scaling out instead of scaling up 💡
The power of scaling out, not up.
December 22, 2024
When I first joined Blackbaud in the summer of 2005, my very first business trip was to visit the Salvation Army in Long Beach, CA.
During that visit, someone shared an observation that I remember distinctly: “The Red Cross is always the first in, and they get the publicity for being first. But the Salvation Army is the last to leave.”
That phrase came to mind recently as I’ve spent time with enterprise sales teams and customer success organizations. In many ways, customer success teams should aim to be the “last to leave” — ensuring lasting impact and long-term customer value.
But increasingly, they’re stretched thin.
Here are some trends I’m seeing:
This creates major problems, especially for horizontal platforms like Monday.com, Airtable, and Smartsheet that rely on adoption and license utilization for renewal and account growth.
If customers don’t fully adopt these tools, renewals are at risk. And why would someone buy more licenses if the ones they have aren’t even being fully utilized today?
Given the profitability pressure on these companies, I believe the solution to many of these problems lies in scaling out, not up — i.e., leveraging partner ecosystems to drive delivery and customer success rather than trying to do it all internally.
In a call earlier this week, my friend Samma Hafeez from Insight Partners shared a simple maturity model for making the transition to an ecosystem delivery approach:
Scaling out through partners provides several advantages.
It allows you to tap into Industry Expertise: Partners often have deep vertical expertise — healthcare, manufacturing, HR, etc. — which helps connect your product to specific customer needs.
It helps you maintain Gross Margins: Services and success teams are dilutive to Gross Margin relative to software.
But partners don’t need to maintain the 75–85% Gross Margins of typical software companies. Their lower margin expectations make them more cost-effective for the customer and offload in-house expense from the company.
Stay Behind: Partners can “stay behind” long after the initial sale, ensuring that the customer is achieving results over the long haul (thus solidifying retention and identifying further expansion opportunities).
Of course, there are risks in leaning too heavily on third-party service providers. The most significant (perceived) risk being loss of control over the customer experience.
The solution? Delegate, but also monitor.
Capture customer sentiment on third-party delivery and establish clear metrics for partner performance.
And remember it’s not really about control anyway. Channel service partners are often better positioned to serve as trusted advisors to both the customer and the vendor.
Scaling out isn’t just for massive enterprises. Even smaller companies can benefit from this approach. For example, Churnkey, a company with less than $10M in revenue today, is already experimenting with partners to ensure customers get the implementation support they need.
It’s not about size; it’s about strategy.
So here’s a planning question for 2025: Are you focusing all your energy on scaling up when scaling out could have a bigger, more strategic impact?
If so, it might be time to explore how a partner ecosystem could help.
Have you experimented with scaling out in your organization? What worked — and what didn’t?
Hit “Reply” and share your insights.
🤘
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