If partnerships and ecosystems are so great, why do many SaaS companies struggle to generate significant partner revenue? In this article, I wanted to highlight a few root causes. I’ve made some of these mistakes myself and learned personally from them. I am convinced that each of these challenges can be overcome.
1. Customer, what customer?
Too often, we obsess over partner activity, losing sight of the customer. It’s no rocket science; partnerships only succeed when they create substantial customer value; think 10x, not 1+1 = 2. Customers should have an undeniable reason to buy into the joint solution.
Assuming you are selling a strong product, this will only be possible if partners offer something your direct sales team cannot, such as deep vertical expertise, a clear understanding of the customer’s business model and profitability levers, or integration with other solutions.
What does not work are partners who tag along in a sales process, waiting for an order form to drop. Vice versa, software vendors who chase partners for leads and do not understand the partner’s customer base are doomed to fail.
If a partnership doesn’t create exponential customer value, it surely won’t create exponential revenue for you, either.
Ensure exponential value creation for the customer:
Why would a customer go with you and your partner? What do you both have another vendor cannot offer
You and your partner should address the same buyer
Jointly create your materials, pitch, demo, etc, which articulate how the combined solution generates value in a way a standalone product cannot, e.g., tap
2. Designing for failure
Isolated partner business with siloed OKRs
Many SaaS companies, especially early-stage ones, fail to properly align their partner programs with their overall business objectives or OKRs. Partner business leaders who are left to create their isolated objectives and fend for themselves are unlikely to succeed in building a substantial business.
Such misalignment might often lead to a lack of clear partnership objectives, inadequate resource allocation, and a partner programme not designed for the overall business. Partnerships will struggle to gain traction without being included in the overall growth strategy.
Partner leaders might just have to win a seat at the table. Build a partner business that nobody can ignore. Create visibility and aim to include a partner OKR in every part of the business, such as product, marketing, sales, and operations.
Key results could include:
Generate $30m in partner-sourced revenue in FY25
Increase partner-influenced pipeline contribution from 10% to 25%
Achieve an average partner deal size of $250k, up from $175k
Ensure at least 70% of active partners contribute at least one deal per quarter
Sign 5 new strategic technology alliances that generate at least $1m in pipeline each
Build a partner marketplace and promote 25 partner-driven integrations in FY25
No GTM strategy for partner sales
If a partner leader does not meet with his CRO once a week, that’s not a good sign. Partnerships require a tight-knit go-to-market strategy that maps out how partners contribute to overall ARR. Partner sales leaders and CROs should be jointly accountable for delivering partner revenue.
Make partners an integral part of overall GTM execution:
Define a partner-led sales motion with a structured co-selling approach
Include partner sales in your regular forecast calls
Build a partner revenue growth plan by identifying where in the sales cycle partners add value
Align partner motions with existing sales motions, whether through referrals, resellers, or co-selling deals - make sure compensation and incentives align at every stage
Communicate a high-level version of your strategy to your closest partners and include them in the overall ambition
Poor partner selection
You have a large book of partner business, yet little revenue. This means your Ideal Partner Profile does not reflect reality. Or your IPP may work, but most of your partners do not fit your IPP.
Partner managers chase big logos or well-established partners in their niche but do not consider whether partners have a real incentive to sell. While those logos look great on a slide or a press release, I’ve seen them too often on the bottom of the partner sales dashboard.
Review your portfolio and refine your IPP:
Try to really understand your partners’ business and how exactly they make money. Identify partners that benefit from selling or referring your product
Prioritise smaller, engaged partners over prominent names that will not actively drive business - sometimes it’s better to touch 80%+ of revenue of a more minor partner than fifth-wheeling a global household name consulting practice, which will only occasionally throw you a bone
Use L3Y sales data to refine your IPP, segment partner revenue by segment, partner type, business model, and other categories
Based on your refined IPP, build a predictive partner scoring model to evaluate customer overlap and the likelihood of co-selling
Obviously, you can use tools to assess customer overlap as part of your initial diligence process
No partner sales team
Early startups typically have AEs that do partnerships on the side, hoping that partner relationships can be self-sustaining. If you have a killer product, this might work for a while. However, to amplify growth, you’ll need an active partner sales team to drive deals.
Hire your ideal partner team:
Hire Partner Sales Managers whose sole job is to recruit, enable, and co-sell with partners
Provide back-office support to help partner sellers navigate partner data tracking, legal negotiations, partner payments, and other critical infrastructure
Treat your earliest partners like your own sales team by training, coaching, and rewarding them
Incentivise direct sales for partner deals
One of the most common blockers to partner sales is to create a channel conflict between partners and direct sales. If direct sales cannot earn a fair commission on partner-led deals, they will avoid them like the black death. If, on top of that, partners slow down sales cycles, your partner business has a close to zero chance of surviving.
Ensure a proper compensation structure:
Reward AEs for partner-sourced referral deals. Ensure partner-influenced revenue counts toward quota retirement
If your partner business focuses on generating pipeline, allow for collaboration between partners and SDRs
Set clear rules of engagement that require sales engagement when a partner brings in a deal and enable the team to work with partners
Design commission plans so that direct sales teams and partners are not competing for the same deals
3. Weak partner engagement
Lack of partner enablement
Enablement is one of the biggest levers for expanding revenue share within a partner, yet most organisations fall short in this area. Without strong enablement, partners struggle to sell and support your product effectively, leading to lost deals. On the flip side, some partners may not be committed to spending time on enablement. Unless these are new partners, they are likely doing plenty of business with your competitor.
Bring your enablement to life:
Develop an onboarding journey that includes training, playbooks, and certifications
Ideally, run training sessions in person, especially with your highest potential partners or, if you’re starting out, your early partner cohort
Do not leave enablement to partner sellers, but assign a partner success team to actively engage partners, ensuring they have access to the right resources and support
Competitive pressure
Even with a well-designed partner program, competitive pressure can make getting more revenue share from partners challenging. Many SaaS companies struggle to differentiate their partner offering in a crowded market. Many partner leaders respond with superior margins.
However, raising a partner's margin is equivalent to providing exorbitant customer discounts—it’s not always about price. Put yourself in your partner’s shoes and consider how the partner is making money—not all partners care purely about margin.
Be clear about what you’re selling:
What sets your partner program apart from competitors? Emphasise benefits and consider how it can help grow partner revenue
Ensure the partner experience, including enablement, is at least on par with or better than those offered by competitors
Regularly assess competitor partner programs to stay ahead
Invest in co-marketing to increase visibility, demand, and joint commitment
4. Unclear financials
Lack of partnerships ROI
This might feel counter-intuitive, but hear me out. Financially speaking, partner sales are useful for several reasons: low CAC, higher win rates, shorter sales cycles, better NRR, etc. Partner leaders are responsible for achieving these metrics.
Not all businesses track these metrics transparently, and not all partner leaders have direct access to them. This state of ignorance typically works until a CFO encounters a weird approval for a partner-sourced deal, which can then lead to a cascade of analyses questioning the partner business.
Prepare for this ROI question ahead of time:
Ensure to track or get access to the most critical financial metrics around your partner business - check if these are being tracked in the first place
Set up a partner executive dashboard that ties operational partner sales metrics to overall board-level KPI
Review historical partner commissions paid and validate each payment, identify any skeletons in the closet that may be left over from your predecessor
Review partner commissions vs. market level, ensure competitiveness for your business, but don’t overpay
Provide a quarterly executive update, including win rates, deal cycles, ACVs, and more
Fuzzy revenue attribution
It goes without saying that tracking partner deals is crucial. There are multiple ways of attributing partner revenue; the simplest model is usually partner-source and partner-influence. In some cases, there can be clear delineations between partner sales territories or segments vs. direct sales, which makes attribution even easier. If leadership does not see revenue impact, partnerships do not receive budget and eventually fail.
Track partner revenue:
Track partner deals in your choice of CRM
Create clear criteria for partner-influence to avoid over/under-attribution
5. Cultural shift
Lack of patience & resilience
Building successful partnerships takes significant time and effort. Most of the founders I’ve worked with expect near-immediate results from their partner programs. We measure partnerships in revenue. However, partnerships are not your typical sales job. They require long-term vision and are core to strategy. Realising this fact, some companies put their Head of Strategy and Partnerships roles together.
Partner leaders need to be influencers, builders, sellers, and strategists. The most significant partnerships can take months to produce peak revenue - the time and investment are worth it.
Manage expectations:
Integrate the partner sales plan into the overall business plan of the company, considering that partnerships take time to mature and generate meaningful revenue
Build deep engagements with your top partners rather than treating them as transactional sources of leads
Recruit and onboard as quickly as possible to get a partner from 0 to 1 in less than a month
Communicate early wins to direct sales teams to encourage co-sell
Provide regular updates to leadership to manage and set expectations
… and this is just the beginning
Most of the challenges we discussed above are internal and primarily within the control of a partner leader. The reality of the external market is hard enough to overcome with a half-baked partner programme. The real challenge is not deal with attribution in your SFDC; the real challenge awaits out there.
What are the most prominent partner challenges you’ve encountered?