March 7, 2017
More than ever before, agencies are pivoting to focus exclusively on one software platform, offering consulting, training, and implementation for customers of that software. As someone who has both been an agency partner and offers an agency partnership program through Proposify, I’ll explore both the benefits and drawbacks.
In many ways, it’s the perfect symbiotic relationship; SaaS companies need to acquire and retain a high volume of paid subscribers at a low acquisition cost.
Agencies want a consistent source of quality clients and additional revenue streams.
Enter the software/agency partnership.
What is a software/agency partnership?
Big, complex pieces of software often require a lot of handholding that they simply can’t provide to all of their customers.
If SaaS companies want to acquire customers cheaply and retain them longer, they need digital agencies as partners who can do all of the sales and training for them, building in their own consulting fees.
The SaaS company feeds their partners leads and empowers them to focus on what they do best. Meanwhile, the agencies act as sales agents for the software company, recommending it to their clients.
Becoming an agency partner can require significant investment to learn the intricacies of the software; taking training courses and paying fees to the software company to be formally recognized or accredited as a certified partner.
While there are a lot of software companies I could talk about by way of example, I’m going to focus on three distinct companies, all of whom partner with digital agencies: Hubspot, Shopify, and Infusionsoft.
Note: this post is not meant to sell you on becoming an agency partner of any particular software platform, or partnering with anyone at all. It is simply meant to outline the pros and cons of taking your business in this direction.
First of all, let’s review the benefits of being a partner:
The benefits of partnering with a SaaS platform
Most agency partners start out as general web design or marketing companies, and after using a particular software product, either for a client project or themselves, they decide to take the plunge and completely rebrand their agency as, say, a Hubspot-Certified Partner, or Shopify Expert.
Often what drives agency owners to make this kind of drastic, expensive decision is the fact that the agency business is tough. It’s hard to sell monthly retainers and it’s hard to specialize in a niche. Partnering with a growing SaaS company can help take their business to the next level.
Here’s how:
Lead generation for agencies is tricky, and it’s one of the most common problems I hear about from agency agency owners.
One of the perks of being a certified partner with a big software company is that they list you in their marketplace or directory.
Hubspot's partner directory allows you to search by the type of certification you're looking for, and by location.
If you click on an agency, it shows you a description and client reviews.
Infusionsoft has a marketplace where you can filter the list by a number of criteria.
Shopify showcases their experts and lets you filter by type of service (design, development, etc.) and budget range.
Do these partner directories actually work at driving leads to agencies?
In this video, Kurt Elster from Ethercycle says that previously when his company was a generalist, they’d be lucky to get 6-10 leads in a month.
Now as a Shopify expert, they sometimes get ten leads per day — more than they can handle — and they’re not even listed as a top Shopify expert!
This is the power of specialization at work, along with being part of a big network.
As another example, I spoke to Jim Hohl, the CEO of Visify, an Infusionsoft partner out of New York City. He said:
“We had been using Infusionsoft for some time, but we wanted the official stamp of approval as a way to distinguish ourselves from the competition. We also wanted to have more of an impact on the development of the software which is so integral to our business and our clients' businesses. Being a partner gives us social proof and access to the important players at Infusionsoft, which has been the biggest benefit so far. Together with them, we have set up a series of events co-hosted with Infusionsoft and I expect a decent number of leads to come from them.”
Expand beyond the local market
When I’ve spoken to agency owners who partner with a software platform, they tell me that as generalists they were limited by their geography, but now that they specialize (thanks to software partnership), they have clients all over the world.
When you’re a generalist, you’re often limited to working just with local clients, and that can make life pretty tough when you live in a small city where the client pool is equally small.
But clients who are looking for a very specific type of agency usually don't care where the agency is located; they care about the results you provide.
Guidance and mentorship
Because all of these software companies rely on quality agencies to resell their product, they offer plenty of help and guidance to ensure the agency knows the software inside and out and is selling it effectively.
In addition to videos and guides listed in their academy, Hubspot offers an onboarding program for agency partners that includes a “channel consultant” and a “channel account manager” who assist with training, technical setup and support, and guidance on how to package and sell Hubspot to clients.
InfusionSoft offers their partners one-on-one training, forums, and even weekly and quarterly business reviews.
Shopify offers workshops, webinars, marketing materials, and private forums to help their agency experts stay on top of their platform.
A sense of community
When you’re an agency partner with a software company, there’s a large community of other partners all drinking the same kool-aid.
In addition to online communities, nearly every SaaS platform that relies on third-party partners to resell their software hosts some type of conference.
Last year, my co-founder and I attended PartnerCon - Infusionsoft’s partner conference.
That's me with Marcus Murphy, the former director of partnerships at Infusionsoft (now with DigitalMarketer). Much to my chagrin, his beard is better than mine.
Hubspot and Shopify also have Inbound and Unite respectively.
While some people may view other partners as competition, the consensus seems to be that agency partners consider each other colleagues, often referring clients and sharing ideas and strategies.
Reduce risk and overhead
When you build your own software to sell to clients, you are solely responsible if there are bugs or downtime. Maintaining your own software is a massive, ongoing cost to your agency.
The beauty of reselling proven, existing software is that you can focus on what you’re best at — like marketing strategy, consulting, or design — and leave the heavy lifting to the software giants who have hundreds of developers, product managers, and QA testers working on it every day.
(This can also be a downside so see later in this article where I list the caveats).
Additional streams of revenue
In addition to getting more clients, agencies also benefit from partnerships by generating additional revenue. In many cases that may be passive, recurring revenue, the very best kind!
If you’re a skilled designer or developer, you can build your own apps and themes and then sell them on the Shopify and Infusionsoft marketplaces.
I interviewed Aaron Whitman from Able Sense Media, whose agency is a Shopify expert. They built two apps that extend Shopify’s core functionality, and the app downloads through the marketplace generate thousands of dollars in recurring monthly income.
Another example: a couple of years ago I interviewed Jeff White from Kula Partners, who had recently re-branded his agency to be inbound/Hubspot focused.
At that time, Kula wasn’t even yet a platinum certified agency partner, but even then their pivot drove their recurring revenue by 1,066% in one year (it made up 35% of their total revenue, and even more so now).
A big part of this is because Hubspot trains their agency partners to sell and package their offering into retainers. They know that users of their software will be retained long term if they have an agency holding them by the hand and guiding them every month, so it’s in their best interest to teach agencies how to sell retainers.
Potential drawbacks/considerations
Do you want to be tied to one solution?
Many agencies want to be “solutions-agnostic” so they aren’t tied to any particular piece of software, instead recommending the best solution for the client’s needs.
Becoming a certified agency partner generally means you only sell that software and don’t recommend or implement any other competing software.
If you’re a Shopify Expert, you’re likely not going to recommend Magento or BigCommerce to clients.
The other thing to consider is that when you recommend third-party software to your clients and it doesn’t deliver results, they experience a bug, or they need a particular feature not offered, the client may hold you accountable as the company they trusted, even though you are completely powerless to fix or improve the software yourself.
Can you stand out in the marketplace?
Having a large community of other partners has its benefits, but it can also be a double-edged sword — you may be competing with those exact same agencies for the same client. You need to make sure that knowing a particular piece of software isn’t the only benefit you bring to the table.
Specializing in a vertical market can really help with this. If you are a Shopify expert who also understands the packaged goods industry in depth, no one else will be able to touch you when you pitch Kellogg’s on a new ecommerce store.
Can you invest the time and money?
This holds a lot of agencies back from taking the deep dive into partnering with a software platform — it can be very expensive.
For example, becoming an Infusionsoft partner will run you about $1,000-4,500 in upfront fees, and renewal fees in the neighbourhood of $250-$3,000.
Hubspot requires many hours of training to get certified in a variety of different topics around inbound marketing. Paying your staff (and taking the time yourself) to get trained takes time, which, as we all know, equals money.
Jim Hohl, mentioned earlier, said about Infusionsoft, “In addition to the classroom time, the assignments were very thorough and it took time to do them right.”
Using Google as an example, I asked Andrew Breen, the CEO of PPC agency Outshine, about what it’s like being a Google Partner:
“Being a Google Partner is free, but you need to meet certain criteria around training and ad spend. The training criteria is time-consuming as they need to be updated yearly, there are six exams, and you need an 80% to pass an exam.”
Bottom line: if you’re an agency struggling to keep the lights on, you may want to wait until you’re on stable footing and have some extra cash in the bank before making such a huge commitment.
Is the software company stable and future-proof?
When you brand your company around one particular software platform, you better be sure that it’s an established, robust company that’s still going to be around for the next five years and doesn’t get usurped by a bigger and better technology. Otherwise, you’ll need to reinvest all that time and money again in learning the new industry standard.
For example, in our podcast interview with Jason Swenk, he said that over a decade ago all of his competitors were specializing in the CMS, Sitefinity. I’d be surprised if anyone reading this knows what that even is, as it fell by the wayside a long time ago.
The good news is if you’ve chosen the three software examples I’m focusing on for this post, you shouldn’t need to worry:
- Hubspot IPO’d in 2014 and did over $180M in revenue in 2015. [Source]
- As of 2015, Shopify is a publicly traded company with revenues in excess of $200M per year. Even Amazon closed down its webstore service and recommended its merchants migrate to Shopify. [Source]
- Infusionsoft hasn’t IPO’d, but even as a privately owned company, it did $80M in revenue last year and has raised over $125M in venture capital. [Source]
However, just because a company is on top now doesn’t mean it will last forever, and that needs to be considered when choosing a platform to build your own brand around.
Conclusion
Making the choice to specialize in and partner with a software platform is a big decision to make. Hopefully, this post helped lay out the pros and cons.
