Partnerships are powerful. History shows us how much we can achieve when we combine different strengths. Think of Procter & Gamble, founded by a candlemaker and a soapmaker, or Disney-Pixar, whose 1991 alliance produced some of the most successful animated films of all time.
At their best, partnerships are based on trust. They extend product reach, shape future innovation, and raise the standard of the customer experience.
From transactions to living networks
The partner ecosystem is changing and it’s changing quickly. Relationships are moving beyond one-off transactions and becoming a living network of organisations that work together.
In this model, channel partners act as consultants who help customers reach new resources, markets, and technologies. Working this way helps teams meet shared goals faster and more efficiently. It also supports recuring revenue growth.
How the channel has evolved
Sage recently asked the IDC to survey more than 2,000 software resellers across the globe. It found that 63% reported double-digit yearly growth, with average profit margins standing at 44%.
Within the sample, a group of high performing resellers stood out. These partners grew revenue by more that 20% over the past two years and shared several common traits.
Stuart Wilson, a Senior Research Director at IDC, specialising in Partnering Ecosystems in the EMEA region, explains: “High performing partners lead with customer outcomes, invest in AI as a differentiator, and run disciplined, services-led models with clear vertical focus.”
“This cohort is translating technology into higher margins, faster time-to-value and stronger customer advocacy. Their success is repeatable, and their model is setting the pace for the next evolution of the channel.”
Hannah Munro, Managing Director of ITAS, a financial transformation specialist and Sage partner, says becoming a strategic advisor has enabled ITAS to build and maintain recurring revenues and increase word-of-mouth recommendations.
“It’s about doubling down on customer success,” she says. “Protecting that revenue base and building on it - that’s key. Making sure we have referenceability - we can put other customers in front of new customers to demonstrate how we deliver - and maintaining our subscription base has been key to our success. We have had 100% retention.”
Trusted counsel
The research findings chime with reports of a similar trend across the business landscape; a movement towards a trusted partnership model.
A recent KPMG study found that 75% of 250 business leaders say partnerships fuel growth, innovation, and agility. A further 83% plan to expand their strategic partner networks.
The traditional sales model that says ‘Buy this to achieve a goal’ is giving way to a more collaborative conversation that asks: ‘How can we work together to achieve your goals?’. For this approach to work, partners and vendors need aligned values, shared outcomes, and trust.
For a partnership ecosystem like this to flourish, it needs to be based on solid foundations; alignment on values and goals, and, above all, trust. Channel partners play a pivotal role in bridging gap between SMBs and new or emerging technologies, educating customers about what’s achievable, helping with implementation, and providing ongoing support.
Channel partners are also increasingly tasked with business-critical projects, be it embedding AI, complying with changes in regulation, or ensuring revenue streams are resilient and scalable. It is not surprising therefore that they are extremely discerning about which technologies they recommend; reputations are on the line.
According to the IDC research, seven in ten high-performing resellers place strong emphasis on working with software brands that have a stellar reputation, and roughly a third say selecting a top-tier brand is the single most important factor in maintaining these trusted relationships with customers.
Specialists, not generalists
Nearly 70% of high-performing partners describes themselves as specialists within a niche. They are experts in offering micro-vertical solutions that meet specific customer needs.
This could mean sector expertise – an understanding of the unique challenges facing companies serving that industry, but also a deep knowledge of the business models within that vertical – or an understanding of a specific application or technology. When you speak a customer’s language, it makes it easier to implement the right technologies at pace, and reduces time to value.
“Verticalisation is key to success,” says Munro. “It’s about being faster in terms of how we deliver and execute for customers. We do that in construction, where we have accelerators that help us deploy faster. That shows up in the speed to sale and how the customer sees value from that solution.”
Through this verticalisation, high-performing resellers are delivering impressive recurring revenue growth. Some 84% are targeting more than 20% this year, despite macroeconomic volatility and warnings of a potential economic contraction. They also report 66% average gross profit margin against the global average of 42%.
This focus on depth over breadth is delivering measurable impact in terms of brand awareness and reputation. The Net Promoter Scores of the high-performing resellers in our research stands at 61, compared to the global average of 48.
Investing in the future
High performing partners don’t treat spending on new technology or sector depth as a cost to the business; they see it as an investment in growth.
One in three say investment is a company-wide strategic priority. “Focusing on customer success as investment rather than a cost is something we have managed to do,” says ITAS’s Munro.
This is important because channel partners can’t stop investing in innovation and progress. During this period of accelerated technological change, it is dangerous to rest on your laurels.
As Wilson explains: “What comes next for the partner ecosystem is really grounded in the process of constant innovation of their business model. What are the next generation of managed services that will give customers better outcomes? There will be a laser focus on customer success.
“Partners have to think about what makes them unique in the market,” he continues. “What no other partner can bring, through specialisation and repeatability. The process of transformation has to be the North Star.”
