“The people are your partners, not the software.”Alex Bass, CyberBytes
Agency Name: Cyber Bytes
Location: New York
Focus: Stack setup, management and CRM integrations
Revenue from SaaS partner referrals = $30,000+ / year
Revenue from affiliate/reseller commissions = ~$4,000 /year
If you do not have a good relationship with your SaaS partners – the people inside the organization on the sales, CS or product teams – you are not in a good position to make partnerships a value-add for your agency.
In this discussion, Alex Bass, the founder of Cyber Bytes Inc, a successful reseller of tools like Copper CRM, Pandadoc, Asana and more, discusses his road to reseller-ship and the recent bumps he experienced. The main takeaways from our discussion are as follows:
- Find a hub tool which you can build more reseller relationships off of (more native integrations).
- Get involved in the communities (help communities and user forums/groups).
- Really learn the tool (partner webinars, docs, implementations).
- Develop relationships with the product and CS teams (continually inform their new team members of your agency and what sort of. referrals you are after).
- Find out and vet your software partners’ PRM to ensure your clients won’t be handcuffed in any way (demo their PRM and ask what happens if your referral wants to de-couple the relationships).
- Keep the clients’ experience at the forefront of the relationship (care less about the referral fee’s and more about the client experience).
- Stay away from software partners who are constantly pushing you to bring them more referrals (this needs to happen naturally).
Here’s the transcript from our conversation:
All right. Mr. Alex Bass from cyber bites. I will do a quick introduction to this call this recording this discussion and then I’ll pass it off to you to introduce yourself.
My name is Alex Glenn. I run partnerprograms.io where we are all about facilitating the relationship between agencies like Alex’s. Software partnerships unfold in a number of ways and Alex is going to give us his insights into his relationship with his software providers.
This will be a great recording to listen to for anyone part of a SAS company, especially the agencies that are considering developing full-fledged reseller business relationships with their software providers. So let’s go ahead and kick this off by introducing Alex, Bass.
Ok. What you had mentioned I have pivoted my business quite a few times over the years. This is relevant because when I first started doing web development and online marketing I started realizing the power of partnership relationships. If you resell or refer their software,, then you can get a commission on an ongoing basis.
This is essentially getting money in the most passive way possible. At least it seems that way, so most recently what we are and what we do is we integrate and automate for small to medium-sized businesses.
Where are you at currently in terms of reseller partnerships and/or affiliate relationships?
The more that I got involved in reselling software, I realized some partner programs are great. And it genuinely is that passive income and then there are other areas where it is not at all passive because you’re taking over support and you’re taking over all these pieces that just makes it a lot more work.
The name of the game here is the reseller relationship. You always want to make sure that it’s as positive as possible for not only you and your agency but for your clients and the people manage your software. So what we want to unpack around that is first and foremost you and your business.
How does the typical saas referral workerbytes?
The SAS alignment what the reseller alignment with these affiliate relationships looks like for you purely in terms of residuals in terms of the alignment the communication I mean talk to us a little bit about how that operates inside of a Cyberbytes
Sometimes we find a software company giving you a 30% recurring margin and sometimes it’s a one-time thing and other times it’s recurring like for the lifetime of the company typically smaller. Smaller startup software service companies are willing to go more aggressive on that and have it be recurring for longer than the larger companies.
Almost how we make most of our money as a company is from recurring revenue, but the bigger piece is actually implementing the software making sure that onboarding is successful with the software companies.
The companies are investing in themselves, and that’s part of how Salesforce got so large. They leveraged the partner companies that are willing to help with onboarding and integration. Whereas they just focus on building the best software that they can so that’s really the relationship and what to look like, you’ll typically get more on the service side of it where you’re going to make sure that they’re successful using it and that you’re able to answer their questions and make it work to the best way possible.
In some cases, your client may never talk to your software partner. They may only deal directly through you and in that scenario, you receive downstream referrals typically from the software companies. That’s the ideal scenario where the software companies their sales team and their support team are instructed by upper management to actually refer the prospect that is considering, in this case, copper.com or pandadoc or whatever.
So talk to me as if I am a prospect of yours that was referred to you by copper talk to me about the sale of copper if I am considering copper and then copper passes me off to you to learn more about copper about cyber bites and your implementation services.
And then if I do decide to purchase copper through you talk to me about the management in the margins and how. Sort of relationship works from an infrastructure level. Yeah, so this is one of those areas that kind of a deep discussion that we had had on a LinkedIn group and why some of this came up to speak about it?
Because we as a business started moving away a little bit from focusing as much on the reseller. Margin. So say for example copper recommend someone to us or refer someone over to. To make sure that they’re successful. You don’t want to get too deep in the Weeds about okay. Alright before we start like let’s make sure that you use a referral code or you know reseller codes that when you sign up you’re going to be under our account at the end of the day like the customer does not care.
About making sure that they sign up in the proper way so that you get whatever commission or whatever they just need help and is software consultant that you’re going to be in many of these areas and solutions kind of specialist. You need to focus on the needs that the customer actually needs to be built and that’s where the reseller area.
It’s kind of hard because it’s like should you introduce it early on in the conversation with this new reseller partner? I typically don’t mention it like whatsoever on the first call maybe toward the under the call as we’re talking about it. I’ll say like hey, you know, I have you guys already sent signed up to Copper directly or are you looking to potentially have that managed by us as well?
So for convenience, if you do sign on with one of our support automation tears, then we can also. Get you better pricing on copper and just bill you one for everything. So it’s each kind of selling based on a convenience of you’re sending one bill versus them having a bill from copper and maybe Panda Doc and all these different areas.
Your kind of getting one bill from us. We are maintaining it and we can get you better pricing because if you go say directly to Copper. You’re going to be spending on a monthly basis $64 per user front month or you go annual if $49 per user per month, but we could essentially go in there and get you a price in between both of those and say hey, I’ll charge you a monthly.
You’ll have an annual contract with us and we can just get like we can kind of do something that copper directly would not let them but be done. So that’s where you can get a little bit creative and trying to sell the customer whether it’s copper or whatever software you’re talking about. What value prop can you give them to go on to your platform essentially go through your billing or whatever, you know happens for you to make a little bit of a margin from that but you need to position it to their advantage.
So it’s simply making payments more simple or reducing the price, you know a little bit but at the end of the day making a 10 15 20 percent margin on a $49 license per month and say they’re getting a few licenses. You’re really not going to be making enough money where you want to spend too much time on this.
Really want to focus most of your energies and explaining how you can help them and make sure that they’re on-boarded, you know, well on everything you don’t want to focus too much on like how they’re going to sign up for the software because it only shows your intentions are wrong. Like I want to make a margin from you versus I want to help you.
What Type of Third-Party App Do You Use For These Margins?
Got it. That makes total sense, and speaking of the margins. Hypothetically. I do onboard with you. I do agree to your service level agreement where you’re managing my account and you’re charging me a fee for that. Now, do you have any specific type of third-party that you use for these margins?
Do you have any extra tracking or is it just purely a line item in the proposal that the client signs off on and they just know they’re paying you a flat fee per month for the management of this , in this case, CR. Yeah, you got it. Like we used to break this stuff out a lot for clients because we’re trying to figure out how we should be showing them and where we should be making a margin.
So in the past, I had like okay you’re signing on this support / automation, / whatever tear and with that that also includes. Topper support and then it also includes the copper license for the software. But then you’re kind of muddying the water where you’re putting the software licenses in with your support in with your Automation in with, you know, every piece of it and then the customer doesn’t really know what they’re paying for and then they might see that bill.
So say that they get a bill for $1000 for that month or two thousand dollars or whatever it is. It looks like they are. Paying you a lot of money per month and it brings in some questions where it’s like, why are we spending $1,500 a month with cyber bites when in reality like eight hundred dollars of that 1500 might be software for copper.
And then that’s where lately I’ve decoupled the to so I will have a line item actually show. Here’s here’s what you’re paying for copper margins. Don’t really matter. They just see hey, you know, we’re charging you $58 per user per month and you have 10 users. Therefore you’re paying, you know, 580 per month and they just see that.
Line item then they see our automation integration tear line item and they see their support and Consulting to your line item. We like to really make it stand out because then we can be flexible to so say the next month. You’re not using as much supporter. You don’t need as much Consulting we can bring you to a lower Consulting tier, but then the next month you using higher automation to your we can move.
To a higher automation here. So that allows our services to be more flexible and more reflective of what you’re actually using versus just selling you on a $1,500 tear because then it’s really tough to convince a customer to either move up or down in pricing when you just have this big chunk number and if you start to say you give them a discount you can’t give them a 20 percent discount off that 1,500 because within that.
Is a licensing cost for software and it really muddies the water of like Emma. I’m getting you a discount on our services not on the software because I’m already your cost on the software. So it’s you know, the more that you put it together it gets difficult to understand what’s actually going on is confusing.
Yeah. Yeah, and there’s the biggest question for them. It’s like okay if you are charging me a margin, what is the margin for yeah percentages there and hypothetically of copper does change their pricing then things get extra confusing. So you just want to make sure that in your case full transparency and your strategy.
Your recommendation is to decouplehose two. So that there is no confusion into where the discounts are being had and what’s flexible and what’s not flexible in your case. Obviously, you can’t change the price of copper. So that is non-negotiable line on it. Okay. Let’s move on to this part and the most important part of the discussion you had a poor experience that you posted in our.
Agency partners LinkedIn group with a SAS provider that was using a third-party PRM a partner relationship management solution in order to manage your relationship with your clients through their software and this sort of handcuffs the. Egypt between your end-all-be-all client and you through the software.
For those who are unfamiliar with AppDirect and the circumstance, can you give us a brief recap of the situation?
So why don’t you just give us the cliff notes of that situation and what unfolded since yeah, so I didn’t know too much about the space aside from we had signed up like when we’d make purchases through some software we use app direct other times. We would use partner stack. So from that aspect, I just knew that different companies sign up with different things back in the day.
I think it was called a gross Zoomer. Let’s grow Sumo. So one of the things that kind of came up though was I had a client of ours who they know, they found tough times and it was becoming very difficult to collect on them. And a lot of what we do is we sign like an annual commitment. We will pay copper for example upfront or pain doc upfront or whatever company.
We’re using will pay them fully Upfront for the year and then we will kind of. Break that down into 12 months and that’s how we get our clients better pricing, but we’re taking a risk because we already paid the software company upfront. So what happens if someone stops paying their bill at the end of the day we kind of get screwed because of that but we also understand that the risks that we’re taking on by doing it this way and the situation that had happened though is.
There’s a client that kind of stopped paying and I’m just like this is really really really rough. I want them to go direct billing again. So they can just use their credit card with this software company. I just don’t want to deal with the collection anymore because like I’m not getting paid. I’m already at money.
This is just, you know, I learned I learned my lesson in this instance to not maybe take on this type of client in the situation. So I went over to the software company and he said hey, you know, how do we go about getting them back to direct billing their contract is up in October November or whatever else and the response back was?
Oh, well, what you have to do is we need to fully delete their account. You can export all their data wipe it out and then they have to create a new account and then you can re import their data and I was like, wait a minute. Like I didn’t realize that being a reseller was going to have that much I guess.
And it’s worrisome. Like we’re using I need to delete their account that they have all this data and and then we have to re-import it and just knowing that you can’t import every facet export-import in any software is if anyone’s been in, you know, this world aside from maybe like. An Excel or something like that something very bare-bones.
You’re typically good but in a software, you can’t just export and import at will and help make sure all of your data. Is that are so I kind of learned at that point. I’m like, I didn’t realize the risk that I’m kind of taking on. So I reflect on all my other clients that I resold on this software and I’m like if they ever want to leave me as a reseller.
I don’t want to have to tell them like, hey, you need to delete your account. So I at that point I kind of realized. Wow, so the platform that the software company actually. Is and depending on how deeply it’s integrated actually does have effect on me because now from a transparency State I want to tell my clients.
Hey, you know, I don’t actually want to sell it send you sign you up as a reseller here because this little 15 percent margin or whatever I’m making is not worth the sickening piece of a year to five years later. You want to get off of us or decouple yourself from. And we can’t do that easily or there could be data loss that that part scary.
So it really affected my relationship with the software company and actually wanting to refer resell clients to them. Yeah, and a good analogy is back early 2000s late 90s and even a couple of years later. There were a lot of marketing and web development agencies that would ho. Their clients domains on their servers whether they buy the domain or not or registered or not.
That’s doesn’t matter, but they would host it on their servers so that if the client ever tried to leave there were a lot of unhappy people finding out that they could not retrieve their their actual website. The agency server, so kind of similar you’re sort of handcuffed to that relationship and I just had someone email me today about Microsoft and Microsoft is a huge reseller Network and it’s working fairly.
Well, obviously they’ve grown globally as fast as they’ve grown through this recession. Program that they have but one of the issues there is is Microsoft support does not help anyone that has been resold through a reseller. They refer them back to the reseller. So if your reseller is not available or if they’re just not knowledgeable enough to help you in that situation in Microsoft situation.
You’re just Mia you’re still handcuffed to that reseller. So in this situation your more handcuffed from a logistical perspective. That that client of yours would have to delete their account would have to reset up the account which would be a nightmare especially because it’s CRM and because there’s so many Integrations that go along with it and you can lose data and there’s there’s there’s a lot of money and time at stake here so that puts you in a very.
Very strong predictor predicament with that client which means now instead of working the reseller angle with clients or hosting that account as their reseller. That is something that you’ve sort of decided or you did decide at that moment to to stop doing and to take a take a backseat on now, let’s talk about what’s happened since then and any sort of positive sort of.
Anything positive that came out of that situation?
Yeah, so I mean, I think there’s a few aspects that have worked out. Well from this it’s a makes me be more aware that say you take app direct for example, and they made it fairly clear that they are not so interested in the agency, which is like the person like us I’m still trying to figure out like agency versus software.
So like they don’t care much about the agency, but they care more about the software and I’m like, oh wait a minute. So this third-party, you know connection software like after they should actually. I care about both ends of it and that’s something that kind of got opened up recently. As a lot of these companies have been redefining their partnershiportals and their partner relationships and I’m realizing that like partner stack, for example, they’ve actually like reached out to me as one of their users and they’re like, hey, what can we do better?
And I’m like, wow, like I’m not I’ve never expected to get that but at the end of the day like yeah like you should because I’m kind of a customer of. Is like I’m a customer of the software that you’re partnered with but my opinion and my feedback doesn’t matter me going through this experience being able to bring it up to you do matter so that when you’re talking with software.
Companies in you’re trying to sell them. Like, let’s avoid this type of situation because this completely spoiled, you know, that that reseller relationship and going to some of these companies and giving them this feedback and making them take partnership more seriously and when they do take it more seriously leveraging a tool.
That actually does care about both ends of the spectrum and realizing that there’s there’s more to Partnerships than just reselling like hey use my URL anything. This is the what it’s been for the longest time a reseller referral or whatever else. It’s really just been like use our link you got signed up.
We’re giving you credit and it’s kind of been hands off but the deeper and the way that times have been changing a little bit. It’s like it’s more Hands-On. It’s more customer service this more like, you know, I’m building a relationship with the software company and the third party company that they’re using because.
Consumer of them and I’m a partner of the software company. So here’s two areas that I really need to build relationships with these people and it does matter so it’s been shaping and shifting and I’ve been seeing the companies that have been doing a good job at it and what they’ve been doing and then the companies that have been failing to adapt and change and still doing it the old model and it has not been a great experience because you’re getting less people wanting to resell because of that.
What did it take and talk to us about any key inflection points along the way?
Got it. Got it. So on the positive side, you have been the benefactor of obviously a lot of referrals and probably a lot of fees that go along with those referrals. So let’s talk about the steps that you took in your career in building cyber bytes to what it is today. Let’s talk about the steps that you took to get to the point.
Being able to receive consistently without having to ask receive those referrals from the software partners that you have.
Yes, I think that’s the biggest thing. I think we’re Partnerships and getting involved in all of this is actually important like you can go to any of these websites and you could sign up for the partner program and that’s kind of one layer.
I would encourage you to really go in and genuinely build a relationship with your direct partnership representative. A lot of what I did early on was I would jump into the community like the copper Community. They had forms and things like that and I would answer customers questions and just do it because I enjoyed the software and I enjoyed seeing what customers were concerned about and I enjoyed helping people so I did that for a couple of years.
And that actually led to one of my now great clients because they were frustrated with the software and they found me answering questions and they’re like, hey, I was going to leave the software but figured I’d pick your brain a little bit and see if maybe we can actually make this work. So I would encourage people to really get involved and I would say a few pieces of software.
I would not go too deep so that this is the one other issue. That is he like even if you sign up for partner stack or whatever else. It will typically pop up and say hey, we think that you’d be interested in signing up as a referral a reseller for this piece of software and just those around a piece of software at you.
I think the more that you sign up for the more, you know broad it’s going to be and you’re not going to have a deeper relationship with each piece of software. So like what’s worked well for us as I went incredibly incredibly deep with copper. I’ve been incredibly incredibly deep with panda Doc and I went incredibly deep with this on.
And I’m sticking to those three as being the core and really it is copper and paradoxes the two that I’m going to deepest with and I’m building relationships with the people within the company on the product team. Sometimes you get introduced to like Asana. For example, they have a webinar for any of their partners and they actually show you like yeah, I mean it’s ndaa and everything, but they show you some of the new features that are coming out and things like that.
What Makes a Client Trust You To Manage THeir SAAS?
You have insight into what’s coming. This makes you better understand how to set expectations for your clients. So I’ve had people that have hired us specifically because they’re just like hey, I love that you have such a deep relationship with copper. And I know that when I say stuff to you, it will actually potentially get to them.
Whereas I speaking to them directly. They’re probably not going to care here. So sometimes you have people that are actually hiring you because you have such a good relationship and they want to be involved in that in some way. So it’s that and the only way you get that is by really focusing down on a few different pieces of software not going to Broad.
That’s at least what we’ve seen. I like that if I see a really focusing maybe on a hub tool that you can sort of build around. I mean in your case copper seems to be your Hub and they have closed Integrations with panda doc. I believe your reseller of any others that you Asana Panda doc. What were the others that you have?
Yeah, I mean it’s if you go from a broad set like in this is where it’s so interesting like taking a step back at it. We’re signed up as a reseller not reseller referral type of agreement with Harvest. But the thing is they don’t really have a partner program whatsoever. So like I have a coupon code if you cyber bites then you get like 50% off the first month and then I actually.
Like a small Kickback like 10 percent per month or whatever back and it’s a nice little program. But the thing is they don’t do anything to help really support you at all. They send me an email every now and then like hey this person signed up, you know, you’re going to get a check for 15 bucks or whatever, but they really are not leveraging you’re taking full advantage of the partnership program and then you have companies like zapier I think is a great example.
We’re partnered with them. Not only did they build some type of partner program called zapier experts. They actually built a community around it and I had to take exams too. Pass it to become an expert and I probably spent solid 16 hours straight taking exams over the course of a few weeks and these are not easy exams.
But like here’s a good example of a cost of a company a software company that’s gone above and beyond on the partnership program because they’re like partnership program is not just reselling it’s being involved is be creating a community and then all the other partners should be able to talk to one another and learn from one another and support one another.
So I think another way that it used to be. To is, you know, you’d have a bunch of Partners and you keep it segmented and there’s a lot of companies that still do that. I want to know the other copper Partners. I want to know the other, you know, Panda doc partners and I want to work with them.
They’re not competitors of ours because. The more that you focus down like I’m only working with copper based company so I could find other Panda doc partners and I can partner with them because maybe one of them is an infusion soft focus or ones and agile CRM or you know, whatever they are. So they’re no longer a competitor, but we could talk about best.
This is we can learn from one another same thing with copper. There’s areas where we specialize in Copper, but we don’t just take on every single copper company because maybe they can’t leverage automation its scale to the level that we want them to be and you know, they’re not competitors and look at everyone as a way to.
People are Partners In addition to software. So everyone can help you. No one is really truly a competitor at the end of the day unless you’re literally creating, you know a competitor to say copper. Like if you’re creating your own CRM, then sure copper is a competitor, but they’re also probably not a competitor until you hit a certain level anyway, and you probably learn from them and partner with them in certain ways.
I think we just got the quote of the conversation. People are Partners not software. I like that. People are the partners not the soft never. I think that’s super important because when you’re talking about your success with your Partnerships, it really came from you building those relationships with the community members with the product teams with the support team.
And making sure that your top of mind when they get a customer or a prospect on the phone that has any issues or even if it is the prospect finding your chat or your post or whatever. It is in the community. That is the biggest thing is making sure that you have developed those relationships with the people internally.
And not just going through the funnel and getting your reseller coupon or your affiliate link, but doing more than that. So we have some final words of advice from Alex and I’ll just rattle off some of the things that you mentioned and then let me know if anything comes up that I missed but find a hub tool something that you can sort of build off of CRM is a.
Example of a hub tool get involved in the communities zapier communities the Asana webinars these sort of partner and Client First communities that they have these these expert-level communities that you can. First learn from but then obviously get involved as a value-added member and post answers those kinds of things really learn the tool inside and out.
So again, you mentioned the Asana webinars that showcase the product roadmaps what’s coming so you can have that in your wheelhouse when you’re talking to potential prospects and clients about the tool. You are a knowledge partner of that tool now developed relationships with the product and the customer support teams at the tools that you decide to be a reseller of.
And find out in vet their PRN to ensure your clients won’t be handcuffed in any way. So in this case, you know, if they’re using App direct versus partner stack find out what that relationship looks like on the back end and have that knowledge when you’re going into the reselling. And then of course keep your clients experience at the Forefront of the relationship make sure that you are having their best interest in Mind through the entire process and not just going after that residual fee anything I missed.
Yeah. No, no, everything’s good. There’s a couple things that I definitely want to end with because it the end of the day. Things are moving toward people and Trust And if you for example, I’m sure anyone that’s tried having a client sign up with a URL like a referral link they forget and then it gets in the system that you didn’t refer them.
How Do YOu Avoid Losing Refeffal’s Due to Bad URL Linking?
And at the end of the day it comes down to trust where if you have a partner at the company that you can speak to and say hey we’re working with this client and they signed up without our URL. We are the. And if you have a good relationship with them, they’ll say oh, okay. Great. I got you. You know, we’re good.
Whereas if you don’t have a good relationship with them then they’re going to be like, I don’t actually know like how do we know that? They didn’t click one of our links on AdWords or something. We paid for a we own it. We’re not going to give you a referral credit for it. So it really is building relationships with the people because the end of the day they will allow you to do little things that maybe procedures and processes won’t let you do and one other area, I would say if you’re available evaluating various software solution.
If you should or should not partner with them, I’ll give an example and I have no problem giving their name out. I was partnered and I still am partnered with RingCentral. I’m not a big fan of the way that they do Partnerships though because they really try to get you to like hit sales minimums or.
Hey, we have a big competition going on. You know, if you’re if you’re the one that sells this many new seats this month and you’ll be entered to win, you know, a thousand dollars in like they have all these things to try to bring in competition, but they regularly reach out to you and say like hey, do you have anything going on?
Why do you not have anything going on and like they’re on your backs about it? And at the end of the day, I want to recommend software. That I believe is going to be a good solution for my clients and I realized that the more salesy the partner relationship is the worst it is and the more disingenuous it is the best relationships have been ones where I sign up with them and honestly a year two years later, I didn’t sell anything but now they’re one of our closest partners because they gave me the time to figure out and supported me along the way to figure out how to turn this into my business and make this part of my business so I would just stay away from.
Typically, the larger companies that have the more sales focused approaches when dealing with Partnerships because it’s definitely less relationship-based and you get random reps from the company reaching out to you don’t even know who they are, but they’re trying to make you sell stuff. I love that.
That’s great advice and I think. Specifics area I was in recently but that’s for another another discussion. So we’ll talk offline about that stuff. And I thank you so much for the time Alex and I’m very excited to see what happens in the future and and some of the discussions that you’re having right now some of these partners that are going to unfold in some really interesting ways.
So we’re all excited about that. We’re all going to look to you as the example and very very happy to have you in the network. So have a good rest of the day rest of the weekend and hope to see you soon at most definitely thanks so much for the experience and talk to you soon.