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Marketer of The Month Podcast- EPISODE 080: The Future of Partnerships – How Channel Ecosystems Help Drive Subscription and Consumption Models
20/09/2022 Arpan Gupta
22 min read

Hey there! Welcome to the Marketer Of The Month blog! 

Marketer of the Month

We recently interviewed Jay McBain for our monthly podcast – ‘Marketer of the Month’! We had some amazing insightful conversations with Jay and here’s what we discussed about –

1. Why partnerships are crucial to drive growth

2. Finding new partner community watering holes

3. Marketing before vendor selection – how to capitalize on the 28 moments before the deal

4. Why subscription/consumption models are everything – no matter the margin

5. How the tech industry has navigated the difficult roads of downturn and unpredictability

6. Why marketing is no longer limited to a pre-sale activity

About our host: 

Dr. Saksham Sharda is the Chief Information Officer at Outgrow.co. He specializes in data collection, analysis, filtering, and transfer by the means of widgets and applets. Interactive, cultural, and trending widgets designed by him have been featured on TrendHunter, Alibaba,  ProductHunt, New York Marketing Association, FactoryBerlin, Digimarcon Silicon Valley, and at The European Affiliate Summit.  

About our guest:

Jay McBain is one of the most visible and respected thought leaders in the global channel. Named 2021 Channel Influencer of the Year by Channel Partners Magazine, Top 40 Under Forty by the Business Review, as well as numerous channel magazines’ top influencer lists, he is often sought out for industry guidance and future trends. 

EPISODE 080: The Future of Partnerships – How Channel Ecosystems Help Drive Subscription and Consumption Models

The Intro!

Saksham Sharda: Hi everyone. Welcome to another episode of Outgrow’s Marketer of the Month. I’m your host, Dr. Saksham Sharda. I’m the creative director at Outgrow.co And for this month we’re going to interview Jay McBain, who is the Chief Analyst of channels, partnerships, and ecosystems at Canalys. Thanks for joining us, Jay.

Jay McBain: Well, thanks for having me.

Don’t have time to read? No problem, just watch the Podcast!

Or you can just listen to it on Spotify!

The Rapid Fire Round!

rapid fire

Saksham Sharda: So Jay, we’re going to start with a rapid-fire round just to break the ice, you get three passes. In case you don’t want to answer the question, you can just say pass, but try to keep your answers to one word or one sentence only. Okay?

Jay McBain: Sounds good.

Saksham Sharda: All right. So the first one, if you had to write a book tomorrow, what would you write about?

Jay McBain: Ecosystems

Saksham Sharda: What would be the title of the book about you if your worst enemy wrote it?

Jay McBain: Probably something about narcissism.

Saksham Sharda: What movie do you enjoy quoting the most?

Jay McBain: With my family, “Planes, Trains, and Automobiles”. In my work life, probably “Top Gun”.

Saksham Sharda: What is your ideal way to spend your birthday?

Jay McBain: Just had my 50th birthday, traveling the world.

Saksham Sharda: Okay, at what age do you want to retire?

Jay McBain: 12 years from now, 62.

Saksham Sharda: How long does it take you to get ready in the mornings?

Jay McBain: About 12 seconds.

Saksham Sharda: The most embarrassing moment of your life?

Jay McBain: Workwise is when I shared information on my screen on an airplane.

Saksham Sharda: Okay, we’re gonna take that Favorite color?

Jay McBain: Baby Blue.

Saksham Sharda: What time of day are you most inspired?

Jay McBain: Late night.

Saksham Sharda: Fill in the blank – An upcoming marketing trend is _________.

Jay McBain: Marketing in, with, and through marketplaces.

Saksham Sharda: The city in which the best kiss of your life happened?

Jay McBain: Raleigh, North Carolina.

Saksham Sharda: Pick one Mark Zuckerberg or Jack Dorsey.

Jay McBain: Pass.

Saksham Sharda: How do you relax?

Jay McBain: Motorcycle

Saksham Sharda: How many cups of coffee do you drink per day?

Jay McBain: Two

Saksham Sharda: A habit of yours that you hate?

Jay McBain: Procrastination.

Saksham Sharda: The most valuable skill you have learned in life?

Jay McBain: Begin with the end in mind.

Saksham Sharda: And the last question is your favorite Netflix show?

Jay McBain: Ever?

Saksham Sharda: Yeah. Oh, is that the name of the show?

Jay McBain: No. Can’t think what was on Netflix. Okay, “Queen’s Gambit”.

Saksham Sharda: Okay, well that was the end of the rapid-fire round. I think you had just one pass. So you win a car. Just kidding. You don’t win anything.

Jay McBain: I’m not choosing Facebook over Twitter.

Saksham Sharda: Yes. A lot of people pass that one. So that was a good pass.

The Big Questions!

Big Questions

Saksham Sharda: So moving on to the long-form questions. The first one is to you’ve mentioned how difficult it is for the channel chief to manage more than 90 operational and strategic components under time constraints. So which skill sets in your opinion are necessary to advance in this particular role?

Jay McBain: Yeah, so the channel chief, which has been synonymous with transactional or resells channels, actually has close to 100 elements in the program. We now have chief partner officers, there are over a dozen of them that have been hired at big companies. And they even have a bigger challenge under time constraints, which is that they’re running not only the transactional channel, but they’re running tech alliances and strategic alliances and business alliances, influence channels before that point of sale, and transaction assist channels during the initial subscription, and then long term retention channels. So I’d say 90 things have probably turned into about 200 things that you’re managing currently. And I create the tech stack, which allows these leaders to automate many of these and kind of remove them from day-to-day human activities.

Saksham Sharda: And so which skill sets do you think would be necessary to advance in this particular row?

Jay McBain: Yeah, so this has been studied. The Harvard Business Review calls this role from a skill perspective, more of general management or a CEO type, where you may have channel marketing and channel sales and operations and finance and other things reporting to you. So skills-wise, it’s not a see-a-bear, shoot-a-bear type of role. It’s managing multiple different elements in parallel. And many of the elements that you’re managing don’t report directly to you. There are third-party companies that are out for themselves as well. So very tricky in terms of leadership.

Saksham Sharda: And one of the quickest ways to drive growth, I guess, is through partnerships. And the best way to support this process is by developing a channel software stack. So what additional measures do you think are crucial to accelerating this growth even further?

Jay McBain: Well, every customer of every marketer that’s out there, whether it’s a prospect or a current customer, currently has seven partners on average that they trust. And the average channel marketer, for example, may know one or less of those seven. So one of the ways to further expand the business, as well as get new opportunities, is to find more of these partners that are influential and super connected with your potential customers. So it’s a franchise model where you can sell, you know, hamburgers, or donuts or coffee. But if you end up building a restaurant, on every street corner, in every town around the world, you sell a lot more. And so partnerships are that same level of scale that you can get from working with others.

Saksham Sharda: And so how does one go about finding these particular pockets that you’re talking about?

Jay McBain: Yeah, so I spend a lot of time on a community approach. In every market, there’s a top-down approach, in which the top partners, might be system integrators like Accenture, and Deloitte, it could be big resellers, like a CDW, there are 20 different kinds of partners, by the business model. And the top ones are pretty easy to find because many of them are fortune-sized companies. The bottom-up thought is based on what they read, where they go, and who they follow. So I track 14 different spheres of influence. And these fears are things like magazines and events and associations, analysts like myself, and podcasts like this. So there are 14 different ways. And if you can capture them at the point, or the watering hole that they’re at, and understand the other influencers at that watering hole, you can build a very powerful, inexpensive model of covering your world of end customers as well as potential partners.

Saksham Sharda: And are there any tools or platforms online where you can find these water holes where everyone’s gathering and it’s easy to find out where they are?

Jay McBain: Yeah, so the channel landscape has, the one that I published has 223 companies who many of them help on the recruitment side, whether it’s network effects, or whether it’s kind of finding these watering holes. There are also basic marketing tactics using things like Google to go find what people are reading and following the breadcrumbs, following their social accounts, and following other things to go find out where they go, what they read, or listen to, and who they follow. So there are algorithms in the place where I think every channel marketer or every marketer in the future, is going to have to get better at understanding all the logos, understanding all these spheres of influence, and all the places in there. If you’re in the tech industry, and your recruiting channel partners, for example, there are 59 magazines, there are 142 social groups, there are 100 podcasts, there are 24 associations. So I could walk down all 14 spheres of influence, you could create a map for your company, for your type of buyer, and the partners that wrap around them, those seven partners. And it’s actually once you get to the law of a few, the people that are driving sitting on the board of these associations, speaking in Las Vegas on stage, recording these types of podcasts on the front cover of these magazines, if you go through and run an algorithm and give people points, you should know who the 100 most super connected influential people are, in your target buyer. And just by definition, many of them are going to be potential partners that sit around that. So in the post-cookie world, this is what we’re now facing, your customer will go through 28 moments on average before making a vendor selection. You have no way to mar-tech or ad-tech anymore to go buy that data. So now you have to become a partner leader, no matter where you are in marketing, to go figure out these 28 owners and to get closer to them and share data with them and attribute what they do, and build technology that can do this in an automated fashion.

Saksham Sharda: So would you then say that collaborating with other members of your ecosystem is the only way to quickly introduce agile solutions to your target audience? What advice do you have for choosing the best partners to go market or co-sell with?

Jay McBain: Well, it’s not the only way. You can run a Superbowl ad for $5 million. I mean,  you can put on a radio ad, you can put up a billboard. There are all kinds of marketing tactics. The most successful ones though are again double clicking, if we want to talk about marketing before the point of vendor selection, there are 28 moments. And as a direct marketing team, you’re doing your best to collect maybe three or four of those moments. Hopefully, they come to our website, and hopefully, they read our ebook. Maybe they listen to our podcast, maybe they talk to one of our salespeople, and they request a demo. I mean, that would be fantastic. But as we all know, that doesn’t happen often enough. And if you looked at your entire market team, every single potential customer in the world, they have seven partners that they trust, on average, and they go through 28 moments before making vendor selection, either in your favor, or more often, you lose a deal without ever knowing there was a deal. So the more of these people, and places and things that you can connect to, and more of these 28 moments you can get in through from a partnership perspective, you’re going to have more MQLs, you’re going to have more chances to service a wider array of customers. And by the way, with technology, you want to do the data sharing at that point, or at that moment, where even if that click doesn’t come through you, you can get the agreement with that partner that you can see that click in real-time.

Jay McBain: What are your thoughts on the ultimate goal? So do you agree that subscriptions are only useful for low-margin B2C? To implement a subscription business model successfully, what kind of significant value proposition must businesses make sure to offer to the customer?

Jay McBain: Yeah, that thinking might have been around five years ago. You can talk to trillion-dollar companies today like Microsoft and AWS, and Google and soon-to-be trillion-dollar companies like Salesforce and ServiceNow, Workday, Marketo and NetSuite, HubSpot, and others. Subscriptions are everything and consumption models are becoming everything. You can talk to big Fortune-sized companies like Dell, Cisco, IBM, Lenovo, and HP, who cover trillion dollars plus they’ve committed 100% of their revenue to subscription consumption models. So low margin, high margin, it’s everywhere. Accenture did a piece of research where they asked CEOs in every sized company, every industry, all 27 industries, and every country of the world. And 76% of CEOs think their current business model will be unrecognizable in five years, ecosystems were the number one reason why. But underneath that subscription consumption models usage and value-based models. In the SaaS world, its product-led growth. And you’ve got direct-to-consumer making a big run because that directly connects to the subscription consumption models. And then obviously, the growth of marketplaces grew more than three months during the pandemic than in the last 10 years combined. 1/3 of the US economy is now marketplaces. So this is now going 76% of companies are moving towards this subscription model. So it’s not about margin. It’s about moving from a valuation perspective, moving your clients, moving your partners, and moving everything into a service model.

Saksham Sharda: And can you think of any particular area where the subscription model is not the future or it’s in decline?

Jay McBain: No. I mean, if you look at car companies from last week, the CEO of Ford is out obviously converting every car they have to electric sort of their 62 competitors. And guess what? After electricity you have self-driving, after self-driving, you have transportation as a service, everything you buy, the companies behind it, are thinking about those things as subscriptions and if you’ve taught value, your toothbrush manufacturer is trying to get you a new toothbrush for 99 cents a month for the rest of your life. You know, Dollar Shave Club is trying to get you a shaver every month for the rest of your life. The fact of the matter is up and down consumers through B2B to B2C, every company is thinking about this model, Carrier who makes air conditioners is thinking about cool air as a service. So instead of a $7,000 air conditioner and furnace and other types of things, wherever you happen to live, I am Canadian. So it used to be heat, not air conditioning. But now I’m in Florida. So it’s all about air conditioning. The fact of the matter is instead of $7,000 to replace the box and paying somebody in a white van, hundreds of dollars to come to fix it each time, I’m going to start paying $49 a month for the rest of my life, to keep my house at 72 degrees no matter where I live in the world. And that’s as a service. I don’t own the stuff, I don’t want to own the stuff. I don’t want to know anything about it. The maintenance, the replacements, all the other stuff I want to be handled. And I don’t ever want to think about cold or heat again, in my house. That’s as a service, every industry is moving in this direction.

Saksham Sharda: And how do you think this is going to be affected by the upcoming recession? Because the industry is currently experiencing its first fully challenging economic environment and more than a decade of exponential market growth. So what suggestions do you have for early-stage mar-tech businesses looking for a willing acquisition, or readjusting their business models to become more profitable?

Jay McBain: We’ve had 14 years of very strong growth. And everything is cyclical, it has been for 100 years. So most people and most boards and private equity firms and venture capital firms have been holding on for kind of this moment, knowing that it was coming. You saw many companies in Martech and ad tech, over higher and over, raise money. And now you’re seeing some layoffs and you’re seeing some repositioning. But the fact of the matter is the business side of it is strong. Whenever there is a downturn, we’re going through several macroeconomic problems, not just inflation and supply chain and wars in Europe. So when these things happen, companies tend to turn to automation. And they turn to efficiencies. And they, the tech industry at least for the last 30 years has led every other industry out of downturns. And that’s going to happen here as well. But it’s not traditional marketing. A lot of the tools that have fed the 9932 companies in the market are going away. As Apple and Google, Apple first moved and Google is kind of halfway through the transition. Those two companies own 99% of Mobile Share, and they own 86% of desktop browsing share. So privacy and you as a product on the internet begin and ends with those two companies when they fully enact cookies. Now mar-tech challenges to more of a partnership element, and working with others to attack those early 28 moments. In a subscription. It’s only the first 30 days, the point of sale isn’t everything anymore. It’s only the first 30 days, getting the customer to the dance, getting them on the dance floor, and then all the fun starts. And so how are you going to market to, through, and with, your customers through your partners to make sure that you’re driving adoption, to make sure you’re driving integrations and stickiness, upsell, cross-sell, and Richmond every 30 days forever? In these types of models, whether you’re an air conditioning company, a car company, or a tech company, the industry, Wall Street’s going to ask you for 108% retention, meaning for every customer you lose, you’re gonna have to double up a current customer. So this is the future. And so marketing isn’t a pre-sale activity anymore. You’re always marketing. And your customer base is a customer for life. The economics are different. The phases are different, the cycles are different. The psychology is different, the behavior is different. The journey itself is completely different in a subscription consumption model. And it probably anchors around that point of sale, which will happen through a digital marketplace.

Saksham Sharda: And in what particular ways would you say that the journey is different for every customer?

Jay McBain: Well, I mean every customer takes a different route, the last time you bought a car, I can only guess at your 28 moments, but I probably guessed that you watch some YouTube videos, you read a magazine, you probably talk to your neighbors you went to social media, I can guess at the events you took that got you from 365 kinds of cars and 62 local dealerships of different brands and landed you at a certain place. I can guess pretty well where you went and how you got there. You configured the car, you colored it, you put the rims on it you wanted, you downloaded the invoice price, and you downloaded the back-end rebates, you are so smart entering that dealership, the same goes for every considered purchase. For every mattress you buy, for every car you buy, for every piece of software, or hardware technology you buy, anything considered, you’re gonna go through these moments, we know more about these moments than ever before. But we know most of these moments, almost all of them are done by others. And those others need to be recruited and on-boarded, and we need to nurture them. So that there’s some sort of co-innovation or value creation or network effects that we can both take advantage of one plus one equals three, that we can both go at it together.

Saksham Sharda: And then speaking of traditional marketing, would you agree that even in the current economic environment, the digital transformation of marketing is far from over? And that it continues to be one of the most effective tools available to businesses worldwide for acquiring and retaining customers?

Jay McBain: Yeah, well I think there’s a number set of tools. The mar-tech tools are growing, you’ve watched that Mar tech stack almost reached 10,000 this year. For the next decade, we’re going to continue to refine ourselves around this new buyer. In four years, the majority of the buyer in every considered purchase industry will be a millennial. So there is different psychology, and different behaviors that we have to not only monitor, measure and manage, but we have to execute. And the fact of the matter is, this is now kind of the decade of the ecosystem where we have to manage and measure and monitor and manage all others to do that and work with. So marketing isn’t as much as a departmental closed-in hermetically sealed environment as it once was. And partnerships now aren’t just getting out to social media, it’s not getting out to some of the marketing influencers. It’s truly a partnership game, where it’s not a list, it’s not an email blast, it’s not a social campaign, it’s not searching engine optimization, as much as it is looking at all of these other partners in the game. So it will be running in parallel with many of the other things. And like I said, That’s before the point of sale, getting the customer to the dance, getting them on the dance floor, and keeping them dancing all night long, will become just as much as marketing KPIs as anything else. How you market to, through, and with your technology, integration partners are going to be key. You know, I talked about cars, they’re selling computers on wheels now, like these aren’t cars, that technology that air conditioning is a computer wrapped around a fan and condenser that’s plugged into the side of your house. Every company in every industry is becoming a tech company. The tech industry is based on an integration first API first environment. So if I’m a marketing person, and I work for Mercedes Benz 79% of car buyers now will not buy a car, unless it has Apple CarPlay. And if you saw it a month ago, Apple CarPlay2. So it doesn’t matter what engine and what design and what beautiful brand we built over 100 years. If we don’t have a certain integration partner, they’re going to walk across the street and buy a BMW. This is the new world and we are integration-first buyers. When you look at the MarTech stack integrations have become the number one thing people need above cost and support and all the other things. And so as a marketer, I get to think through these technology integrations and if Apple would say something nice about Mercedes Benz, that would go a long way to connect those buyers, at least four-fifths of them to say, not only do I want CarPlay, but I need that inside of beautiful leather wrapped cabinet.

Saksham Sharda: And so what in your opinion would be the possible dangers of this kind of integration of tech into everything?

Jay McBain: The danger is your partner becomes more powerful than you do. I’ve got 100 years building nice cars, and then all of a sudden, whatever radio it has becomes more important than the car. So the integration is that the big tech companies, the big five, become more and more powerful. And maybe take over the brand or in some cases, if you’re an Amazon, for example, they might acquire a competitor or you and go directly and compete with you. And that’s what can happen in integrations as well. So this is a world where, you know, these big five tech companies are all thinking about rolling out their car brands. So while it’s your radio inside your Mercedes today, Mercedes may be facing off against a very popular and rich competitor, a few years from now.

Saksham Sharda: And so what’s the answer to this perceived monopolization of everything because it’s not yet started? Is there a way it can be channeled towards something that is not as dangerous as it seems with monopolization?

Jay McBain: Well, I mean the answer today is not to go in your cocoon and convince customers that this isn’t the right thing for 79% of you. The answer today is to be the best implementation of CarPlay. And it’s connected into so many places that you’re putting so much engineering into it, that you have for 79% of buyers, you have the best implementation, connected to the nicest looking car with the best other technology in it, that it just makes sense that when you buy your iPhone, for example, all of a sudden, there’s a little app in there allowing you to subscribe to your new car. So I mean, it is deeper integrations and it’s meeting that customer for where they want to buy and providing a frictionless environment to them. And understand that these trends are not future-looking. They’re underway, and getting out in front of it.

Saksham Sharda: So one last question. It’s more personal, and it’s for you, what would you be doing if not this?

Jay McBain: If I wasn’t doing this, I would probably be on a sailboat circumnavigating the Earth.

Saksham Sharda: Oh, wow. What is circumnavigation, just going around the world?

Jay McBain: Yep.

Saksham Sharda: Okay, literally.

Let’s Conclude! 

Saksham Sharda: Well, thanks everyone for joining us for this month’s episode of Outgrow’s Marketer of the Month. That was Jay McBain, who is the chief analyst at Canalys. Thanks for joining us, Jay.

Jay McBain: Thanks for having me.

Saksham Sharda: Check out their website for more details and we’ll see you once again next month with another marketer of the month.

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