Welcome to The Partnered Podcast Episode 025 with Jay McBain, Principal Analyst of Channels, Partnerships, and Ecosystems at Forrester (previously at ChannelEyes, Autotask, Lenovo, & IBM). Enjoy!
Join host Adam Michalski as he interviews Jay McBain, Principal Analyst of Channels, Partnerships, and Ecosystems at Forrester.
In this special 25th episode, Jay and Adam discuss how partnerships in SaaS are becoming less of an art and more of a science. Jay also provides an analysis of where the SaaS partnership landscape is today and where it's going.
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Welcome to The Partnered Podcast where we interview c-level enterprise partnership leaders from the world's best SaaS companies. The goal is to give you an inside view on how leading organizations drive the most partner sourced and influenced revenue out of channel sales partnerships and alliances.
The Partnered Podcast is brought to you by Partnerships Leaders, the community where the best in partnerships, channel and ecosystems come together to share knowledge, network and grow their programs. Apply to join the conversation at PartnershipLeaders.com.
We're also sponsored by Partnered.io, the leading tool for managing and measuring SaaS partnership sales. Partnered.io helps you make more revenue from your existing partnerships. If you're using Salesforce and Slack, check out Partnered.io to get started today!
[00:01:03] Adam Michalski: Welcome back to The Partnered Podcast! I am extremely excited to have Jay McBain on today, Principal Analyst of Channels, Partnerships, and Ecosystems at Forrester. And, Jay, just to kick things off, can you tell us a little background on you got into becoming an analyst focused on channel partnerships and ecosystems?
[00:01:20] Jay McBain: [00:01:20] Yeah. Sure, absolutely. And thank you for having me today. I have been around the channel probably 26 years now. I've worked for big companies like IBM and Lenovo as a leader of the channel. After that, did a couple of things, but one most notably is I did a startup and focused on channel software and built some AI and mobile and social and some pretty cool things for six or seven years leading a startup.
[00:01:46] And then, you know, after seeing the business from both sides, decided to become an analyst, love to write. I think I've had a blog for those 26 years looking at the future of the channel and all the trends and things like that. And now I get kind of paid to do that instead of having that as a hobby.
[00:02:04] Adam Michalski: [00:02:04] That's awesome. Yeah, and I think you're being modest. I would go as far as to say you're famous in our space, so I am particularly excited for this episode. But one of the questions that I guess we can kick things off with is, can you tell us a little bit about your current role at Forrester in terms of just like your title and your responsibilities? You know, and everything that you're working on?
[00:02:22] Jay McBain: [00:02:22] Yeah, absolutely. So, you know, to make it simple, 75% of the world flows indirectly - you bought your last car from a dealer, you bought your last TV from a retailer, you bought your last jar of peanut butter from a grocer. Every industry, every country in the world, flows indirectly. So, when you look at that and you look at the dealers, and the agents, and the retailers, and the franchisees, and the resellers, and the managed service providers, and all of the different types of service companies on the, you know, front end or of the customer, or the last mile of the vendor distributor relationship, that's what I look at.
[00:03:01] And I look at it four different ways. There's a people element, which is always the most fascinating. There is a programmatic element, you know, the average program has about a hundred elements from onboarding training through to incentives and motivation, co-selling, co-marketing, enablement, et cetera through the journey.
[00:03:23] I look at the processes and the workflows and automation around that. And then number four, that links to technology. I published the channel software tech stack, which is 159 companies that make all of that work across every industry, across every country in the world.
[00:03:40] Adam Michalski: [00:03:40] That's awesome. Yeah, and I love how like statistical and how quantitative you are.
[00:03:46] So I definitely want to keep that lens as we continue to expand here. And a lot of our listeners are in SaaS, so if it's cool with you, I'd love to focus this episode particularly around B2B SaaS. How does that sound?
[00:03:57] Jay McBain: [00:03:57] Well sounds great. So, there's 175,000 SaaS companies today, and that's up from 10,000, 10 years ago.
[00:04:04] And when I look at those 175,000 and you know, I get to talk to a lot of them, and I get to spend a lot of time with some of the major SaaS companies that have had channels for a while and, and really building out the model. And, from what we know at Forester, you know, upwards of 30% of SaaS companies today of the 175,000 are talking about channels at the board level, you know, building out programs and really building out an ecosystem.
[00:04:32] And we know that about 10% are actually executing right now. They're hiring people. They're investing in technology. They're building out the program. So, you know, 10% of 175,000 is 17,500 firms that are actively looking at channels as a keyway to go-to-market and building out their roads to market.
[00:04:53] Adam Michalski: [00:04:53] Got it. And just to contextualize that, can you kind of put that side-by-side with the broader B2B software market and how that stacks up?
[00:05:02] Jay McBain: [00:05:02] Yeah, sure. So, if you look historically in software companies, Microsoft does about 96% of their business through the channel. So, if you talk about maturity in software, companies like SAP and Oracle, the vast majority of their business flows to and through channels. You know, some of the legacy companies in business software, I look at Sage and I look at, Dynamics inside Microsoft, or NetSuite. I mean, across almost every vertical there is, and every buyer, the legacy is that you build out your channel business.
[00:05:41] And that's not only from a transactional perspective, which we can talk about, but it's really around influences of the customer and long-term retention. As some of these legacy software’s are turned into SaaS or turned into a recurring subscription consumption model, you know, channels become more important than less.
[00:06:01] Adam Michalski: [00:06:01] Got it. Yeah, you mentioned a couple of points here that I definitely want to loop back around to, but just zooming back out again. So, between the differences on SaaS and legacy B2B software, I would love to get your opinion on why there's such a disparity there in terms of, you mentioned Microsoft has over 95%, driven indirect, but then SaaS is like pretty far behind. What is the reason for that? And second part of that question is, is that growing? And if so at what clip?
[00:06:30] Jay McBain: [00:06:30] It's a good question. And we break down software into dozens of different categories and, you know, each type of software, depending on the buyer, the industry, the geography, the sector, segment, and size of customer, it goes into, and the product itself, you know, whether it's security software, whether it's, you know, banking software, all of those different five vectors are important in terms of answering that question.
[00:06:56] The simple way to answer the question though, is that SaaS, as we know it, is about 20 years old. If you go back to the kind of the founding of Salesforce in 1999 as a bellwether and you know, a few weeks ago, it became part of the Dow 30, it overtook Oracle in value. So, you know, that's kind of a crowning moment for SaaS to become and kick out Exxon, a big oil and gas company out of the Dow 30 and become one of those highly visible companies that everybody's looking at. I think that's, you know, a bellwether we're going to look back on.
[00:07:29] So if SaaS is 20 years old, there's been a growing momentum. And over the last 10 years, you've seen that certainly exceed growth of other parts of the technology industry and through COVID, through less six or seven months, you know, you've seen SaaS as being very resilient, growing in the 30% range where traditional hardware and software and Telco categories are down by 17%. That's a big swing of 47% in performance. And the cloud acceleration, the automation and everything customers are talking about in this phase of COVID is wrapped around SaaS.
[00:08:07] So, I mean, we're at a kind of in the renaissance moment when it comes to SaaS and we're at that point now we're about 20 to 30% of it is sold through channels. Again, depending on those five vectors I mentioned, but we're going to see that grow and it's not going to hit 96% and it's probably not even, you know, going to become the majority in the next five years. And there's reasons for that.
[00:08:30] Adam Michalski: [00:08:30] That's super helpful. Yeah, and I think just even these macro metrics are just super fascinating to me. And I think like a lot of our listeners, because for us, as we continue to build out our channel programs, it's an understanding of, there's been a lot of work done in the space over the years.
[00:08:47] And applying that through the SaaS lens, it's slightly different. And understanding like best practices is frankly, you know, partially why we started this podcast - to help give folks a good lens on how to best run these SaaS partnerships, whether they be tech, whether they be agency, whether they be solutions.
[00:09:03] So I'd love to get a good understanding of, when you think about SaaS specifically, how are these partner programs differing from the traditional legacy reseller programs and sorts like that?
[00:09:19] Jay McBain: [00:09:19] Yeah. I think the number one way is the recognition of the buyer.
[00:09:23] So, in traditional software, the buyer was, and is today, the CIO or the CTO or the CSO, or, you know, somebody in a related role. Well, we know today in cloud 65% of cloud and SaaS decisions are made outside of it. So, if you start studying, for example, the Head of Marketing in many companies, the Head of Marketing spends more money on tech than the head of IT.
[00:09:49] So it's an amazing kind of turnaround where, the Head of Marketing has this 8,000 logo MarTech stack by Scott Brinker. And they're looking at these 8,000 logos and they're trying to figure out the seven-layer cake of which kind of solves there problem. And, obviously, you know, fuels the leads and fuels the demand gen and the branding of their company.
[00:10:12] So if you study that buyer, you studied the head of sales, the head of operations, the head of finance, the head of HR. You look at all these different categories where SaaS is going into how it's sold. It then moves back into the type of channel. Do you need to sell that way? Which is different again than selling to a CIO on an RFP, through a procurement division of which B2B software has been kind of stuck in for over three decades.
[00:10:40] And so the consumption model, the subscription model, and I think the biggest learnings in the last 18 months or so is the SaaS companies who are looking at their customer journey. And they're getting obsessed over the early journey where it's mostly digital buyers who don't tend to like to talk to salespeople or fill in web forms.
[00:11:02] So they're understanding the moments that go into the early journey. And we're starting to figure out now that around five different influencers come into that early journey. And you can think of those influencers as partners. They could be affiliates and affinity advocates, ambassadors. It doesn't matter.
[00:11:19] Their business model, a referral fees, finder's fees consultants. The fact of the matter is you need to get in early and often to earn a spot in that seven-layer cake that the customer is about to bake. And your chances of getting their direct, your chances of being on page one of Google, your chances of being on page one of a marketplace.
[00:11:43] It’s highly competitive with 175,000 companies vying for that spot. So what companies are doing now is figuring out that if I can earn one of two, three of those five spots, as people who would know what I do and endorse me and really get me in front of customers early and often. That becomes a channel strategy, which is different than the more transactional channel strategies that we've thought about in the past.
[00:12:13] Adam Michalski: [00:12:13] Yeah. So, let's unpack that a little bit because there's a lot of interesting stuff there. And I think, particularly through the lens of demand gen, as you were just covering it and, especially since COVID, I've actually seen a lot of just my SaaS peers realize that partnerships can drive an immense amount of value at the top of the funnel in terms of driving new business.
[00:12:33] And it's a variety of different ways as you illustrate it. I think for a lot of SaaS leaders there's the transactional channel, as you mentioned, in the sense of like, it's very black and white with resellers and folks like that. However, I think like a lot of these SaaS partnerships really evolve around what we tend to bucket as the term of co-selling.
[00:12:54] And, it's very, very broad and ambiguous. It can mean a lot of different things in terms of, sourcing or like influencing the actual revenue itself. And could provide value from just literally information on how to sell into the account all the way down to introductions or recommendations.
[00:13:09] So, I want to double click a little bit here on the actual co-selling component and kind of get your viewpoint on what is co-selling? How do you see that in the market? What are your thoughts around it? Is it unique to SaaS or is this something that you've seen has always been around?
[00:13:23] I want to spend a couple of minutes on this specifically.
[00:13:26] Jay McBain: [00:13:26] Yeah. Co-selling has been around for 39 years. I can trace it back to, I was with IBM for 17 years and in 1981, August the 12th, when the PC came out, one of the first IBM programs for those new dealerships that were anointed was a co-selling program.
[00:13:41] So it's been around for a while, but what's different now is the industry has moved from this client server idea. And part of the reason that Microsoft and others have such a high percentage of channel is those are the channels they sold to, through, and with, are the ones that serve the customer from a hardware perspective.
[00:14:02] Well, obviously we're moving out of that in a multi-cloud hybrid cloud world, the world doesn't anchor around hardware. So, it's a different journey that the customers on and how they collect information and the changes demographically that are happening. So all of those things add up to something different.
[00:14:20] And the main thing that I tell traditional vendors is this single throat to choke, or this trusted advisor status that you've always thought about the channel having, is gone away. You know, people are experts, and they earn their right to be one of those five seats at the table, the virtual table today, around a customer early in their journey.
[00:14:41] But there's no ownership anymore. A vendor doesn't own a customer. A partner doesn't own a customer. A distributor doesn't. No one owns a customer. So, if you look at it as an ecosystem or what I say, more celestial where you got stars and moons, and everything's moving, you're not the center of the universe.
[00:15:00] You might be a big star. Like Microsoft would be a big star that has a lot of rotating things around them, but they're only one star in this galaxy. So, in an ecosystem, nothing is linear. The customer buying journey isn't linear, the five people wrap around the table and how to influence them is not a linear thing.
[00:15:19] Your ability as a SaaS partner leader is to figure out when those stars and moon are going to align and make sure that you've got all of the plumbing done. You've got, the right people around the customer that have been onboarded and educated and trained and certified - they're incented in the right way.
[00:15:37] They're motivated. They've got a level of loyalty that they're going to talk about you, as opposed to your competitor, that then you're moving into kind of sales enablement and co-selling, and co-marketing. So, without those early building blocks in your program, and without thinking about your partner in the same journey format.
[00:15:57] So this is the magic is you've got this customer journey that you know much more about than you did even a few years ago. You understand the moments now you've got this partner journey that's overlaid on top of it. You understand the partner moments. They get to that point where they can represent you and even endorse you in front of that customer.
[00:16:17] You're focusing on customer experience, not only early in the journey, but at the point of vendor selection and transaction. But because you're a subscription business, every 30 days, forever, you need to re-earn the trust of that client. You need to drive adoption; you need to drive integrations to make it stickier.
[00:16:36] You need to drive upsell and cross sell every 30 days. So that's this channel model. Now you have to convert customer experience into a partner experience. So, this is the kind of the framework that we're working off of going forward.
[00:16:49] And I think SaaS companies are nimbler. They understand their customers better. They serve their buyer better. And they've got a better chance here to open that up and use channels and partners of all types. There are about 16 different kinds of partners that sell SaaS and they can use those partners in a kind of a win-win scenario in parallel. You know, to driving great customer experience across the journey.
[00:17:20] Adam Michalski: [00:17:20] Yeah, I think that's particularly fascinating. And I think you made a great point there that ultimately the SaaS business model is contingent upon returning that customer, whether it be on a monthly basis or annual basis. But it's really inherent in the actual SaaS business model in the sense that, you have to earn the customer, you have to upsell the customer, you have to cross sell the customer. And because of that, like there's just an inherently different way to partner and utilize partners in that sales cycle to drive additional business value.
[00:17:51] I guess, switching gears to one thing that I think that is particularly interesting and I want to get your opinion on is, we have a lot of folks on the show who are, early-stage companies - maybe series A, series B series C - they're kind of building out their initial partner programs.
[00:18:06] And it's almost like, one of the universal things is, getting folks to actually buy in to the partnership and just the partnership mindset at a company, often starting with the C-suite and top down, if you're going to be successful. So, given you have started a company, I know you and I both understand the value of partnerships, but for those folks who were making that business case internally and looking to build out their initial partner programs, what are your recommendations, best practices, or even pitfalls to avoid there?
[00:18:36] Jay McBain: [00:18:36] Yeah, it's a great question. It goes back to the four elements, right? It's the people, the process, the programs and the technology. If you're one of those 30% of companies who are thinking about a channel seriously at the board level, and then you move to one of the 10% that are executing, there's a number of things that you kind of have to put into place.
[00:18:55] The cultural thing is interesting. And I flip industries here because if you're going to franchise, it's basically what you're going to do. But you can't really franchise, if you think of McDonald's until they figured out the hamburger at scale and the fries. And if you watched the movie, The Founder, and stuff like that, it was fascinating because, they got this kitchen down to the millimeter in terms of efficiency and things like that.
[00:19:20] But not until they locked it down could they franchise a second restaurant and then a third and then a fourth. And if they could keep it at 90 something percent efficiency to what the original was, there was no top end, so they could just start adding thousands and then tens of thousands. And then hundreds of thousands of restaurants, if you make a good cup of coffee, same thing.
[00:19:43] I mean, all these franchise models, the same thing as every company has to start direct. You can't start franchising if you haven't figured out the hamburger or the coffee. So, you have to figure out your product, you have to figure out your customer, you have to figure out your sales and marketing. Your brand.
[00:19:58] You have to figure out kind of all those things. And you have to have that repeatable and somewhat scalable. You have to get to a certain level to when you can move it out to a partner. One of the key things that SaaS companies do really, really well is what I call the multiplier effect. And they communicate to their channels differently because back in the day, like the B2B software that we were talking about, is you would go to a partner and you'd say, here's the license, here's the maintenance, here's your margin front end margin. Here's your backend margin, you know, your volume rebate, your market development funds, you know, here's how much you can make on the deal. Well, that's, you know, 20, 30%, whatever it was, the fact is today, the multiplier is the other way around.
[00:20:40] So Salesforce would come out and say, for every dollar we sell, you can sell $4.65 cents. And here's how it looks on the pie chart. 64% of that is professional services. It needs to be installed, implemented, integrated, secure, compliant. Has to be continuity, has to be built in data. You know, here's the 17 tech services that you can drive in that 64%.
[00:21:04] You know, it needs other software. Like we mentioned, there's seven layers of the cake. Somebody will buy Salesforce plus six other ISBNs on top or emerging tech companies. So they're paving the way with our partners to say, if you're working on a hundred thousand dollars, Salesforce deal, your pie is about a half a million dollars.
[00:21:21] Today that's at 75% margin. So why would we even be talking about, you know, 20% licensed revenue when you could be out making as much money, or more than, Salesforce does at the same type of margins? That's the opportunity in the ecosystem? You know, last week, Google put out their number of Google cloud at $5.32 cents.
[00:21:43] Going up to $7.80 in five years. So, it's a huge opportunity on this multiplier effect as opposed to what the traditional resell model is. And I think that's the different language that they're coming to market. Everything else, the program going through all those hundred elements. A lot of that is table stakes.
[00:22:02] I mean, you're not trying to hit a home run here. You're just playing Moneyball to make sure that you have a deal registration system, and you have a lead passing system. You have some technology that can make it all work and scalable. But the people element becomes really important companies. And I work with companies all day long - SaaS companies that are just getting going, and it's understanding your buyer.
[00:22:22] You're not going to be all things to all people all the time. You're not Microsoft yet. So right now, if you serve mid-sized clinics with a marketing buyer in upstate New York, you've got to really get into what that community is and who those partners would be in that environment. And so, I talk a lot about community marketing, what they read, where they go, who they are, an easy way that you can actually click through.
[00:22:47] The magazines, the podcast, the associations, the events, all the things, the vendor community is distributor communities. And when you double click on all of those and find the people in score, the people, getting to your list of the hundred, most super connected influencers in mid-sized clinics in Rochester and Syracuse and Albany and Buffalo, upstate New York.
[00:23:10] That's your win. So, you've got to go get all hundreds of those super-connected people, or at least the majority of them into your partnership program and whether they're resellers or not, whether they're transact or not. It doesn't matter. The fact is, is you got to find room for them and make them feel at home.
[00:23:26] And show them the opportunity of what you bring to the table and how it can help their business. And that's the franchise model. And if you can get through that, all companies go through this maturity phase, they start out direct and they're hitting this home run. And guess what to get to the next level.
[00:23:45] They've got a franchise. They've got to go through this amplification. Because direct hits the wall at a certain point. It has for every company in the history of the planet. And that's why 75% of the world $65 trillion goes through channels.
[00:24:00] Adam Michalski: [00:24:00] Yeah, I think that's fascinating. Let's focus on that people element here for a couple of questions, because there's some interesting stuff that I want to touch on with you.
[00:24:09] I'll let you start top down. How many total partnership professionals are out there? And is that number growing?
[00:24:15]Jay McBain: [00:24:15] It's definitely growing. We're watching 800,000 emerging tech companies and they have about the same number, you know, 10% of them are thinking about channels right now. The 175,000 SaaS companies, there are millions of companies coming into the tech channel because every company in every industry is becoming a technology company. We're seeing this major surge as every company is becoming a subscription and consumption business.
[00:24:38] You'll notice a few days ago that Disney did a full re-org around their consumption model around Disney+ a few weeks before that Michael Dell announced the seven companies under Dell Technologies are all consumption-based. And the next three to five years, a week before that Chuck Robbins said Cisco, you know, HPE, all these companies and that they could be tech companies or not, are moving into this space and rethinking how they go to market.
[00:25:04] But the net of the partnership conversation here is that it's not transactional channels in the way that we've known them. It's thinking about channels in the form of an ecosystem, whether they show up early in the customer journey at that point of vendor selection and initial transaction, which is that first 30 days in, in air quotes, or they show up every 30 days forever.
[00:25:30] This is why you have 81% of accountants doing tech services. This is why you have 78% of digital agencies doing tech services, because everyone is becoming a tech company. It's this is kind of the future disruption.
[00:25:44] The last thing I'll say is Accenture did a big survey of CEOs in every industry, in every size company, in every country of the world. And 76% of them think that their current business model will be unrecognizable in five years. 76%, and ecosystems are the number one reason why. So, it doesn't matter what you sell. It's all converging into this space and this partner religion, or this ecosystem religion, is just going to become pervasive.
[00:26:16] Adam Michalski: [00:26:16] There's a lot of good stuff in there. And I think, I definitely want to loop back around because I mean, the topic of transactional versus non transactional is something that I find pretty fascinating. And I think that a lot of, particularly when we talk about the tech stack, specifically built for partnerships, it's like a lot of the legacy technology is really more focused on the transactional component. And I think that there's been a little bit of a Renaissance on more of the non-transactional component in different processes, workflows, automation that you can build over there.
[00:26:44] So I want to loop back around there, but before we do so, can you specifically speak to, for B2B SaaS, what are the biggest partnership communities that you think are the most relevant for folks in the B2B SaaS community? I know that you have a pretty good top-down view of this.
[00:26:59]Jay McBain: [00:26:59] I do. And I publish the list as well because I subscribed to them all and I'm really interested in all of them, including yours and the great work you do in this podcast and the broader team with the tools and everything else.
[00:27:12] But there's 54 magazines that SaaS leaders read. There are 64 podcasts that they may listen to for different subjects. There are 150 events per year that they're invited to. There are 24 different associations. There are obviously big vendor communities. There are distributor communities. 99 LinkedIn groups. There are 25 Facebook groups. There are big Reddit communities.
[00:27:35] So there is a big environment here. And the fact is, there's no umbrella to this. There's no like single association or no single place that, or a single magazine that everybody reads. It's highly, highly decentralized. And if you want to get out to the broader SaaS community and especially the partnership leadership, and when you asked me how many there's millions of people, the fact is is there's not just one Superbowl ad that you can run and go spend $5 million to talk to them all.
[00:28:04] Well, you got to do a community approach and start looking at all these different sources that I talked about in terms of what they read and where they go. But I get obsessed over the hundred people that drive this community, that talk on these podcasts, that sit on the board of these associations, that do the keynote at these events, that are on the front cover of these magazines.
[00:28:25] I score them, and I'm really interested in, again, there's no one person that's kind of the royalty or the King or Queen of SaaS partnerships. But there's a hundred people that are thoughtful, very, extroverted, visible people that are really driving the thought leadership and driving a lot of these people, process and program and technology thinking around how to get there.
[00:28:54] And. you know, use best practices and everything else. So that's the people element that kind of wakes me up in the morning.
[00:29:00] Adam Michalski: [00:29:00] Yeah. And, I mean, plug for you here because I think that if I had to mention one person who has done the most for the partnership and ecosystem realm, you're definitely the one.
[00:29:12] So, huge thank you for scoring, for ranking, for, you know, whether it be tech, whether it be people, everything. I mean, your analytical lens on this is extremely valuable to the entire ecosystem. So huge thank you. Keep doing what you're doing on that front.
[00:29:25] The one next, I guess last question that I wanted to touch on specifically around people is. I think what's extremely interesting about partnership folks in general is that there really hasn't been much standardization around roles and responsibilities per se, particularly in SaaS. We have, I think that it's starting to become a little bit more standardized, but when you think about like sales or customer success, like there's a very linear path of like SDR, Account Executive, you know, Management
[00:29:57] What are your thoughts around that standardization? How much it's potentially holding back partnerships and people who are interested in partnerships? And just how you view that over the next 5, 10, 15 years?
[00:30:08] Jay McBain: [00:30:08] Yeah, right now I think we're in the third stage of sales and marketing. In 1999, I mentioned Salesforce and the next decade was really around the sales model.
[00:30:17] And you went into 1999 thinking that you manage a territory with your gut. You, you're born to be a salesperson. Well, that all went away in a few years. When you know, you had CRM and you had the layers of sales technology and the art became a science. And you couldn't get a job as a sales manager, or even a salesperson, without knowing that process and SQLs and everything else.
[00:30:41] About 10 years later, 2009, the same thing happened for marketing. You know, you went into 2009 thinking that 50% of your marketing dollars were wasted. You just didn't know which 50%. It was really funny at cocktail parties back then. Well, a few years later, you couldn't get a job as a CMO or a marketing leader without having your process down to a science down to the seventh decimal point.
[00:31:05] You had companies like Marketo and Eloqua and HubSpot and Pardon and Act-On back then. No one knew those companies until they were acquired by Oracle and Salesforce and Adobe and others and they became big names. Well, 20 years later, we've invested a lot in direct sales and marketing process, people in tech.
[00:31:26] And guess what? 75% of the world goes indirect. So, there's been a little bit of a blinder there, and I think we're moving now into the 159 companies on the channel software tech stack that people in terms of what their roles like still, you can go get a channel job today talking about drinking with your partners and taking them to the Caribbean and you know, this great relationship, rah-rah.
[00:31:49] That's going away in a couple of years, you're going to manage your channel partnerships to the seventh decimal point. You're going to have the processes. You're going to have the technology locked down. You're going to have the scalability and to become a channel leader, a partner leader, your interview's going to look very different a couple of years from now than it looks today.
[00:32:05] And we're just in this period now where many of the companies, most of them on this 159-company tech stack, you wouldn't recognize. But 10 years from now, when they're acquired by an Oracle or a Salesforce or an IBM or an Adobe, you will recognize them. And that's where we're going. This is the third stage.
[00:32:22] It's kind of the crowning moment that brings together sales, marketing and indirect sales, probably all under the CRO in one consistent and well-performing organization.
[00:32:37] Adam Michalski: [00:32:37] Yeah, this is extremely exciting to me, as I imagine, you know, for a lot of our listeners. We are really going through that new formation or that next step for partnership professionals where it goes from that art into more of a science and I'm personally extremely excited about that.
[00:32:55] And one of the big elements of that is the tech stack. So, a couple of questions here. I mean, like one, what types of tools do you see modern day B2B SaaS partnerships teams leveraging, both now and into the future? And then also, is there any like particular resources that you have out there, just speaking about, whether it's the tech stack, PRMs, or any of the tools that folks could potentially look at in the space?
[00:33:23] Jay McBain: [00:33:23] Yeah. So, a couple of things. I talk about the hundred elements that go into a program. The tech stack really serves up that like, if you want to do incentives, I mean, there's incentives companies. If you want to do onboarding, there's learning management companies that do external or channel type of onboarding. If you want to do through channel marketing automation, marketing to through and with your partners at scale, there are 40 companies that just do TCMH. It's actually the fastest growing.
[00:33:52] But there's seven layers of the tech stack that kind of serve up the underlying parts of those hundred parts of your program. The fact of the matter, the biggest changes, and I added into 2020 and ecosystem bubble, because if your channel truly is trifurcated, you don't just have this transactional channel.
[00:34:12] It might even be a small element of your overall program is the transactional piece. We're seeing that Microsoft, who's bringing on 7,500 partners a month, 80% of them are non-transacting. So, the move now is to this early journey, like who's helping you and who's influencing. And how do you influence the influencer early in the journey?
[00:34:31] So in that it's attribution. So, there's different companies that can do attribution early in the journey. The transactional models understood. But this third element now is this retention driving adoption over the long-term with partners, driving upsell and cross sell every 30 days, driving integrations and stickiness.
[00:34:52] All of these things become incredibly important and you've got to serve all parts of the customer journey, these three different really important parts and the software itself. There's no one company that does it all. So, in how you do all of that today is still like the marketing stack still what somewhat of a channel stack in terms of the technologies that you'll build the processes, you'll build the program that will be launched and the people that will be behind it all, you know, evolving over the next couple of years.
[00:35:24] Adam Michalski: [00:35:24] Got it. Yeah. And I think that's what's particularly interesting and I love the lens that you put on it previously, just regarding, the sales tech stack and the marketing tech stack and how those evolve, because I'm personally of the same belief that a lot of that is going to be happening.
[00:35:37] I think it's going to be happening sooner rather than later. And I think that there is a lot of accelerants that have, obviously COVID being one that pushed us to the forefront. And I think that the growth rate, particularly in this space, on the tech front, on the people front, and all of that is going to be particularly exciting over the next 5 to 10 years.
[00:35:54] So with that said, before we wrap up here, I just want to get your take on the partnership landscape and where you see it going over the next 5 to 10 years. What's most exciting to you?
[00:36:07] Jay McBain: [00:36:07] Yeah. What's exciting to me is when every company on the planet becomes a partner. So, this 76% of CEOs think their future is wrapped around ecosystems. You know, how you sell a forklift, how you sell a paperclip, and how you sell B2B SaaS software, is all going to be wrapped around how you run an ecosystem. So, every company, we're talking millions and millions and millions of companies, all come flooding in and they add value in that multiplier in different ways.
[00:36:37] It's managing chaos. It's not linear. It's absolutely celestial. And I'm interested in who the winners are going to be in this new space when you're looking out there and who can best leverage the most influential people, and who can best serve the customer, who can best drive the customer journey, and the customer experience through partners, then this wide open, and you're going to see big companies that we know and love today, and you recognize their logos, go away because of the lack of partnership execution. And you're going to see companies that you don't recognize their logo today become superstars and maybe join the DOW 30 ten years from now because of their successful use of partnerships. And, I think this decade, as we look back on it, 10 years from now will be written in that way and in terms of how all this came together.
[00:37:31] And I think it's just exciting for us to be along for the ride. The decade of partnerships.
[00:37:36] Adam Michalski: [00:37:36] I like that. And I don't know about you, but I'm particularly amped up right now. So, that's awesome. And I think a lot of our listeners are going to be too.
[00:37:44] I guess the last question that I have for you is, if anybody is looking to engage with you, you're obviously, probably the largest thought leader in the space.
[00:37:52] How do they get in touch?
[00:37:54] Jay McBain: [00:37:54] I'm everywhere. So, if you want to send me a LinkedIn, connect with me on LinkedIn and send me a message there. You can send me a direct message on Twitter or find me on Facebook. I mean, I'm JMcbain@forrester.com. But I've got all my windows open.
[00:38:13] Adam Michalski: [00:38:13] Awesome. Awesome. Well, I mean, on behalf of the entire partnership community, Jay, thank you so much for everything you do and continue to do. And thank you so much for joining the podcast today, man. I really appreciate it!
[00:38:25] Jay McBain: [00:38:25] Oh, this was fun. I look forward to doing it again at some point!
[00:38:29] Adam Michalski: [00:38:29] All right, Jay, talk to you soon. Take care.
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