I recently had an interesting debate with someone about ‘customer ownership’ and how this plays out in a SaaS world.  Its perplexing because my verbal sparring partner has some great points, but the root of my unease with the whole debate was based on uncertainty about if it even matters anymore?

Lets look at the evolving SaaS reseller and integrator market.  A bunch of companies that have made money off selling, installing, integrating and managing on premise software have seen the writing on the wall and are looking at morphing their business models to support SaaS. In this case they still sell, but in the services are significantly different. The configure, training and provide 2^nd level support.

The issue is that in the first instance, that customers was ‘theirs’. They held the core engagement and their walk away position was strong.  But in a SaaS world (Saleforce.com, or even Microsoft’s hosted exchange product), the SaaS provider holds the customer, they are no longer the integrators. So they can do the upfront work, but easily get disintermediated in the medium to long term. Imagine if Salesforce.com of Xero or whoever decided to increase revenue by building a consulting and training practice…what then for their channel partners?

My counter argument was that in a SaaS world you are on the line every day for great delivery. This includes the channel partner, if you don’t deliver then of course you can loose the customer. There is also a lot of relationship and customer knowledge etc that comes with the deal AND if you are dumb enough to be a one track pony then of course you are under more risk. What i mean is, if all you do is sell Xero or Salesforce.com and you haven’t thought about expanding your engagement into that customer with other services like change management etc then you get what you get.

What do you all think, Is customer ownership still relevant? If so how does it work in a SaaS world? Where do you stand on this? I think its important because a good channel model is going to be increasingly important to SaaS to counter the stagnant growth perceptions that exist.

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Dir Marketing
written by Adam, July 29, 2008

We, at Phase 2, believe that "Owning the customer" is as important to our partners as it is to us. It seems to me that if you are funding marketing, the sales force, the design, and all for the time to get the deal through the sales cycle... the last thing that you want to consider is giving the customer to someone else. If youre not at ease with this (Like most SI's I know) then find a partner that offers private labeling and allows you to remain the face to the customer.

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written by Paul, July 30, 2008

Hi Adam,

Good points, as was aways the case the commercial construct you have with the vendor can significantly mitigate the risk

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written by Bill, August 17, 2008

In my prior job I worked with mid-market ERP software where the channel for products like Great Plains or MAS90 does take ownership of the customer relationship. I now work on QuickBase a hosted database and application building platform for everyday business users.

When our channel sells a new customer they usually help them with some custom application that's important to their business. The customer definitely has a direct relationship with us, but as you can imagine, when they want their next change to the application (and they decide they don't want to do it themselves) they go back to the channel partner.

In addition, because you can always solve another problem with QuickBase there is always more business. We have customers that started at 10 seats and now are in the thousands or tens of thousands. In most cases there is a channel partner involved.

So, the reason I say all this is to make the point that channel partners can play an essential role in the world of SaaS but that role is changing. They don't need to own the customer. They need to bring domain expertise about the customer's problem, industry, and team. That's always going to be valuable. At Intuit we work hard to make software simple so partners that depend on technical expertise and customer lock-in won't do well with us. At the end of the day most everything in QuickBase is easy enough that the customer can do it themselves so if the partner wants to keep the business they must deliver value and trust. If they do, they end up with a long-running, profitable relationship.

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written by Paul, August 17, 2008

Thanks Bill,

Really good to have someone who's seen both sides comment. I absolutely agree with you about adding value and building trust.

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