The way technology vendors work with channel partners is evolving. No longer solely sales and support, partners are now crucial throughout the entire customer life cycle—from landing new logos, to adoption, expansion, and renewal. This shift is driven by the increasing reliance on recurring revenue models, where long-term customer success is just as critical as closing the initial deal.
Yet, this evolution comes with challenges. Many vendors struggle to align partner incentives, provide the right enablement, and track performance in ways that drive mutual success. So, how can you refine your partner strategy to maximize revenue and customer retention?
The State of XaaS Channel Partnerships 2025 report explores these challenges and emerging trends that set top-performing vendors apart. In this blog, we’ll provide an overview of some of the key insights from the report—giving you a snapshot of what’s working, where vendors face roadblocks, and how you can optimize your channel partnerships for long-term growth.
Read the entire State of XaaS Channel Partnerships 2025 report in the TSIA Portal for a deeper dive.
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Why Channel Partners Are More Essential Than Ever
Throughout 2024, businesses were forced to do more with less. Budget constraints, layoffs, and pressure to drive profitable revenue growth led many vendors to rethink their strategies—while many enterprise companies turned to channel partners to help extend their reach and maximize efficiency.
Over the past year, the role of partners has expanded dramatically. No longer limited to sales, partners are now driving value across the entire LAER (Land, Adopt, Expand, Renew) life cycle, helping vendors secure new customers, improve adoption, grow revenue, and increase renewals.
Why Vendors Are Relying More on Partners
- Scaling without expanding internal teams: Partners allow vendors to serve more customers without adding headcount.
- Boosting customer adoption and retention: Partners drive consumption and value realization, improving renewal rates.
- Driving recurring revenue growth: Partners play a critical role in expansion, helping vendors increase customer lifetime value.
Looking ahead, channel partners will remain a cornerstone of growth for XaaS companies. Partners will be key to long-term success as business leaders face the challenge of delivering more revenue with fewer resources.
Related: The State of Channel Partnerships 2025
Overcoming Common Challenges in Partner Strategy
While leveraging channel partners can accelerate growth, it also comes with trade-offs. One of the biggest challenges is losing direct control over the customer experience. To be successful, vendors must establish trust, alignment, and a comprehensive partner strategy across key functions: sales, professional services, support, managed services, customer success, expanded selling, and renewals.
Rethinking Partner Incentives
It’s easy to assume that financial incentives, like discounts, are the key to boosting partner performance. However, in XaaS models, overreliance on discounts can actually hurt customer retention. Instead of driving long-term engagement, discounts often result in short-term gains that don’t translate into sustained success.
So, what’s the right approach? Align incentives with the specific roles partners play in the LAER life cycle. Vendors must clearly define partner responsibilities at each stage—land, adopt, expand, and renew—to ensure rewards encourage the right behaviors.
Enabling Partners for XaaS Success
Many partners still operate under legacy business models designed for hardware and perpetual software sales. Shifting to a XaaS approach requires new skills, processes, and tools, but vendors often expect partners to adapt without providing the necessary support.
For instance, customer success plans are essential for driving business outcomes, and while 69% of partners say these plans are the most valuable form of enablement—fewer than 25% of vendors actually share them. This disconnect, known as the partner parallax, highlights a significant gap in vendor-partner alignment.
For partners to drive customer adoption, expansion, and renewals, vendors must invest in enablement strategies that set them up for success.
Tracking the Right Partner Metrics
Despite the growing role of partners in XaaS, many vendors report a gap between overall partner-sold revenue and XaaS-specific partner revenue. The reason is a lack of clear, consistent performance metrics.
Partner success can’t be measured by one single metric—instead, vendors need a complete picture of partner performance across the entire LAER life cycle. This means tracking:
- Financial metrics to assess revenue impact.
- Operational metrics to gauge adoption and renewal effectiveness.
- Consistent internal and external metrics to align vendor and partner goals.
Without end-to-end measurement, vendors risk missing key opportunities to optimize partner strategy. Companies that track consistent partner metrics report higher performance and revenue growth.
Vendors must go beyond traditional sales tactics for channel partnerships to thrive in a XaaS world. This means aligning incentives, providing the right enablement, and tracking metrics to ensure long-term success.
Related: Bridging the XaaS Vendor-Partner Gap
Top Trends Shaping XaaS Channel Partnerships in 2025
Despite the challenges of shifting to a partner-led XaaS model, some vendors are seeing significant success by evolving their approach. The data highlights three key trends helping vendors increase partner-sold revenue, adoption rates, and expansion opportunities.
The Expanding Role of Partners
Vendors' use of partners has fundamentally changed. Rather than limiting partners to traditional sales roles, top-performing vendors engage partners throughout the entire LAER life cycle.
Today, partners contribute in seven key roles throughout the customer journey. Vendors integrating partners into these roles see higher revenue from partner-sold XaaS, while those excluding partners from adoption efforts report minimal revenue growth.
The takeaway? You're missing out on a significant revenue driver without leveraging partners beyond initial sales. Vendors that involve partners in customer adoption and expansion efforts see a substantial boost in XaaS revenue—and this trend isn’t slowing down.
The Rise of Partner-Friendly XaaS Offers
One of the biggest obstacles to successful partner programs is that many XaaS solutions are not designed for indirect sales.
Historically, vendors invested heavily in partner programs, but saw minimal returns because their offerings weren’t structured to support partner-led success. Today, the most successful vendors design XaaS offers for partner-driven sales, adoption, and expansion.
This shift reflects a new understanding: partners aren’t just resellers, but are key to long-term customer success and revenue growth.
Evolving Partner Programs for XaaS Success
With vendors under pressure to drive profitable revenue growth, most are actively rethinking their partner programs. 90% of companies are transforming or expanding their programs to align with XaaS success.
As the XaaS landscape evolves, partner programs will continue modernizing, rewarding partners for closing deals, and delivering long-term customer value.
Top-performing vendors don’t just rely on partners—they empower them. The data shows that success in XaaS depends on expanding partner roles, designing offers with partners in mind, and modernizing partner programs.
Related: Partner Roles Are Changing in XaaS Businesses
Optimize Your XaaS Partner Strategy for Profitable Growth in 2025
Over the past year, vendors have increasingly relied on channel partners to drive profitable growth—but success doesn’t happen by chance. To fully leverage partners, vendors must take a strategic and long-term approach to transformation.
Vendors are under increasing pressure to do more with less, and channel partners have become a critical part of scaling XaaS growth. However, many companies struggle with partner incentives, enablement, and performance metrics.
The vendors closing the revenue gap are those that:
- Develop partner-friendly offers.
- Define clear roles across the customer life cycle.
- Take a long-term approach to transformation.
By tackling these challenges head-on, vendors can unlock new revenue streams, improve customer retention, and build a scalable, profitable partner strategy.
Your Key Takeaways
- Create partner-friendly offers: Design XaaS solutions that can be effectively sold and supported indirectly.
- Clearly define partner roles: Decide where partners can provide the most value across the LAER (Land, Adopt, Expand, Renew) life cycle. Develop training, enablement, and incentive programs that support these new roles.
- Commit to long-term transformation: There’s no quick fix—successful vendors take a multi-year approach to refining their partner programs. Focus on continuous performance measurement and optimization rather than short-term gains.
Smart Tip: Embrace Data-Driven Decision Making
Making smart, informed decisions is more crucial than ever. Leveraging TSIA’s in-depth insights and data-driven frameworks can help you navigate industry shifts confidently. Remember, in a world driven by artificial intelligence and digital transformation, the key to sustained success lies in making strategic decisions informed by reliable data, ensuring your role as a leader in your industry.
