5-second summary
- As a volume-based business – that is, one that is oriented around selling as many units as possible – you can’t cover every corner of the market or every use case yourself. So don’t bother trying.
- For SaaS companies that are using the flywheel model, partnering with other organizations on sales, integrations, and add-ons is the best way to attract and satisfy customers who have unique needs.
- Atlassian is living proof, having partnered with thousands of companies to boost both customer value and revenue.
This article is part of our series on using the flywheel model to grow your business. Check out the complete collection here.
Growing your SaaS business takes a team. Obviously. What’s less obvious is that you don’t need the entire team to be on your payroll. Instead, you can cultivate an ecosystem of partnerships around your company that acts as an extension of your in-house teams. These partners help you market, sell, integrate, and extend your products.
Each partnership fuels your flywheel in its own way. Channel partners offer the white-glove treatment needed to land and nurture customers with complex needs. Other partners build apps and integrations that extend your product and boost customer loyalty by making the product stickier. All this requires is a willingness to share information, resources, and revenue so both you and the partner can win.
It’s not always easy, and there are some leaps of faith along the way. The reality is, you won’t be present for every customer interaction (which is kind of the point). You’ll need to collaborate closely with your partners, as well as set them up to act autonomously. You also have to recognize that each partner has their own goals and adds a unique value proposition. They need to establish their reputation with customers, too.
Finding the right balance of openness and collaboration with partners is hard work on both sides, but it’s worth it when you get it right. As the proverb says: “If you want to go fast, go alone; if you want to go far, go together.”
Being part of an ecosystem is critical for growth in the SaaS world, as Atlassian can attest to, whether you’re at the center of that ecosystem or one of the partners on the periphery. So let’s pull back the curtain and look at how this all works, using Atlassian’s ecosystem to illustrate.
I’ll walk through its three components, how they fit into our business model, and share a few insights that will help you develop an ecosystem strategy of your own.
1. Build a channel for high-touch sales and service
Creating a network of channel partners lets you reach customers and markets you couldn’t reach on your own without abandoning the flywheel model.
Building great software should be the primary focus of any SaaS company, and you don’t want to spread yourself too thin when there are plenty of other organizations that already specialize in high-touch sales and service.
Atlassian realized early on that heavy investment in direct sales or professional services would come at the cost of R&D. Instead, we partnered with experts in the industry to deliver these value-add services, and thus the Atlassian Solution Partners program was born. Once each partner’s staff completes our certification program, the partner can offer a wide range of services and custom-built integrations that extend our products, in addition to selling the products themselves.
Our ecosystem includes 700+ sales and service partners around the world. In fact, approximately a third of all Atlassian’s business involves one of our partners.
You might be thinking, “A third? That’s a lot of revenue to share! Why not just do all that in-house?” It’s certainly tempting, and most vendors do exactly that. Customers have questions during the sales process? Companies build a high-touch sales team. Customers want help with configuration and roll-out? Companies build out a big consulting division. And so on.
These vendors retain tight control, but lose focus.
There will always be prospective customers who crave a high-touch sales experience. (This is especially true for larger customers in regulated industries.) There’s nothing wrong with that. It’s just not something a high-volume flywheel business can easily accommodate on its own because the flywheel relies on frictionless customer self-service. Remember, a volume-based business depends on selling as many units as possible.
And in some regions, there’s a strong cultural expectation that business will be conducted one-on-one in the local language. Again, nothing wrong with that. But a flywheel business has to be selective about where they establish a local footprint. Channel partners can fill that role for a fraction of what it would cost to place your own teams in every such region.
All that said, Atlassian did eventually build in-house teams focused on training and customer success. Once our partner network reached a certain size, we decided that, from a strategic perspective, we need to define the best way to use our products by working directly with our customers. However, we scale these efforts by training and certifying our partners on these practices. This ensures partners can operate autonomously while still making sure the experience is consistent from one customer to the next.
2. Mind the gap! (With the help of your app development partners)
There are two major benefits to partnering with app developers:
- Apps that sit on top of your product can satisfy niche customer requirements that you don’t have time to address.
- Apps decrease customer churn.
You’ll never ship your entire backlog. As a volume-based business, you’re focused on satisfying the most common customer needs. But there will always be customers with specialized use cases. And as your customer base expands, the backlog of feature requests from customers will outpace your ability to deliver on them – something Atlassian learned first-hand.
That’s where apps come in. By creating an open API or framework on the back end of your product that makes it easy for other products to plug in, app development partners can help you fill in any gaps. As a bonus, they might even bridge gaps you and your customers haven’t identified yet.
Apps are a win-win-win for customers, development partners, and the core business. If your organization is willing to invest in a few key areas – building relationships with developers, a marketplace platform, and robust product APIs – this strategy can pay long-term dividends.
We have over a decade’s worth of data showing that apps make the core product stickier. The moment one of our customers adds an app, they become much less likely to churn out because now they’re customizing the base product to suit their unique needs. They’re also more likely to expand their relationship with Atlassian through additional users, upgrades to premium features, additional products, or some combination thereof.
In other words, they become happier customers. And as we know, happy customers help keep that flywheel spinning.
For early-stage SaaS companies, apps are a great way to accelerate growth. Meeting notes app-maker Hugo is a great example. Soon after starting the company, Hugo’s founders built integrations for their app that let users sync meeting notes with Confluence pages and turn action items into Jira tickets. That’s been driving traffic and sign-ups for Hugo ever since, fueling customer acquisition and revenue.
Similarly, creating apps that are sold through a marketplace can be a business in and of itself. The Atlassian Marketplace partners with hundreds of developers, many of whom are independent coders who make their living doing nothing but app development. Others started independent, then grew into full-blown companies.
3. Deliver continuous, seamless integrations
An integrations strategy serves two purposes from a flywheel perspective. First, you make existing customers happier by bringing more value into your product. Second, you can actually gain new users.
You don’t need to cover every nook and cranny of your market. Every customer is unique and with the growth of cloud offerings, the ability for customers to tailor a variety of solutions to their needs has only gotten easier.
The thing is, customers expect the products in their collection to work together seamlessly, no matter how many different vendors are represented. That’s why we invest in tight integrations with the tools and services that matter most to our customers (and so should you).
Take the software development market, for example. It’s always been at the core of Atlassian’s business, but we don’t try to cover every aspect of development on our own. Instead, we use our Open DevOps framework to bring things like test management and feature flagging to customers. We partnered with companies that specialize in those capabilities to build integrations that, for example, let customers work with automated tests from inside Jira and manage feature flags without leaving Bitbucket.
Integrations and co-marketing partnerships also put your product in front of new people in a way that is highly relevant and contextual. Let’s say you paste a link to a Jira ticket into a Slack channel. Anyone in that channel who doesn’t already have a Jira seat will be invited to create one.
On the flip side, there’s a button on every Jira ticket that lets you share that ticket via Slack. If your organization doesn’t use Slack already, that button will prompt you to set up a free trial. The result is more usage of both products, and happier customers all around.
Play as a team of teams
Successful companies know the value of playing as a team. At Atlassian, we even codified it as an official company value. I hope you’re convinced now that the team doesn’t just mean the people inside your four walls, but outside them as well.
As with any team, trust is vital. If you’re asking people to partner with you, you have to be willing to share information so they can provide a great customer experience. Similar to playing as a team, when Atlassian says “open company, no bullshit,” we’re not just talking about internal transparency. We strive to be as open with our partners as we can.
An ecosystem strategy strengthens your flywheel no matter what stage your business is at. With channel partners, app development partners, and integration partners as part of your extended team, you can grow faster and help your customers go further.
Hungry for more? Check out the other articles in this series.
Thanks to Sarah Goff-Dupont for her contributions to this piece.