Partnering for SaaS sales

Synopsis – SaaS vendors should really find channel partners to do some of the marketing heavy lifting for them

When Xero first announced its strategy of targeting accountancy firms as a primary marketing channel for its SaaS accounting product I was a little dubious. Bear in mind that SMEs traditionally see accountants as a “once a year” service and, beyond possibly some advice at inception of the business, are unlikely to approach their accountant for operational advice such as which accounting package to use.

Further to this there was no real incentive for accountants to recommend Xero – sure it meant they could (possible) convince their clients that a move to Xero would save accounting time that could then be used for value-added services – but I’m not sure how well clients would respond to this claim.

I was thus sceptical that Xero could achieve any real degree of referral sales from accountants (and bear in mind that the rapid scaling that Xero needs mean lots of customers signing on over a relatively short period of time).

I was however positive about one avenue for Xero – that of partnering with accountant to create a mutually beneficial relationship. I mentioned this to Xero nearly a year ago, a situation where accountants could bundle Xero in with another bunch of products/services that in aggregate add real value to the business.

Much as I’m a firm believer in creating SaaS aggregation potential (CRM + ERP + HRMS etc etc), this software + services concept is a powerful offering.

Great then to real in the Xero blog that a UK firm of chartered accountants has started offering a packaged “consultancy and compliance” solution to businesses. Their OnLine product packages Xero with some other consulting services.

I can’t comment on the price or how it compares to other similar offerings in the UK (OnLine runs to £195 per month) but the concept should give Xero shareholders some comfort heading into the second year post IPO.

This should be seen as a model for other SaaS startups – marketing is expensive – if a channel partner can provide some of that heavy lifting it’s a valuable thing (especially given that a third party is generally a more trusted party than the SaaS vendor themselves)