Partner marketplace
10 September, 2015

6 mins

Building a Partner Marketplace? There’s a better way

Large, but deceptively nimble, entities like Salesforce, IBM, Google, Oracle, and Rackspace (among many others) have already proven the concept of a partner marketplace. They foresaw the importance of partners a few years ago, and they built their marketplaces from the ground up to great success. If you’re looking to get partners more involved in your company today, however, you might not want to build your own marketplace in house. Here’s why:

Problem #1: High Upfront Investment = More Risk

The large SaaS forerunners that we see successfully implementing in-house marketplaces could afford it. They also had no choice but to build it themselves. There were no solutions out there. Today, whether you’re a small start-up or mid-size company, putting together a development team for a 12-24 month build cycle can easily run anywhere from $800,000 to upwards of $2M.

That’s just the beginning of the costs.

Annual maintenance costs can exceed $350,000. Then, consider the inevitable drain on internal resources. You could have dedicated that time and energy to product launches and partner support instead of wrestling with software, support, billing, tax or legal issues. Regardless of whether you’re an established company or a budding start up, the cost of building a marketplace can be surprisingly high. These oft-overlooked costs can leave many managers caught between a rock and a hard place.

Most companies don’t advertise their failures, but you’ll hear the conversations behind closed doors. We’ve heard of companies that were forced to scrap their entire first version of their partner marketplaces. One company in particular (who shall remain nameless) launched a whopping 12 months late! That’s risky.

Problem #2: Maintenance Distracts from Partner Success

Even after you build a marketplace successfully, you have to keep your partners engaged. The partner team must constantly support existing partners and launch new initiatives. It is a regular activity. If not prioritized properly, ignoring partners will defeat the whole purpose of having a marketplace to begin with.

“If we could have focused from the get-go on the actual partnerships and building programs for our ecosystem, instead of having to build our own version of the app store across all the mobile platforms we supported, we would have been able to grow Box OneCloud twice as fast,” says  MuleSoft’s Director of Developer Marketing Indy Sen, who has also worked with Box and Salesforce.com in the past.

At the end of the day, your priority is to focus on building partner relationships, not to deal with the hassle of inevitable technology problems.

Problem #3: Getting Internal Resources and Buy-In

At its best, a partner marketplace can provide a huge competitive advantage by adding innovative functionality of your product without muddling its core benefits. An improperly launched, or poorly maintained, platform will ruin the experience for your partners and actively detract from your product’s value proposition. It will discourage partners and users, who have plenty of other things keeping them busy. They won’t be easy to win back.

When you build your own partner marketplace, you have no choice but to rely on your own internal resources for support and maintenance. Even if you could accurately forecast this, there’s no guarantee you’ll get the resources you need to fix it — leaving you with a bunch of dissatisfied and frustrated partners.

Moreover, the problem gets amplified along throughout the layers in a company. Red tape, various internal priorities, and resource scarcity could leave your partner team without proper analytics, reporting, or any other of the features you need to improve.

Even if you can afford it, building an in-house marketplace can raise a lot of challenges and requires a relatively sizable upfront investment. There’s no guarantee it will even work. Fortunately, there’s a way to minimize the risk, avoid challenges, and make sure that you’re free to focus on building partner relationships.

Enter the Marketplace Service Provider

You can avoid the risk, time and cost that it takes to build a partner marketplace from the ground up, and roll it out immediately with a proven and tested solution. By using a marketplace service provider, you can set up an entire partnership ecosystem in minutes with a fraction of the cost.

A Marketplace as a Service is Less Risky

Test the waters with a low investment, and eventually either continue to scale, or migrate to a marketplace you build in-house once you see partner success.

Time is money, as they say. But for companies that live and die with the pace of development cycles, time can be even more valuable than money. Taking a year or more to properly build and launch a marketplace is a monumental time drain that could easily cost your business a significant competitive advantage: the element of surprise. Also consider the opportunity cost, the opportunity for you to have a working marketplace instantly instead of being months behind schedule. In addition to any lost revenue, think about partner churn and potential brand damage. Are you willing to risk that?

Focus Your Resources on Partner Relationships

Building a marketplace in-house is a gamble against the future. It’s the hope that you will be able to both build and execute correctly. All the while, you’ll have to manage its upkeep effectively alongside the other rapidly growing and evolving parts of your own business. This can be an unnecessary pain, especially when you consider that buying the service itself comes with those features neatly rolled in.

Focus from the get-go on the actual partnerships and building programs for your ecosystem. No technology will be able to replace a dedicated and engaged group of partners. Invest in that and let the marketplace service provider’s on-boarding and support team take care of the technical side.

Leverage the Service Provider’s Support Team

The core of the marketplace, a clearinghouse for third-party apps, is just the tip of the iceberg. In order to be fully-baked, this approach requires analytics, reporting, e-commerce integrations, and security features that streamline operations.

When you work with a marketplace as a service solution, you can rely on their support. For example, we work around the clock to ensure that our clients’ marketplaces are constantly up and running, and that we resolve any technical issues quickly. They can focus on actually engaging partners knowing that we have their backs.

Start Small, then Scale Up

Successful technology businesses thrive on the efficient use of the same main organizational resources — time, money, and creative energy. Use your resources wisely. Work with someone else who can build a partner marketplace on your behalf for less time, money, and risk. If the partner program works out well, then scale up on the platform, or export your data and build it in-house. The momentum you gain will make it easier to justify the investment and resource allocation to your boss.

The initial phase of your partner program will be crucial to partner success. In order to execute successfully on engaging partners, work with a marketplace service provider to take care of your technical needs.

Partner marketplaces are simple, but they’re not easy. OpenChannel takes care of supporting your partner marketplace so that you’re free to manage relationships and bring more partners to your platform.

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