27 Oct Everyone Loves a Good Synergy, Especially if it Drives EcosystemLedGrowth
October 27, 2021
Everyone loves a good synergy – where two or more elements combine together to become more than the sum of their separate parts. In the world of partnering, synergies help us understand how we get to #EcosystemLedGrowth (ELG) and the underlying flywheel that ecosystems bring when companies #gotomarket in partnership.
There are five elements that come together individually in partnerships to add value – we call these the ecosystem synergies. For example, when two companies combine their customer influence, the joint impact is greater than the individual impact. And there’s a multiplier effect when these different ecosystem synergies are combined, which creates exponential value.
Understanding and leveraging the Synergy Model and its multiplier effect will help Partner Leaders and the C-Suite understand how to select, nurture, and leverage partnerships to scale their business. The strongest performing ecosystems leverage the Ecosystem Synergy Model by creating the synergies and driving/managing the multiplier effect when they are combined.
The five synergies align to the partner business development process. From how we prioritize partner selection through the process of going to market and building deep and impactful relationships with joint customers.
Ideal partnerships, particularly ones where the partners work together to drive customer awareness through to customer advocacy, rely heavily on shared Customer Influence. We often choose partners based on the amount of influence currency they have with our ICP (Ideal Customer Profile) and by combining each of the two companies’ customer influence we create influence synergies. Reciprocally, my influence helps lift my partner and my partner’s influence helps lift mine. The metrics to measure Influence synergies are greater and more efficient top of funnel activity (MQL), larger deal size (ACV), and higher close rates (<CAC).
Next comes the Vision synergy. This is created when two or more partners have compatible and aligned market intentions. The more these intentions are compatible and aligned, the greater the synergy. Partners whose joint offerings are critical in addressing a given customer need, require greater vision synergies to succeed. Vision synergies are highly predictive of strategic partnership success.
Solution synergies occur where two partners’ offerings combine to deliver greater customer value, e.g., two ISVs offering a high-level joint integration. Customers often report that they will pay as much as 20% more ACV for ISV solutions that are integrated with critical adjacencies out of the box (vs being integrated ad hoc by the customer post purchase). The extra 20% in pure margin is a quintessential synergy.
GTM synergies naturally follow once these up-stream partnering mechanics are in place. GTM synergies are created and optimized when partners look beyond just the transacting (co-selling or reselling) and think about how they operate across multiple joint GTM funnels: including influence, marketing, sales, and customer value realization. The more aligned partnering teams are across these funnels, the faster the ELG flywheel turns.
One sees the cross-synergies multiplier effect reflected through GTM outcomes. For example, consider two partners with equal levels of influence (10% customer mindshare) and equal spending on demand gen spend ($1). Compare going to market alone vs going to market together, specifically to create MQLs; if the two partners combine their marketing spend in a joint demand gen campaign and each spent $1, collectively, their $2 produces 4x the impact of separate demand generation efforts. The doubling of influence impact (from 2x to 4x) is where we see the multiplier effect which should show up in a lot more MQLs for the joint offering!
Last but certainly not least is the power of Relationship synergies. Relationship synergies emerge as partners experience the various benefits and outcomes of working together. The superpower of relationship synergies and what makes this element unique is that it powers and lubricates growth in the other synergies. As relationship trust and engagement increases, so does the imperative to put more resources into key partnership elements.
To put the five synergies into action, see if you can evaluate your tech and strategic partner ecosystem on the basis of the five synergies; where are you strong and where do you need to shore up weakness. Keep in mind that small changes in one or more of the five synergies can create a big difference and produce a knock-on effect that lifts the other elements. Remember also that relationships may be between companies but in reality, they exist in the minds and hearts of people across the partner companies; so, follow the rule of building trust through service and you won’t go wrong. Happy partnering!