non-coastal startups can learn from the coastal companies. I recently wrote about how this is one of the most underrated growth drivers for startups. Yes, partnerships can be difficult to navigate, prioritize, and are also unpredictable, but I cannot recall a category leader who did not excel at creating an effective channel partner ecosystem.
We’ve been incredibly fortunate to invest in Terminus and Sigstr, who have placed considerable focus on partnerships from the very beginning. They’re both experiencing explosive growth while creating two new categories of software. Terminus was the pioneer of the #FlipMyFunnel movement, bringing national collaboration and attention to account-based marketing. Sigstr is maximizing email signatures as an owned marketing channel to amplify content internally and externally, turning your employees (who send an average of 10,000 emails a year) into your biggest ambassadors.
Last week, I had a great conversation with Sangram Vajre and Dan Hanrahan, who lead partnership activities at these respective companies. You can check out the video below or read on for a few nuggets that emerged from our discussion.
1. Executive Ownership
If your company is serious about building partnerships, an executive must own partnerships as a major part of their role. Effective partnerships involve constant communication and almost all the hard work is done upfront. Without alignment internally and having the trust of the leadership team the investment is worth the effort, partnerships can fail before they even get started.
Because partnerships are extremely cross-functional – bridging product, marketing, sales, and customer success – senior leadership is a requirement. Flexibility and autonomy are necessary.
In our conversation, Sigstr’s Dan Hanrahan equated partnerships with enterprise sales. “If you’re selling really big clients, you need authority to make decisions on the fly. Similarly, enterprise ownership and executive alignment are crucial to partnerships,” he stressed.
As an example of this, Sangram Vajre said that he manages every point of communication with Terminus’ HubSpot partnership. One lesson he shared is that having too many cooks in the kitchen doesn’t work. To eliminate confusion, one point of contact has to own the strategic partnership. And to avoid the difficulties that come with owning too many partnerships at once, it requires selectivity, leading to the second key point…
2. Hyper Focus
Successful partnerships require extreme focus in two different contexts. First, every successful partnership should be built with your customer in mind. And secondly, without constantly prioritizing which partnerships you’re pursuing, you will be like a wave in the ocean. The only way to succeed with partnerships is to prioritize effectively.
Instead of focusing on technology alone, place your focus on the pain that the customer feels — the problem. When you are focusing on an actual problem compared to a theoretical one, you create immediate momentum. Drive your product innovation by focusing on the customer’s need.
It’s also important to focus on joint customers. One of the best ways to understand your best partnership targets is by learning who your joint customers are. Zero in on the ways you’re adding value to these customers and how you can continue to do so. Turning your joint customers into your biggest advocates is powerful. At the end of the day, it’s real stories and impact that are memorable. They will resonate with your sales team and travel up the executive food chain of your partners’ companies.
Prioritization is one of the prevailing themes of startup success, and it’s no exception with your partnerships activities. As Sangram said in our conversation, you have to place strategic bets with which partners to pursue. As a startup, you’ll likely be maxed out with three to five partnerships at any given time.
As Sangram put it, “Strategic level partnerships don’t happen overnight. It takes a lot of muscle, time, and understanding for the partnership to ultimately represent your brand.”
3. Define Mutual Success
Creating a win-win partnership matters. Otherwise, partnerships don’t last. As a general rule of thumb, especially as an early stage company, you should be giving more than you’re taking.
Instead of starting with what you want out of the relationship, you should be thinking about what it makes it valuable to your partner. This is about genuine relationships, not just business transactions.
Dan Hanrahan could not have said it any better: “At the end of the day, it is a person on the other end. One thing I always ask is, ‘How do you know you won at the end of the year?’ Then, we align whatever we do with how they win. This means taking care of their customers and helping them grow their customers.”
By beginning with the end in mind and working backward, you enable yourself to be outcome-oriented compared to being driven by activities. Sure, any strategy needs tactics to be successful, but if you start with the tactics, you’re in trouble. Certainly, supporting your partner’s growth and delighting mutual customers never hurts!
The proof is in the pudding when it comes to partnerships. You have to be able to measure success. The challenge here is that it’s not just a quantitative game, but also qualitative… and it takes patience to see results from your partnership activities.
Sangram considers this the most challenging aspect of partnerships, and I agree with him. There simply isn’t an immediate ROI. You do run the risk of never seeing results materialize from a partnership.
The other challenge is that every partnership is different in nature. Sangram said, “There’s no clear playbook for how to do partnerships. There may be a framework, but no partnership is ever exactly the same.”
But what you can do is track your efforts against your success objectives. On a quarterly basis, what value are you trying to create for your partner? And what benefits are you seeing? Track your leads and opportunities, of course, but you have to remember to have patience and to take the long view.
Partnerships are so valuable because they drive demand generation, branding, and corporate development efforts simultaneously. You can measure demand gen, but how do you measure anecdotes and stories? How exactly do you put a price tag on a CEO mentioning your company from the stage during their user conference? Of course, it’s valuable, and ultimately it’s this shared value that can create attractive acquisition targets.
5. Show Up Consistently
Being present matters. If you’re out of sight, you’re out of mind. There’s no substitute for showing up.
Dan shared advice for what has worked really well for Sigstr, and while it isn’t rocket science, it’s tactical advice that any company can implement today. Dan and his team show up early for the conferences, they bring great team members, rock their green Sigstr swag, and simply get involved in the ecosystem.
As he said, “So much of this is about hiring good people and investing in the partner relationship.”
Initially, you’re trading on relationship currency until you have some firm metrics to show. As a startup, it’s a bit of the “fake it til you make it” mindset. You can show you care, you can show up, and you can add value to their customers. You can also show up by showing your passion to bring innovation and solve problems.
I loved what Sangram said: “Early in the life of your company, your vision is bigger than your product … but big companies will give you the opportunity to solve difficult problems when they see your genuine passion and that you care more than anyone else.”
At the end of the day, partnerships come back to the people on either side. If there’s mutual synergy in your products, it is about whether they know you, like you, and trust you.
What other factors have you seen contribute to effective partnerships? As a larger company, what do you want to see from startups? And as a startup, what ways have you built strategic relationships with tech giants? Leave your thoughts below.