Innovating Cybersecurity Partner Programs: The Core Requirements

For this article, we had the pleasure of conversing with John McCabe, an AVP Channel Sales for North America, with ExtraHop. Working in such a position, he is at the forefront of designing and managing innovative channel partner strategies that empower businesses. ExtraHop is committed to uncovering cyber risks and enhancing business resilience by identifying hidden threats.

The company provides organizations with critical visibility into cyber threats, vulnerabilities, and network performance issues that bypass traditional security and IT tools. This insight allows organizations to conduct smarter investigations, accelerate threat mitigation, and maintain operational continuity.

Leveraging John's experience, let's dive deeper and learn all the necessary tips & tricks to master your cybersecurity partner program.

Always Start with the ICP for Your Partner Program

According to John, the first step in building a partner program for a cybersecurity company is establishing the Ideal Customer Profile (ICP) for the client you are working with. It is crucial that this ICP aligns with that of the partner, ensuring that both parties are targeting the same type of client. This enhances the potential for quickly closing business through partnerships.

"Typically, in the startup world of cybersecurity, companies aim for mid-market-sized accounts, although they are also interested in enterprise-level accounts. However, startups must realistically focus their efforts on mid-market Chief Security Officers (CSOs) as their primary targets due to resource constraints.”

With a decade of experience in the cybersecurity partner world, John has gained valuable insights into the dynamics of forming partnerships for startups in the industry. He has observed that startups often find more success when they partner with companies that are open to emerging technologies. These partners are more likely to understand and engage with new security products, seeing the potential for growth and the opportunity to differentiate themselves from more prominent vendors.

When you're a startup, you need partners who not only understand your technology but are also ready to grow with you. These partners are essential because they will invest the time and resources necessary to enable and sell your product, recognizing the mutual benefits.

On the other hand, larger partner resellers often hesitate to engage with smaller vendors that have not yet established a substantial market presence. This hesitation is understandable, as significant time, energy, and cost are involved in building a partnership. Larger partners typically seek maximum value from their relationships, focusing on partnerships that promise larger deal sizes, which are less likely to be offered by emerging startups. This strategic approach helps ensure that the effort they invest is proportionate to the returns they expect.

4 Pillar Partnership Program for Success!

John has developed a partner program structured around four main pillars to streamline and enhance the business process in the cybersecurity sector.

The first pillar emphasizes the simplicity of doing business. John advocates for straightforward contracts and eliminating complex negotiations to facilitate quick and easy partnerships. He suggests using direct communication tools such as channel managers, Slack, or Teams channels to maintain open and active communication.

The second pillar focuses on financial benefits. According to John, it is essential to offer attractive margins to resellers. He suggests aggressive rates—30 points or more for deal registrations and 10 to 15 points if a deal is sourced to the partner. For Managed Service Providers (MSPs), he recommends setting aggressive pricing to ensure substantial gross profits, making the partnership financially appealing.

Enablement, the third pillar, is a critical component of the strategy. Jnoh has evolved his approach from traditional field training to more scalable solutions like recording training videos and uploading them to a Learning Management System (LMS) or partner portals. This method allows partners to access training materials, complete certifications, and become proficient independently.

Enablement is key for any program. My goal is for my partners to be able to sell without me being in the room.

The final pillar is comprehensive support. John underscores the importance of providing powerful sales, engineering, and technical support to partners, especially MSPs, who often act as first-tier product experts. He emphasizes the necessity of backing partners extensively to ensure they have all the resources required to succeed.

The $1 Million Question: How to Ensure the Alignment between Your Company's and Partner’s Goals?

John stresses the crucial role of executive alignment in the success of partnership programs within the cybersecurity sector. According to him, aligning the executives of both the company and its partner companies is essential and should be addressed early in the partner recruitment process.

The initial step involves setting up meetings between executives from both sides to discuss key strategic elements such as the go-to-market strategy, the Ideal Customer Profile (ICP), and the overall mission. These discussions aim to align both parties on how they can collaboratively achieve the goal of generating revenue from the product.

When our executives commit to working with a partner and endorse the collaboration, it sets a powerful precedent. Our sales reps see this endorsement and are motivated to engage and sell with the partner actively. This alignment is beneficial and critical for building an effective go-to-market strategy and a successful partner program.

John underscores that such alignment ensures that all subsequent actions and strategies are coherent and targeted, strengthening the partnership's overall efficacy and profitability.

The Role of Technology in CyberSecurity Partner Programs

Per John, partner portals and Partner Relationship Management platforms (PRMs) are the lifeblood of any partner program in the cybersecurity industry. These platforms serve multiple functions, but their primary purpose is to facilitate deal registration, allowing for the tracking, monitoring, and management of deals that partners bring in. He points out that the essence of their role in the cybersecurity field is to encourage partners to bring deals and reciprocate by bringing deals to partners.

Beyond deal registration, John also highlights the importance of partner portals in creating and maintaining content libraries. These portals house everything a partner might need about a product, including videos, whitepapers, sales slicks, data sheets, and other marketing materials. He emphasizes his proactive approach to training on the partner portal, ensuring that sales teams or operations personnel are well-versed in using the portal to submit deal registrations without needing to revert to questions continually.

John also underscores the value of account mapping, a feature that some PRMs are offering. Account mapping technology allows companies and their partners to filter and quickly identify key accounts that both are working on, thereby streamlining collaboration and enhancing efficiency. He describes how this capability has enabled his company and its partners to identify and capitalize on 5 to 10 significant opportunities per mapping session. This tool not only helps in growing existing businesses but also in uncovering new business opportunities.

The partner portal and account mapping are not just tools; they are integral to the success of any partnership program. These capabilities significantly reduce wasted time and effort and have directly contributed to winning substantial deals.

How to Measure the Success of Your Program?

John stresses the importance of certifications as a crucial Key Performance Indicator (KPI). He believes that having a certain number of certified sales representatives and engineers is essential for effectively selling a product. He typically aims for at least two sales certifications and two to four sales engineering certifications per partner. According to John, the partnership is unlikely to progress effectively without these certifications.

In addition to certifications, he identifies other vital metrics, such as revenue goals and the number of deal registrations. He suggests setting specific revenue targets, whether $20,000 or $2 million, to define expectations with partners clearly. For deal registrations, John proposes creating different tiers of partnerships, each with its own revenue and deal registration requirements, such as achieving a million dollars in revenue and a hundred deal registrations annually.

Moreover, John also advocates for the "nearbound" method of selling, which is rooted in trust. According to him, "Building trust at the grassroots level with those reps is critical. They are the ones who will bring you into the deals you need to get to and help you get as close as possible to the buyer."

Threats in the Cybersecurity Landscape and Strategy Differentiation

John’s strategy aims to shield the company from potential downturns if a new competitor cuts into their opportunities, emphasizing that consistent and positive partner engagement is critical to sustaining business growth and stability.

He advises his sales representatives and channel managers to consistently keep their faces and the company logo prominent in front of partners. This strategy is especially crucial as new technologies emerge and competitors enter the market, potentially offering higher margins and threatening established relationships.

To combat this, John underscores the necessity of ensuring all aspects of the partner program are appealing—including margins, spiffs, and Market Development Funds (MDF). However, beyond just offering financial incentives, John focuses on the significance of attention and engagement with partner reps. He believes in building a "bulletproof" relationship by consistently showing partners attention and care, even without the immediate incentive of a deal.

According to John, it is challenging to differentiate your cybersecurity company's partner program in a competitive market. To set his program apart, his company quarterly spiffs to incentivize sales reps for activities like setting meetings, advancing to proof of value stages, and closing deals, with a structured payout that totals $2,500.

His company also invests in event sponsorships to maintain visibility and reinforce partner relationships, enhancing lead generation and partner mindshare. Additionally, they feature a simplified margin structure to a two-margin system, eliminating the complexity of tiered margins to accelerate sales opportunities and make it easier for partners to understand potential earnings. This strategy aligns with his primary goal of making the company easy to do business with, removing barriers to closing deals, and facilitating smoother transactions.

Time Kills All the Deals

Time is everything when negotiating a deal. Facing an 18-month negotiation delay for a $1.5 million deal with a major tech company in Silicon Valley, John turned to a strategic partner with established connections to expedite the process. This partner, familiar with the client's Chief Security Officer, facilitated a rapid agreement signing within 24 hours and arranged meetings between the respective company reps. The deal, which would have traditionally taken a year and a half, was closed in just a month through the partner's existing purchasing channels.

This experience underscored the immense value of strategic partnerships, particularly in how they can dramatically shorten sales cycles and enhance revenue flow without the usual hurdles. The partner earned a significant profit from the transaction, incentivizing them to promote John’s services further. This initial success led to an expanded relationship, increasing the commission from 10% to 25% on subsequent deals.

That’s the value of a partnership—being able to close deals faster and streamline the process to accelerate revenue, proving that strategic collaborations can transform business prospects. You know that famous saying in sales: ‘Time kills all deals.’ If you give them time to think and lose focus, you're not going to get those deals closed.

Conclusion

To conclude John's rich experience in cybersecurity partnerships, here are the three main takeaways:

1. Streamline Contract Negotiations Through Partnerships: You can significantly accelerate the negotiation process by collaborating with partners who already have established relationships and trust within the industry. This strategy not only speeds up revenue flow but also bypasses the typical obstacles faced in long contractual discussions.
2. Incentivize Partners Effectively: Providing incentives for different phases of the sales cycle, from scheduling meetings to finalizing deals, motivates partners to focus on your product and strive for faster closures. Such incentives not only boost sales but also enhance partner engagement and loyalty.
3. Capitalize on Initial Successes to Expand Opportunities: A successful partnership that results in quick wins can serve as a foundation for further opportunities. The initial success should be used to demonstrate the effectiveness of the product and partnership model to other potential partners. Expanding commission percentages as a reward for continued partnership success can further motivate partners to sell more aggressively and bring in additional business, creating a virtuous growth cycle and profitability.