No More Tiers. Is Salesforce Showing us the Future of Partner Programs?
Salesforce established itself as an innovator way back when the business become synonymous with the ‘No Software’ logo. In the year 2000, when Salesforce launched, Software as a Service was a relatively new concept.
The first Dreamforce event took place in 2003 and the Salesforce AppExchange launched in 2005. More recently, in 2018 Salesforce acquired Mulesoft for around $7 billion, and in 2019 Tableau for $16 billion. Today Salesforce revenues are around $20 billion annually, growing around 30% each year.
THE SALESFORCE PARTNERING MODEL
As a ‘born in the cloud’ vendor, Salesforce has always adopted an ‘ecosystem’ approach to partnering, rather than adopting a classic resell model. What this means is that Salesforce has consistently developed an ecosystem of relationships with companies building software applications that integrate into Salesforce, and with companies that offer services around Salesforce. Resell exists, but is a secondary model, see below.
The transactional relationship for a Salesforce end customer is in most cases directly with Salesforce. The end customer contracts with Salesforce and is invoiced by Salesforce based on usage. It’s not a pureplay consumption model (like AWS for example) as customers commit to a fixed level of usage over a fixed period. Partners make money from referral fees and from software or services that they add to the Salesforce deployment.
The Salesforce partner program is seen as a model by many vendors as so much on premise software is moving to the cloud and is being billed based on usage.
THE PROGRAM STRUCTURE
The Salesforce Partner Program underwent a significant overhaul in 2019 and relaunched during 2020. The program has two major tracks, the AppExchange Partner Program for software developers, and the Consulting Partner Program which is for companies who offer value added services practices with associated methodologies and tools.
The AppExchange Partner Program is not our focus here. This program allows developers who create applications that integrate with the Salesforce platform to certify their software and then market it supported by Salesforce. Approved applications are featured on the Salesforce AppExchange Marketplace, one of the world’s largest enterprise cloud marketplaces. You can visit the AppExchange Marketplace at
https://appexchange.salesforce.com/
The Consulting Partner Program uses a points system to evaluate partner commitment to Salesforce and to trigger rewards. This is explained below.
Approved Salesforce Consulting Partners can, if relevant, become resellers by enrolling in the Cloud Reseller sub-program. This is for the relatively small group of Salesforce Consulting Partners who offer license resell and wrap-around managed services. To enter the Cloud Reseller Program partners must meet resell revenue goals based on total customer Annual Contract Value (ACV) and they must meet certification goals for customer support.
THE POINTS SYSTEM
The Salesforce Consulting Partner Program has four levels and partners are placed into levels based on points as follows: BASE Partners (up to 249 points), CREST Partners (over 250 points), RIDGE Partners (over 500 points), SUMMIT Partners (750 points). To enter the program a partner must have a minimum of two Certified Consultants and pay a program fee of $1k for Base level.
Program points are earned based on three categories of criteria which are:
CUSTOMER SUCCESS. A maximum of 350 points are available in this area. Points are awarded based on Customer Satisfaction Scores and based on the partner’s NAVIGATOR level. The partner’s Navigator level refers to their domain expertise: Level 1, Level 2 or Expert.
INNOVATION. A maximum of 350 points are available in this area. Points are awarded based on the number of Certified Architects, Developers and Consultants that the partner has.
ENGAGEMENT. A maximum of 300 points are available in this area. Points are awarded based on the Annual Contract Value (ACV) of partner sourced revenue from new customers or new projects with existing customers. This measure is referred to as COSELL ACV.
Salesforce is gradually up-weighting the program points available from Customer Success criteria (CSAT and Navigator) and down-weighting the program points available from Cosell ACV. This means they are placing more emphasis on customer experience, and less on partner sourced revenue.
Salesforce offers an extensive partner enablement roadmap and library of content called Trailhead.
PROGRAM TIERING
An important point to note is that Salesforce no longer (as of early 2020) uses program tiering externally to describe partners. The Base, Crest, Ridge and Summit designations are for internal use to describe partner commitment and to trigger program benefits.
Focus is on partner experience, partner capability and customer satisfaction ratings. Partners cannot be selected based on level in program.
KEY LEARNINGS
• The Salesforce Partner Program has developed to meet the needs of a born in the cloud SaaS business, so resell is less important. The important program tracks are for developers and consultants. For many vendors this presents a model for the future as they move to SaaS-provisioned software models.
• Partners are levelled based on points, which offers structure but flexibility. Other modern programs are adopting this approach, see our blog on ServiceNow here
https://www.kovendi.com/-servicenow
• Over time Salesforce is increasing program focus on Customer Satisfaction and on Partner Expertise (‘Navigator’) while reducing focus on influenced revenue. This is a key trend to take note of. Partners are promoted to end customers in the partner locator based on Customer Satisfaction and on Partner Expertise, not on program levels.
Understanding cloud partner programs is complex and challenging for most technology vendors. At Kovendi we have the insight, experience and expertise to help you. Get in contact if you want to know more.