#021 Navigating B2B SaaS Partnerships with Martin Scholz

Thomas Miltschuh: Welcome to our new episode of Speak Revenue! Remember, revenue is not a goal. It's a result! But a result of what? In this show, we turn our eyes from the output towards the input. We speak to sales leaders and entrepreneurs about the journeys. Join us on our request to uncover and learn the root causes of success. Let's unpack what works for them and what didn't today with our guest, Martin Scholz. Hi Martin. Great to have you. Thanks for taking the time.

Martin Scholz: Hi Thomas! Thanks for having me. Pleasure to be here.. 

Thomas Miltschuh: Wonderful. So let's get started right away. Please give us a quick introduction of yourself. Who are you, what do you do? What makes you so successful?

Martin Scholz: I try to keep it short. So in the last 15 years, I found my way into an area of business development when business development was still literally a business development and not the hard job of making appointments for your account executives. Which was about, you know, entering new markets geographically, vertically or customer segment. And a lot of that turned out to happen with partnerships. My next job in the next startup was then, already called, SVP partnerships, and over the last 15 years I realized I had a chance to found a lot of great partnerships, which drove significantly the success of the companies I've worked for. Made a lot of mistakes, which I had a chance to learn from. Luckily, there were more successes than failures, so ultimately, I realized: "Hey, it seems like I collect some knowledge which is not so unique, or which is quite unique and not so much available in the market." So together with Bernard, who's my co-founder and partner in crime, we decided to put our knowledge to the market as industry experts to help B2B SaaS companies to be more efficient in their growth by using the power of partnerships.

Thomas Miltschuh: Do you think partnerships as a sales channel are still underestimated?

Martin Scholz: Absolutely. Not only as a sales channel, this is one of the first things we try to do. Educate and enlighten the people. It's not about having someone else selling your product. This can happen. Actually, this is the harder thing to achieve, and this is probably the reason why still 80% of partnerships fail because say, oh yeah, let's do some channel. I heard that it works awesome here. 30% of the list price if they go and then they wait to collect the money. But as the title of the show says, you know, revenue's not the goal of partnerships. It's the result. So what do you actually need to do to make it successful? And are there other ways, smarter ways, which are fitting much better to your current go to market? To utilize the power of partnerships in various spaces to help not only your sales team or your revenue team, maybe help your marketing team, maybe help your product team, maybe help your customer success team to reach their goals, which ultimately lead to, reach the revenue goal for the company or maybe the e goal. Because ultimately today it's very much more about capital efficient growth and not revenue at our growth, at all cost, how it used to be. So there's way more to partnerships than just channels. 

Thomas Miltschuh: Okay. Sounds like it is about integrating the partner a little bit in their own bus into their own business. So maybe you could go into this a bit more, into detail a bit more. How do you make this happen?

Martin Scholz: It's a very good question. So as I said, if you compare that to. Five years ago, partnership was something like a second thought or third thought or something you would do when you had enough time or too much resources, which we know hardly ever happens in a startup scale up environment. If you look, you know, more recently in the last 12, 24 months, there are people who are much, way less biased than I am, who say, Hey, partnerships are absolutely crucial for the success of a company. Sarah Wang from Andreessen Horowitz says: Our top portfolio companies, for them partnerships, are a revenue driver, number one, and a priority driver number one. It's not an afterthought anymore, right? There are Gartner and McKinsey who have studies about the power of the ecosystem, et cetera. here is to understand what do we want to actually achieve? And I think the reason why, you know, I even came across that podcast and reached out to you guys was, I definitely couldn't agree more With the the tag line: revenue's, not the goal. If we run the partner experience, uh, partner Academy, PB Academy, where we train partner folks, my first question is always what is your goal? And shockingly still, 9 out of 10, tell me, revenue's the goal. Then, well, you know the answer, right? Revenue's not the goal. So what do you actually need to do to achieve that result of revenue talk? Do we talk about Net New Revenue? Do we talk about retention revenue? Do we talk about reducing customer cost, which is actually not revenue, right? It's leading to having your revenue with less cost. These are the things which you can all achieve as a partnership, depending on what your company's doing. So the first rule was always like, okay, hey, leadership, what do you want to achieve? And does that even fit to the characteristics and the environment of the product and your own company?

Thomas Miltschuh: All right. I saw that if I created a framework or established a framework to get partnerships working. Maybe you could give us an overview on this and, how do you get started? First of all, how to get started to get the commitment of both sides to work together, to collaborate successfully. And how do you make it successful? How do you leverage it the right way? Maybe depending if you focus on a specific case, if there are different approaches.

Martin Scholz: The general approach we take, or the framework is first we make a 3 step approach to make sure that the, you know, one of the things we heard from, from leaders and also investors was like, yeah, partnerships, I don't know. You need to invest and you have two years of black box, and only then you see the results, which is basically wrong, which is, wrong in a way because they're looking at KPIs they know from other channels, maybe sales KPIs. And if you, yes, if your KPI is revenue, that might take two years until you see it in your Salesforce reporting. Whether or not, you know what a partner source is? Partner influence, Partner revenue. But it doesn't, by no means it's the two years of black box because there are a lot of things happening in between the comparisons. If we stick to the sales channel or sales partnerships, which are I guess the one the audience probably is most familiar with. you think about building up your channel, of partners who bring your product to the market, I always try to compare it with hiring a new sales team. If you want to hire a new sales team, you need to recruit this person, or, you know, and she or he maybe has three, four months a notice period, or if you start today, you just make the decision today to launch that you know that you probably spend three, four months until you have this person hired. 

Thomas Miltschuh: Correct. 

Martin Scholz: Same goes with the partner. Just because you decide today you want to be a channel partner doesn't mean that the channel partners are ready tomorrow. So you need to recruit that partner. It's not a partner set, it's partner recruitment. You need to recruit the same way like you, or similar way like you would recruit an employee. The day the person signs the employee's contract, they don't produce at the same time. Just because somebody signs a partner product, contract, they don't produce immediately. It's totally natural for you, to invest in an onboarding for your employee, whether it's co-selling, whether you're shadowing him, whether or her, or whether you have a professional onboarding program. You definitely have a ramp up period. You have somebody responsible to get this person, on speed. But for partners, it's very often near, they're sent a partner contract, so let's wait until they send the money. It's not gonna work. You need to invest in them as well because, For your employee, their primary goal is to close deals for you. That's their job description. The partner runs his own business. It's not their business to sell your deals. So why would they, so that's, and that's one of the core questions, like why would they even consider bringing your product to the market? What's it for them? It's a mutual relationship. There's not much of a transaction in there. And even then, if you have recruited the partner, you invested in onboarding the partner, even then this partner will have some kind of sales cycle because they need to create, generate their own pipeline. They need to bring their prospects through the sales cycle, similar to yours. So if you look into your own hiring and you say, okay, I have . I decided today that I want to extend or build up my sales team. You know that it will take 6, 9, 12 months until this decision you take today yields significant revenue driven by that additional sales person. And this is one of the first lessons we try to educate that it's the sales. If you go down the channel road, keep in mind that it's the same, it's a similar way. There are other partnerships which kick off faster. That's clear so far?

Thomas Miltschuh: Yes, of course. Yeah. And we are really focusing on B2B SaaS, specifically, right?

Martin Scholz: We do focus on B2B SaaS. We realized that actually the framework we developed worked for B2B, B2C, or B2B Non SaaS. There's actually an ISO, which hardly anybody knows, ISO 44001, which is called ISO for Collaborative Working, and my Co-Founder Bernard, is actually the associate director for the ICW, which is the Institute for that Norm in Germany. When we put the frameworks to, the PC framework for B2B SaaS partnerships and the ISO norm framework for collaborative working next to each other, we found like an 80 plus percent overlap. There are some things which are the norm, which you need when you are working in a capital environment, which our customers typically are not, startup scale ups typically, but the base underlying framework is all the same. So coming back to the framework, how we start that. We start by being the devil's advocate for the leadership team and ask, Hey Thomas, you want to do partnerships for your company? What do we want to have? And if the answer is revenue, well then we have a topic, right? Then we say, well, this is not going to be specific enough. So what is the actual goal? Do you want to increase your customer lifetime value? Do you want to decrease your customer acquisition cost? Are you maybe looking into reducing your post sale cost? And avoiding building up a huge solution engineering team, which is helping, implementing and disrupting your software. If you think about Adobe or Salesforce, their successful partnerships are predominantly in the system integration space, which implements solutions to the customers. It's not Salesforce doing the implementation. It's one of the many, solution partners. Or are there other things you want to achieve? And this general idea is like having like a half a day workshop with the leadership team to really develop a partner hypothesis or the partner notion, the rough idea, what do we want to achieve? Do we have somebody in mind who could potentially be interested in, do we have any convincing partner value proposition for them? Why are they, why should they care? And do we have a rough estimation? How fast do we need the results? And how much of the results do we want to have? And we're setting the stage of, hey, what could be the result of doing this initiative? And it's the first breaking point that could be the result that didn't say well, it takes too long. Or we need to invest too much. We have to have other priorities, now we need to postpone it. That's fair enough. Then better don't stop. than trying to do something half hearted, if they do agree to having this first hypothesis, this rough idea, this back of an envelope, or back of a napkin business plan. Then we say, okay, let's take that to the next stage and be more specific and create a real go-to market plan and really create this detailed and see what are the timelines, what are the resources needed, headcount, budget, you know, what is the, can we validate the, this on the market? Having the first conversations with potential partners and seeing if the ideas which we had in the boardroom or in the leadership room are actually have a market fit with that we create a second stage where we have then a two, three year plan, which will be wrong. It's a plan, it'll be wrong, but at least we have something which guides us and which can be presented to leadership and maybe to the board to get the buy-in, to have the expectations set correctly. Partnerships are always a little bit of a midterm play. It's not a quick win. If somebody tells you, tells you partnerships for growth taking, forget it. They're lying. Snake oil. Yeah? But if you don't start today, you will not have, you will have a problem with your budget in two years. If you start today, partnerships will be your driver for maybe 12 months, maybe 18 months, maybe 24 months, for sure. And if that's then agreed, then we have the company to actually put on the road and execute it, build the team, you know, win the first partners, et cetera, et cetera. 

Thomas Miltschuh: Talking about results and goals, do you see the typical goals set for companies in different stages, or is it very individual from company to company? When talking about SaaS B2B.

Martin Scholz: It's very different. Let me give you a quick example from my own history. So my first startup was a search metrics and SEO company or platform for search engine optimization. One of the strongest channels for us were digital marketing agencies to choose the Searchmetrics platform to, you know, work with their clients on optimizing their search engine performance. I did that for six years. We built a global agency program. We had all the big ones. It took us a long time, but it's not a money printing machine, but close to it, right? Then we had, and I switched and went to uberall. It's a local marketing solution. It helps companies to manage their location data on Google Maps and Apple Maps and Facebook, et cetera. So when I want, if you want to check where's the next Starbucks and if they still open, you know, you need to manage that data, and uberall is a fantastic way to do that. So a lot of companies would all source that still to an agency. It's actually within a digital marketing agency. Again, a bit of the SEO team, which was the first point of contact. Even though the challenge for uberall was that it's more than just SEO. Challenge was uberall is a little bit of a plug and play solution. You set it up once, it's not very complicated, and then a lot of the stuff works smoothly automatically, which is nice for us as a product, but bad for our agency partners who cannot charge a lot of service money around it. So even if we had the same ICP, even if we had a similar IPP, we realized due to the nature of the product, the methodology which worked, or the program which worked fantastically for such metrics didn't work for uberall. We needed to come up with a new way to adjust to the product, right? So much depends. And that's why so many partnerships fail because some founder talks to another founder and they had it at the founder's dinner and they say, oh yeah, these guys run amazingly with partnerships. Let's copy that. Well, it's not gonna work. 

Thomas Miltschuh: Seems like you need to know much more about each other, than just, what you get in one, during one dinner.

Martin Scholz: Yeah, absolutely.

Thomas Miltschuh: What do you say? Or do you have any recommendation or at what stage B2B sales companies should start engaging in partnership relationships? Or, any minimum requirements you think should be fulfilled?

Martin Scholz: Very good question. First thing I have to say, it always depends, again, partnerships are so unique, so diverse. It's so interesting to work in that space because you always have new ways and you can, you know, come up with new ideas. But in the more than 80% rule, it would be that. Typically a company should have found their ICP. They should have found their go-to market and product market fit. They should know who to buy it from. And, what is the value proposition of the product? Because if you don't know who you want to sell to, how would you find a partner who could help you to drive that sales? Right? Whether it's a channel or whether it's in marketing, you would need to know. Okay, who's my ICP and who is a partner who could help me to work with that ICP? So that typically translates if we stick to the American standard. It would be late series A, early series B, would be a good point to consider this. Sometimes you have companies or clients which look for product partnerships earlier. What are product partnerships? It's a way to take pressure from your roadmap, from your development team, from your product team, and you say, Hey: this is my core product! There's a feature, which is missing and our customers or prospects telling us we should have X, Y, Z, but it's not core to our solution. Do I want to reinvent the wheel or do I go down the road to find another product company, which becomes my partner completing my solution? Think about the car industry and their part. BMW does not produce the gear themselves anymore. Right. They have somebody who specialize in that, who does build this solution and the part according to their specifications and requirements. But BMW does not produce it themselves anymore because it's maybe not the core of their car design anymore. And especially in that space, it might be a good idea to start earlier because one of the power of partnerships you can always achieve is speed to market. You can be much faster on the market if you don't build everything yourself. 

Thomas Miltschuh: Yeah. 

Martin Scholz: The cliches, right? Not built here. but sometimes it's better to leave it to the experts and focus on what is really the unique selling proposition. The disruptive part of your solution. 

Thomas Miltschuh: Okay. Several years ago I was told something like: don't start partnerships if you don't have at least 1 million MRR. So it looks like it's a bit more complex. 

Martin Scholz: Yeah, I would immediately ask, okay, what's your average deal size? Right? I talked to founders who had a very niche, high-end multinational product where they had 2/3 customers and they were above the 1 million, but it was not a repeatable set process because it was very customer solutions. And then on the other hand, you have companies which are focusing on the SMB space where you need quite a lot of clients to  get a million. So there might be a way that you want to find partners who help to bring your product to the market way earlier to achieve that scale. In such metrics. We partnered with IONOS, one-on-one who brought, where we built a custom version of the SEO, like super, super lightweight SEO tool. Like I was compared, like we had the formula 1 racing car, right? Only 10 people in the world could drive because it was really state of the art, all the details. And then we need to bring that down to what would be the Volkswagen Golf equivalent, which, like a guy like me would use to bring the kids to the school or the grocery home. Right? So what are the few things in every Golf today that have an RBS and ESR systems, which we developed originally for Formula 1. So what are the features which you really want to have in your family car? And then we achieved a huge scale with that strategic partnership with one-on-one IONOS where we brought our solution. Actually friction of that,  pieces of that to a completely different segment, with the power of a partner, we would never have been able to set it ourselves into that market. We were totally relying and that was what they brought in. We brought in the expertise on the SEO part. They brought in the customer base and the market knowledge and the marketing knowledge, how to place that solution. How to design it first, and then how to, put it towards that  particular customer group.

Thomas Miltschuh: So you really need to think about how to adapt properly to make it work for different business partnerships. Okay.

Martin Scholz: Absolutely. 

Thomas Miltschuh: What do you think, after talking about what is the right way to start with a partnership, are there any sickness you would mention? Any signs, to stop, to quit a partnership?

Martin Scholz: Yeah, I think one of the things which we tend to forget is that most, 99% of our partners have their own business. And their business is not necessary to have our business. So even great partnerships with work nicely for 3, 4, 5 years may come to a situation where one or both companies have devoted in their strategy, devoted in their focus, set other priorities, and all of a sudden, not all of a sudden typically you see that coming, but the goals are not aligned anymore. And there's no mutual goal for this partnership. And then it's a good way to say: Hey, look, we had a great time. Let's see how we can part ways in the same professional and collaborative manner how we used to work in the last five years. so this is for the times when you say: Hey, we, we had a good time. They're also partnerships, which never had a good time. Like in real life you have, sometimes you have toxic relations, and similar like in, in real life, we need to stop them as fast as possible because well, they're toxic. Right? How do you distinguish that? At uberall, we developed, you know, Bernard and I worked together, sat together, and we came up with the 3 Cs of partner qualification. So don't start a partnership, which will probably become toxic. Like in sales, don't qualify. Disqualify as fast as possible. Don't waste your time with prospects, which will not deliver. It's even harder for partnerships because in sales you always have this trigger of will they pay me money? And if they don't, are not ready to pay you the money, then you have a very clear trigger to say yes / no. Partnership contracts on the other hand side very often do not, well by default, do not include a financial obligation. So you have the situation that people sign partnership contracts very easily because they sit patiently on the shelf. If nothing happens, nothing happens. So nobody has to pay anybody. Nothing's lost. This is toxic because you invest time in this partnership, you probably try to onboard this person. You spend time convincing them to get them excited, and all they do is like, yeah, I don't care. So we looked at three things, and the three things we had was the customer base. Apparently the partner should service the same customer base you're looking for, right? It should be fitting and the customer base should be relevant for you. What does it mean - relevant? Well, if you are an SMB space, they probably should have 10 thousands of customers. If you're a high-end multinational customer, working with the biggest multinational brands and maybe 10 customers are already very attractive because each of them would be a huge ticket for you. So again, it very much depends on your business that needs to be relevant to your business. Number 2, would be the credibility your partner would need to be credible to talk about your product with that prospect. Do I mean that? We had some occasions where I would say that example, look, I go to a baker around the corner to grab my bread rolls for Sunday morning and this guy would all of a sudden start trying to sell me printer cartridges. I would look at him strangely, right? I mean, the same ICP. Everybody in the neighborhood has a printer at home, so it's quite ICP. You could argue it's the same buying persona, but I don't want my baker to have dirty fingers from handling toner cartridges, right? If this guy would try to sell me a butter knife or bread knife, I totally understand that. I would say he's competent. He can recommend me, which I should use to, you know, cut off my bread words more easily. So credibility, explain in a simple example. 

Thomas Miltschuh: Yeah. 

Martin Scholz: The third one is capability. Are they capable of doing that? That has something to do with processes, infrastructure, can they build a client? Do they, can they support them, they need to support them, et cetera, et cetera. Depending on the partnership, capability can be very easy. Sometimes it's pretty challenging if you think about it. You want to integrate a solution, they probably need to have an API. If they don't have an API, they're just not capable of connecting to your software easily. And we ran with the 3 Cs and we had one which scored pretty mediocre 1 or 2 of them and became rockstar partners. And we had others which scored extremely high on all these three parameters and they didn't produce. And it took us quite some time. It was one of the hard learnings we had. Damn it. We missed the force and the most important one, the one and most important force element should be the first is commitment. 

Thomas Miltschuh: Right. 

Martin Scholz: Do they commit to the partnership? They don't commit to your partnership, so you can do whatever you want. It won't fly if they do not score very high on the other ones, but they are committed. They want to go into this customer base or they want to, they're ready to invest in building this capability, or they will upskill themselves to, not own the credibility they can. All of that can be changed, but if the commitment is not there, you're screwed.  Commitment is the hardest to track. 

Thomas Miltschuh: Yeah. Would you like to add something on this?

Martin Scholz: I know just saying that this is the challenging thing is, the first 3 you can, you know, we can do rest, desktop research, you can ask them, commitment is like a soft signal, much softer. 

Thomas Miltschuh: Definitely. Yeah. Do you have a recommendation in cases where the SaaS solution is something very new, maybe has potential to disrupt a market or even open a new market? and nobody has a lot of experience with this? Maybe, ICP is similar or the same, of the partner of the solution, service partner. How do you overcome this? Is there a secret recipe of onboarding partnerships or partners for new, very new SaaS B2B companies with a very new solution?

Martin Scholz: Yep. There is, it's actually one of the other typical mistakes I've seen. So things you should not do, if you want to find partners who bring your product to the market. Typically there are three things why people would partner up, right? Basically do any kind of business decision , especially in B2B SaaS, it's time savings or improvement of a commercial situation. So more money, more revenue, less cost. These are three drivers where people buy something. In that case where you really have this new innovative solution, which doesn't have a market yet where you need to create the market, but you might have a potential to be disruptive, nobody knows if they can sell along that, right? There's no, oh, yeah. If you partner with us, you can write so many hours for services. But that's one thing you can trigger, especially in that case. It's the status. It's the status of Partner where they can position themselves as thought leaders. I actually talked to one of my clients, which is in that space. We say: well, the thing is you need to find somebody who wants to be an innovation leader, who wants to make sure that by having your solution in their portfolio, they can position themself. As the innovative consultant who is much smarter, much more advanced, much more state of the art than the other ones. The big mistake, which I see regularly, is that startups want to partner with the big ones. Whether it's I want to partner with Salesforce or Adobe on the product side, or I want to partner with McKinsey or Accenture or Deloitte, I always joke like, you know, I wanted to date Angelina Jolie when I was younger, but Angelina Jolie never wanted to date me, 

Thomas Miltschuh: Really? 

Martin Scholz: Right? No, I'm actually fortunate, because I've been married for more than 20 years, so I believe in strong relationships, longer relationships. Also my personal life. I'm very happy that I didn't even have a chance to bother Angelina. But the point here is I guess you understand it already, it's like even though you want to partner with Accenture, they don't care for you. And it's much harder to find somebody in Accenture who takes the risk of putting a new product to the market than with some smaller boutique agencies. 

Thomas Miltschuh: Mm-hmm. 

Martin Scholz: You might be lucky. One of my clients, They have a, one of the big four, general partners in their board. Of course, that can open a lot of doors and that helps them tremendously. But if you're not that lucky, if you do not have that senior partner from one of the big companies on your board, it would be very cumbersome, especially in the beginning. So focus on the one which is on your level. 

Thomas Miltschuh: Yeah. And I think it shouldn't be about doing a favor to someone. this can be a trap, there can be a pitfall in this. You need to make sure even if you know somebody, let's say in a bigger, potential partner, company, there is some business interest. Yeah. Cannot be about doing a favor.

Martin Scholz: I couldn't agree more. It is an absolutely fair point. The point is, on the other hand, even if you have a great value proposition for this person, reaching anybody in the big corporation and making them change their standard procedure is a very tough game. There was a saying, you know, from the UK people were dying trying to sell to IBM or British Telecom and this. Unfortunately can be true if you try to work your way directly and work your way directly into this. So my recommendations always find the smaller one, the hungry ones, the innovative ones, which are not, also not restricted by having very strict internal frameworks and procedures who are ready to give your chance if you have a great value proposition, which is the precondition, as you said, completely right, and then make them the big ones nervous because they're losing pitches against the small ones, which have your solution in their pocket, then they will come to you and say, oh wait, Okay, who's that guy? Who's that product? Which, you know, we lost deals.

Thomas Miltschuh: We're coming to the end of the episode, I think we could talk much more. I've got one last question. Let's just elaborate a little bit about Tech Stack. I've noticed there's some development in this area to leverage partnerships with technology. Do you have any recommendations or any things that should be taken into account there?

Martin Scholz: This could fill another episode. I will try to do it short. One warning specifically for that typical audience. You may come across fantastic solutions like Reveal or Crossbeam. One, talking about nearbound. The other one talks about the echo system that grows, both are very strong, things which can help you, but don't fall into the trap of thinking. You just buy that software and then magic will happen. It's all about having a good concept, a good idea, and a value proposition because at the end of the day, both reveal and cross my account mapping tools. If you just use them to map accounts, which you want to target, which one of your partners, and then you just have your SDR doing an outbound call, cold call or ask your partner repeatedly to, can you do an intro? Can you do an intro? You will build this relationship. So really be mindful about how you use this additional opportunity in a meaningful and partnership way.

Thomas Miltschuh: I think that's great advice. Thanks for joining us today. I think there was a ton of value we could provide with this episode to our audience. Thanks for sharing all the actionable insights. Huge shout out to all our listeners. Your support means the word to us. Remember to check out our website:speakrevenue.com for full transcript and additional resources If you enjoyed the show. Please leave us a review on Apple Podcast or wherever we go For your listening needs, it really helps get the word out. Also, follow us on LinkedIn at Instagram or on YouTube. We'll be back soon with another great guest. Until then, stay curious and keep listening. ​