In today’s fast-paced business world, the right b2b partnership can be a game-changer. Whether you're a small business owner, tech company executive, CMO, or CRO, understanding how to identify the right b2b partner type is crucial. This guide will walk you through the steps to make this important decision, using examples from the FinTech industry to illustrate key points.
Why Choosing the Ideal B2B Partner Matters
Choosing the right b2b partner is not just about finding someone to collaborate with; it’s about aligning with a partner who complements your business and helps you achieve your strategic goals. This choice can impact your market presence, customer satisfaction, and revenue growth.
Of course, your company will engage in various types of partnerships, including both tech and channel collaborations. Here, we are focusing on selecting the right partners that may conduct indirect sales for you efficiently
Understanding Your Product
Before diving into potential partnerships, it’s essential to have a deep understanding of your product. This understanding serves as the foundation for identifying the ideal b2b partner type. Let's break this down with two FinTech vendors: Know Your Customer (KYC) systems and Loan Management Systems (LMS).
Identifying Client Pains
The first step is to determine how many pain points your product addresses for your clients. Is it an end-to-end solution or a small piece of a larger process? For example:
KYC Systems: Typically, KYC systems are a complementary feature in various identification processes. They address the initial step of identification and are required across multiple industries.
LMS: On the other hand, LMS solutions usually cover the entire lending process for financial institutions. They are comprehensive and can dominate up to 90% of a client’s budget for lending process automation.
Assessing Your Product's Core Value
Next, evaluate whether your product solves a primary business pain or if it is a supplementary feature. Understanding this can help you determine the importance of your product in the client's ecosystem:
KYC Systems: These are often not the main product clients are looking for but are essential nonetheless.
LMS: These systems are often the primary product for clients automating their lending processes.
Evaluating Budget Allocation
Analyze what share of the client’s budget is spent on your product. This factor can influence the type of partners you should seek:
KYC Systems: Generally, these systems require a smaller portion of the client’s budget compared to end-to-end solutions.
LMS: These systems command a significant portion of the budget, making them a major investment for clients.
Considering Integration and Customization Fees
Determine if your product imposes high integration and customization fees. Products that are easy to integrate and require minimal customization are typically more attractive for partnerships:
KYC Systems: These often require minimal customization and integration, which can be appealing to a broad range of partners.
LMS: These systems usually require significant integration and customization, which might necessitate specialized partners.
Analyzing Market Competitiveness
The competitiveness of your market and the willingness of clients to invest time and resources into research can also influence your choice of partners:
KYC Systems: The market for these systems is highly competitive, with clients often looking for cost-effective, easily integrable solutions.
LMS: Clients usually start their search with LMS solutions due to their significant role in the lending process, making the market less saturated but more demanding.
Comparing KYC and LMS
To illustrate these points, let’s compare KYC and LMS more closely:
KYC Systems: These are industry-agnostic and serve as a complementary feature in the identification process. They are typically global providers with minimal customization needs and integration costs. The market is highly competitive.
LMS: These systems handle the end-to-end lending process for financial institutions and command a high budget share. They require substantial customization and integration. Clients usually seek these systems first when automating lending processes.
Deciding on the Best Partner Type
Just a quick reminder: our discussion covers technology and channel partnerships, including referrals, resellers, and system integrators.
Based on the above analysis, we can conclude the following:
KYC Vendors: The best choice for KYC vendors would be technology partners targeting the same audience with end-to-end solutions. These partners can integrate KYC into their offerings.
LMS Vendors: Conversely, LMS vendors should consider channel partners such as resellers, referral partners, and system integrators who can sell to the LMS’s target audience and effectively resell the solution.
Here is an excellent example of a partnership between Ondato (KYC) and Skaleet (Core Banking). Ondato benefits from a new lead generation stream via Skaleet, while Skaleet enhances its client offerings with additional features. Concurrently, Skaleet generates indirect revenue by partnering with system integrators like 42flows.tech.
Guess what! 42flows.tech and Ondato are also partners! This exemplifies the power of Partner Networks. Why not leverage the network effect?
Analyzing Your Company's Goals
After understanding your product and its market fit, the next step is to analyze your company’s goals. While increasing revenue and profitability are common objectives, we'll focus on more specific goals that can guide your partnership decision.
Goal 1: Entering New Markets
If your aim is to enter new markets, consider partners with a strong presence in those regions. They can provide the local knowledge and connections needed to establish your brand.
Goal 2: Expanding Existing Market Share
To expand your market share, look for partners with complementary products or services that can enhance your offering. These partners should have a solid customer base that aligns with your target market.
Goal 3: Expanding Your Offering
If you want to expand your product or service offering, seek out partners with expertise in areas you wish to explore. This can help you diversify without the need for extensive internal development.
Goal 4: Reducing Customer Acquisition Cost (CAC)
Reducing CAC is crucial for sustainable growth. Partners who can provide qualified leads or access to their customer base can significantly lower your acquisition costs.
Goal 5: Launching a New Product Line
When launching a new product line, choosing partners who can offer insights into market needs and help with distribution can be invaluable. These partners can accelerate your go-to-market strategy.
Practical Tips for Identifying the Right Partner
Now that we've outlined the key factors, here are some practical tips to help you identify the right B2B partner:
Research Thoroughly
Conduct in-depth research on potential partners. Look into their market presence, customer base, and reputation. Use industry reports, market analysis, and customer reviews to gather insights.
Evaluate Compatibility
Assess how well potential partners align with your business values, culture, and objectives. Compatibility is crucial for long-term success.
Consider Track Record
Review the track record of potential partners. Have they successfully collaborated with other companies in your industry? What results did those partnerships yield?
Leverage Networking
Use your professional network to get recommendations and feedback on potential partners. Networking can provide valuable insights and introductions.
Test the Waters
Before committing to a long-term partnership, consider starting with a small project or pilot. This allows you to gauge the partner’s capabilities and working style.
Examples of Successful Partnerships
To give you a better understanding, let’s look at a couple of examples of successful partnerships in the FinTech industry:
KYC and Payment Processors
Many KYC vendors have successfully partnered with payment processors. This collaboration ensures that the identification process is seamlessly integrated into the payment workflow, enhancing security and compliance.
LMS and System Integrators
LMS vendors often partner with System Integrators (SI) to offer comprehensive lending solutions to financial intitutions. These partnerships enable financial institutions to automate their lending processes while ensuring seamless integration with existing systems.
Conclusion: Make Informed Decisions
Identifying the right b2b partner type is a strategic decision that requires careful consideration of your product, market, and business goals. By understanding your product’s role, analyzing your company’s objectives, and following practical tips for partner selection, you can form partnerships that drive growth and success.
Remember, the right partnership can be a catalyst for achieving your business goals. Take the time to research, evaluate, and test potential partners to ensure a mutually beneficial collaboration.
For those ready to explore potential partnerships and enhance their business strategies, further resources and expert consultations are available. Dive deeper into the world of b2b partnerships and unlock new opportunities for your business.
Happy partnering!
Thank you for the article. Partnership ecosystems is a driving engine of generating revenues and it has proved to be working successfully at Ondato.