Mind the Gap: Is “Fractional Partner Leadership” the Solution?

 We originally wrote this as a full-length article for another publication but it turned out a little longer than needed.  We decided to publish the full-length piece here to share important perspectives we have while we edit down the content elsewhere.  

Coronavirus notwithstanding, as a leader in a SaaS company, you have a lot of macro and micro challenges that you face to do your job. You are responsible for aligning all the conditions to grow your business, and there is never a day that you can take your foot off the gas pedal because your investors expect exponential growth. Let's face it, with so many pressing matters on your plate; it is tough to manage everything or to be an expert in all aspects of your business. As our company's primary leader, I know this problem all too well. Some days I don't know if I am coming or going. So all this being said, we want to share thoughts that you will find helpful to help create your ideal conditions. 

When you dreamed up the idea for your company or took the helm as a growth leader, I can surmise that the plan was to build a useful product, one which could either: 1) create new efficiencies for your ideal customer; 2) do something better than what other products exist in the market can do; 3) or to disrupt an entire industry. When we ask founders why they started their companies, these are typical answers. This process of evolving beyond what currently exists is the fundamental driver of innovation.  

Another thing we can probably guess about your business is that you are likely using a "direct sales model" method as your primary go-to-market vehicle. Selling direct has been the central playbook for SaaS tech startups for the past decade. The formula is pretty straight forward: Marketing drives leads, SDRs nurture leads to opportunities, AEs drive opportunities to close, and Customer Success teams take care of these new clients. It's a neat and tidy process on paper, and if you walk through the halls of any SaaS tech company across the globe, you will pretty much see this playbook in action everywhere you go. There's only one problem with this. Tens of thousands of SaaS companies have popped up, and everyone is using the same playbook.

With the SaaS space becoming so crowded, there are anecdotal signs everywhere that customers, getting overwhelmed with options, are experiencing vendor fatigue. Every single day so many direct SaaS salespeople vie for the attention of the customer to sell the "SaaS solution du jour." You can see the effect of oversaturation play out when a SaaS company that was previously growing exponentially using the direct sales model, suddenly sputters and stalls after the company exhausts its early adopters. Yes, modern-day SaaS companies are running smack into Geoffrey Moore's book "Crossing the Chasm" in many ways. The good news for the savvy leader is it is possible to buck the trend and find alternative ways to market, whether you are just starting out or if you are in advanced growth phases.  

Looking for an Alternative

So what are you to do if you are a leader? The first recommendation we make is to take a step back from the day-to-day: 

• Are there other ways to market besides the direct sales model?
• Are there alternative revenue streams that can be developed?
• Are there influencers that are helping my client make decisions?
• Is there a "better" or more expansive playbook that we could use? 

Chances are the answer is "yes." BUT... you knew there was a "but" coming, for most leaders, doing something different is daunting, especially if you don't have experience with indirect selling, channels, and partnership programs. 

When we talk to earlier stage SaaS leaders, most leaders have not looked at building indirect channels to market because of the unknown. Fear, uncertainty, skepticism, and misinformation has caused SaaS leaders to look at alternative revenue streams as a "cost," or they look at partnership programs as a "nice to have someday." So they continue to drive ahead with what they know, the direct sales model. Then they blindly drive straight into Moore's chasm. I am here to tell you that "done right" the SaaS mathematics proves that channel & partnership programs are a sound investment and are likely more profitable to run than a similar investment in a direct sales model. The key phrase is "done right," which is where most companies miss the mark or fall short before declaring partner programs "don't work for us."   

Unintentional Gap in Partner/Channel Strategy

To be successful with alternative revenue channels, it does take an investment to have a successful partnership/channel strategy and team. Companies often approach this from one of two ways, both of which can fail dramatically. The typical scenario we see is that a company "invests" in partnerships by assigning an entry or mid-level employee to the task. This low-cost alternative makes sense on paper from a cost perspective; however, the statistics are pretty high that your new partner employee will have a steep learning curve. Ultimately s/he will struggle to identify the right strategy to build a scalable program. On the other extreme, a smaller percentage of the time, the company invests in a senior leader. This high-cost alternative is great from a perspective of bringing in experience; however, due to the higher employment cost of the leader, the partnership budget is eaten up, and it is tough for the leader to build a team to achieve success. Thus what we see is that there is a huge GAP in the market, between the expertise needed to do the job right and the budgets required to make it happen. 

Solving the Expertise Problem: Mind the Gap

The expertise problem doesn't just exist in the partner realm. In professional areas, like marketing and finance, an emerging trend over the past 5+ years has been to utilize "Fractional Leadership" to fill the expertise gap cost-effectively. The use of Fractional CMOs or Fractional CFOs has become commonplace. Fractional leaders have become an excellent way for companies to bring in the expertise they need, with a smaller scale budget. Fractional Partner Leadership is a concept whose time has come.  Fractional Partner Leadership is a new way to allow emerging SaaS companies to break the "direct only" playbook and to seek out many ways to get to market.  We believe all earlier stage leaders should be looking at and executing alternative revenues earlier, and the fractional partner leader model can make this more of a reality.  

Going back to the beginning of this article, you didn't get into business to be the "best executor of a direct sales model." You owe it to yourself and your company to find the best ways to market, no matter what they are. When you look around, you might be surprised to learn that you can scale your business using other methods. If you are launching a SaaS company, have a company in its earlier stages, or you've been thinking about starting a partner program, give Fractional Partner Leadership a shot. The risks are lower, and "spoiler alert," you have an excellent chance of breaking the direct-sales-only mold that everyone else is using.