Why Partner Channel Growth Is Needed for ISVs
A look at why ISVs hit growth plateaus and how partner channels can become a necessary evolution in their go-to-market strategy - not just another tactic, but a fundamental shift in how sustainable growth happens.
It always makes me think when I'm talking to ISV founders who have hit a wall with their growth. The pattern is remarkably consistent - what worked brilliantly in the early stages suddenly feels like pushing a boulder uphill.
As I often mention to clients, in the technology industry, we tend to overestimate what we can accomplish through direct sales alone but constantly underestimate the power of a well-designed partner ecosystem.
This points to something fundamental about business evolution - your go-to-market approach needs to mature alongside your product. The sheer fact that you're leveraging partners will afford you the ability to scale in ways direct-only approaches simply can't match. Market reach, specialized expertise, and customer trust are things you just don't have to build from scratch. There are many strategies for ISV growth. I focus on partner channels which have really made strides and changed the game beyond what many founders imagine possible.
The Limits of Direct-Only Growth
I can still remember my first startup's sales approach. It was founder-led selling all the way, and we thought we had it figured out. When we made our first few enterprise sales, I thought to myself, wow, we're onto something big, this is awesome! Little did I know that this direct model would soon become our biggest constraint. The first successful ISVs may have grown primarily through direct sales, but there was little to no scalability.
Who would have thought that over the last fifteen years the majority of successful B2B software companies would build significant portions of their revenue through partner channels? I honestly can't imagine trying to scale an enterprise software business without a thoughtful partner strategy ever again.
Why Partner Channels Change the Equation
Over my career I worked with an ISV that was completely dependent on their direct sales team. It was a bit painful to watch - great product, excellent internal talent, but they couldn't break through to the next level of growth. It was amazing to me that they could be in the middle of their target market and all of a sudden their growth would flatline, despite having a solution customers loved. Now, before I even start working with an ISV, I evaluate their partner strategy, their ecosystem approach, and download their channel readiness assessment. Oh, did I mention that I also use partner signals as an early indicator of market fit?
I walk into companies that have powerful technology yet use outdated go-to-market approaches that keep them from reaching their potential. With the advances in partner ecosystems over the last decade, ISVs can accelerate their business and their market penetration - just about everything - from a well-designed channel system that fits their business model.
Why Most Partner Programs Underperform
Of course the last topic I am going to touch upon is channel readiness and the advancement of running successful partner programs. If you would have talked to a typical ISV founder in 2020 they would have said you're crazy to suggest partners should drive 30-50% of revenue.
There were some partner programs available of course, but they were fledgling - nobody could have predicted that partner ecosystems would not only be major revenue drivers but also critical to customer success, product innovation, and market expansion.
The industry has taken such a turn that at this point you wouldn't even start a SaaS business without saying "how CAN we leverage partners effectively?" rather than the exact opposite which is how people thought just a few years ago.
The Times They Are a-Changin
The market hits the nail on the head - with technology businesses things are always advancing, always innovating, and always changing. Even direct sales approaches though are likely to change a great deal over the next five years. Who knows what might happen with AI-powered partner management - maybe we won't need those massive channel teams soon?
Partner ecosystems are getting smarter and more efficient by the year - soon enough we might not even distinguish between direct and indirect revenue - we may just have integrated go-to-market motions. As for partner-led growth, we are still at the very beginning of a movement.
Five years from now we may be at the point where no ISV at all is operating without large portions of their go-to-market living in the ecosystem. What might that ecosystem even look like - will it be collaborative, transparent, and value-based? All likely and I dare not guess the rest.
If you are evaluating a partner channel growth strategy, or questioning whether your current GTM motion can support it, feel free to contact me
To discuss more about this blog post feel free to connect with me on LinkedIn or if you are evaluating partner channel growth, or questioning whether your current GTM motion can support it, feel free to contact me on website.
