📂 Partnerships allow you to tap into existing audiences

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📖 The following is an excerpt from my work-in-progress book, Founding Marketing. It's a (very) rough draft of thoughts, notes, and research... so feel free to reply with your feedback on what I should expand more on and what needs to be clarified. Enjoy!

Affiliate

Affiliate marketing and referral marketing often get confused for being the same marketing technique. However, affiliate marketing pays someone for every lead or customer they send you, whereas referral marketing uses existing customers to reward them in a monetary or non-monetary way for every lead or customer they send you.

Affiliates can also be a huge driver for retention for two reasons:

1. Everyone wants to use the tool that the “influencers” are using and recommending
2. When customers become affiliates, now you’re a revenue stream, and they become much less likely to cancel

With the right incentives in place, you’ll be surprised how much marketing your customers and partners will do for you.

Companies like Transistor, Convertkit, and WPEngine have all leveraged affiliate marketing as a major growth channel.

**Affiliate marketing is when someone earns a commission by promoting your products or services.

The idea behind affiliate marketing is that someone earns a commission by promoting your companies’ products or services.

For SaaS companies, this offers two opportunities:

1. Recruit affiliates to market your product for you and get a cut of the revenue in exchange.
2. Partner with other SaaS companies that offer complimentary services to your own, and act as the affiliate merchants, earning commission for referring new customers to them.

Affiliate marketing is generally reserved for low-touch sales models, because an affiliate link needs to convert based someone following the link and creating an account or becoming a paying customer. This would be very hard to track in a high-touch sales model that may have many offline touches such as phone calls, in-person events, or video calls.

The co-founders of Demio used affiliate marketing early on as a part of their launch strategy to get an influx of paying customers.

“We were offering extremely discounted prices for Demio during this grand opening launch period, and we were giving 50% commissions to any affiliate that promoted. These discounted prices allowed the affiliates to use extreme scarcity with their audience, since the prices were going up by more than 300% after the 7-day launch window. It was a huge success. When it was all said and done, we had 500+ new customers on annual packages of Demio, and we had enough cash in the bank to last us at least six months.” - Wyatt Jozwowski, co-founder of Demio.

As a pre-launch & bootstrapped business with limited resources, Cometly built the initial version of their product for a very specific niche. Then they did something clever –– they partnered with one of the top affiliates with an existing audience in that market.

They began searching for affiliate software that works with SaaS companies. Matthew recalls there were tons of options for affiliate software, but not many that were built for SaaS. “We absolutely love Rewardful’s platform. It was super easy to set up – took us 1 hour from start to finish, including the integration. Other platforms were complicated to set up and would break during common SaaS scenarios”, said Matthew.

“We absolutely love Rewardful’s platform. It was super easy to set up – took us 1 hour from start to finish”

Given they were planning to launch with a prominent affiliate, they wanted to create a strong impression. “We love the UI & UX of Rewardful. The aesthetics are amazing. Most other platforms look outdated and feel clunky, which we didn’t want to associate our brand with”, said Matt.

“We love the UI & UX of Rewardful. The aesthetics are amazing. Most other platforms look outdated and feel clunky, which we didn’t want to associate our brand with”

“While gearing up for the launch, the Rewardful team was super helpful and hopped on a call to help us out 1 hour before the launch and got everything working.”

The launch began with a co-marketing webinar with the affiliate where the Cometly team introduced the platform and a special “founding user” offer for the attendees. After the webinar, the doors remained open for one week before the offer expired.

Pros:

• Additional revenue stream. If you’re earning commission from promoting other, complementary SaaS products or services, this can help diversify your income, so new customers aren’t your sole source of income.
• Let others do the marketing for you. Incentivizing customers and influencers to promote you can get you traction early on.

Cons:

• Not guaranteed income. You have little control over the success of your affiliate programs - you may invest a ton of time and effort into setting them up, only to find there’s no demand for your service.
• Sharing a percentage of revenue from customers can eat into your profit and end up being a high cost of acquisition.

In my experience, it’s best to be really generous to affiliates because (1) it’s harder to market products than you think and (2) it’s very competitive.

One-time commissions in SaaS is chump change. Everyone wants a piece of the recurring revenue. Offering ongoing commissions for as long as someone is a customer.

Usually 20-30% is normal. Anything above 30% is very generous and should be reserved for affiliates who have earned it for their track record or loyalty.

Results

Using Rewardful to launch with affiliates, Cometly went from no revenue to $53.8k MRR ($646k ARR) in the first week of launching their product. Given many paid annually, Cometly generated over $251,000 in cash flow from the launch ($147.5k on launch day, $103.5k the remainder of the week).

“Using an affiliate for our product launch allowed us to get in front of his community of potential customers and rapidly acquire a lot of new users around the world.”

Partnerships and integrations

Many SaaS companies share the same target audience, while offering non-competing products (for example, the note-taking app Evernote, “to do” tool Wunderlist, and password manager LastPass).

By joining forces, it becomes possible to pool resources and create marketing campaigns greater than the sum of their individual parts, allowing the co-marketing companies to share in the results.

Co-marketing with three other companies doesn’t necessarily translate to three times the results, but it’s definitely always more than what you could do alone.

For more high-touch sales models, partnerships can be a key component in winning up-market deals. Mid-market and enterprise companies will have a very rigorous process and strict set of requirements for new technology that they adopt.

One of Hubspot’s best channels was actually a reseller program, essentially.

They’d allow partners (agencies, mostly) to mark up Hubspot and license it on their behalf.

Here’s what Peter Caputa, who lead up the program, said about it: “With early success, the executive team relented and I scaled HubSpot’s partner program for marketing agencies up past $100M in annual revenue. As of our last earnings call, channel sales represents 40% of revenue. We have 3,400+ partners servicing thousands of HubSpot customers, helping them get better results, month in and month out.”

Now, I don’t have any direct experience with a reseller program so my knowledge is minimal, but I’ll link to this story where he shares a bit about it.

Like other channels, I imagine it was successful by identifying the right agencies, getting buy-in to promote it, enabling them with whatever they needed, and then creating a repeatable process to onboard and support more agencies.

Partnering with complimentary solutions can help you win business by:

1. Having a stronger story together than you would apart.
2. Leveraging each other’s strengths and making a stronger case against some of the “all-in-one” solutions that may not be particularly strong in any one area.
3. Lessening the amount of decisions they have to make.

Working on new integrations can be costly and take time, but in the long run, integrations are a key part of most SaaS strategies. Building integrations can not only open up new business opportunities, they can also open up new markets.

Integrations can become a key differentiating factor amongst competitors, can attract many people who use the products you integrate with, and ultimately can help you expand your product/market fit.

For example, customers of a CRM product may be looking for a new email marketing product. One of the most important requirements they might have is an integration with their current CRM, so they may google something like “email marketing integration with .” This has very high search intent and could lead to grabbing low-hanging fruit.

In some cases, integrating with a platform and getting listed in their app store can be a major driver for growth — like if you were a Shopify App, Salesforce app, Chrome extension, Intercom app, Wordpress plugins.

There are an increasing number of “platforms” and integrations and partnerships will grow as a key differentiator for commoditized SaaS products.

—Corey

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