In a highly saturated, dynamic, and ecosystem-driven software environment, having a plan for managing customer integration requirements is virtually unavoidable. Your software integration strategy is your roadmap, as a B2B software vendor, to meeting your customer’s integration requirements.
Building and executing an effective integration strategy is not just a technical matter. It’s not only about understanding APIs or data formats. It’s not the just that one developer’s job.
As a software vendor your approach to software integration is integral, holistic, and of the utmost importance. It will impact your ability to scale your customer count. It will impact the extent to which you get to participate in your software ecosystem. It will impact customer success and net promoter score.
In this post, we’ll get into what a software integration strategy includes and why it’s so important. Then we’ll look at what inputs go into creating an effective integration strategy.
What’s a B2B software integration strategy?
Building out integrations to your software product is not a single task. It’s a facet of product development that will always be there. It probably doesn’t consume your feature request list, but there is always more to do.
Your integration strategy establishes what you plans are for taking on those integration requests–from both internal and external requesters.
It includes information like:
- Do we build, buy, and/or partner for the capabilities we need to meet integration needs?
- How important is integration to our company/product’s secret sauce?
- How unique are our business domain’s integration requirements?
- How much uniqueness in customer requirements are requested? How much of that uniqueness will we enable?
- How do we deploy and manage the integrations for customers?
- What are the different classes of integrations, and how do answers to all of the above questions change between them?
You know you need to integrate to other software products. You know there is some amount of your customer’s requirements that can’t be met without that integration.
Your integration strategy contains the decisions you’ve made about how you are going to meet those requirements.
Why You Need a B2B Software Integration Strategy
You might wonder why you need a software integration strategy. You might have come pretty far without one. What’s all this about?
Your customers have an integration problem. They are buying and swapping out a lot of SaaS applications every year.
For a company of any size to put those applications to good use, they must be integrated in any number of ways. Your customer’s problem is your problem if you’re one of those SaaS applications.
The extent to which you take on responsibility for helping your customer integration the software you are selling them is your decision. On one side of the spectrum, you could simply put up an API and say, “It’s up to you guys.” All the way to the other end, you could build bespoke integrations for every customer you sign.
These choices and the gradient of choices in between them are all valid, but some are more right for you than others. In the next section, we’ll get into which factors you need to consider in order to choose the right software integration strategy.
Inputs to an Effective Strategy
There are a lot of aspects of your business that factor into your integration strategy. Some of them are huge. Some of them are minor.
I’ve simplified it down to five key inputs to your integration strategy. Even if you’re imperfectly applying them, simply approaching the decision making process with these in mind will help you make much better integration decisions.
In fact, these are the exact topics I cover during an intake workshop for a consulting or implementation engagement. Let me know if you’d like to talk more about it.
The five inputs to an effective integration strategy are your:
- Business model & unit economics
- Lead-to-revenue playbook (marketing/sales funnel)
- Customer success playbook
- Strategic alliances & business development
- Software architecture
Business Model & Unit Economics
Your business model, and specifically your customer/unit economics, are an important (and often overlooked) input to your ecosystem integration strategy.
Some integration options are fairly low cost and usually low capability. Some are the opposite. If you charge customer $1,000/month for your service, you cannot incorporate an integration strategy that costs you $1,500/month per customer.
Duh, you can’t spend more than you take in. But even $500/month or $250/month is probably too much.
Most SaaS experts look for at least 70-80% gross margin on SaaS revenue. That means your integration deployment needs to a very small fraction of that 20-30% cost of goods (COGS) or you risk hurting your gross margin.
Consider your cost-per-customer when evaluating integration approaches. If you’re a startup, factor in how scale impacts that cost, because early-on, the economics might not look great.
Don’t forget to factor in non-obvious costs like developer time to support integrations or financial restitution provided for failed integrations (e.g. “We’re sorry, here’s a month free”). Those kinds of activities are where the bodies are usually buried when costs are out of control.
Lead-to-Revenue Playbook
Your lead-to-revenue playbook (your marketing-sales funnel) is another important consideration when setting an integration strategy.
You train your marketing and sales teams to talk product and value proposition. You’ve nailed the verbiage. You’ve written the playbook. But, often times, the sales playbook is insufficient when it comes to integration.
Instead of asking your sales team to react to your integration strategy, consider how your chosen integration strategy will change conversations in the sales process.
Consider questions like:
- Will your customers consider certain types of integrations to be a deal breaker?
- How technical are your customers? Who are you selling to?
- Will your customers be open-minded to additional costs for integration?
- How do integration concerns create friction in the buying process?
These questions are just scratching the surface. But, the point is: Be thoughtful about closing business when deciding how to approach integration.
Customer Success Playbook
Like your lead-to-revenue playbook, your customer success playbook is also an important factor when establishing your integration strategy.
How do you get your newly signed customers fully onboarded? How do you retain them? How do you add value or up-sell additional functionality?
How you deal with integration could impact every one of these questions. Consider the following:
- Is some amount of integration a drop-dead requirement for onboarding or is at a value-add later?
- Who are you working with during onboarding and support? What is their ability to understand integration complexity?
- What happens when an integration fails? How does that impact your customer?
Again, your CSMs might know your software and your playbook front-to-back, but if they start to shrug their shoulders when integration comes into the conversation, you’re customer experience takes a hit.
Like with your sales team, consider how different options for integration strategy will impact your customer success teams and their playbooks.
Strategic Alliances & Business Development
Business development and integration strategy are the yin and yang of ecosystem integration. The latter is the technical piece. The former is the human piece.
Your integration strategy absolutely must gel with your approach for finding, establishing, and monetizing strategic partnerships and channel sales relationships. Without synergy, these two forces will create friction in the business.
Consider aspects like:
- What data can/should be shared between partners? How does that impact the customer?
- What does the customer experience look like when two partners are able to provide value as one? Is there a value multiplier effect?
- How can partners use integration marketplaces as a lead generation opportunity?
- How do integrations further enable my channel partners?
The best kinds of strategic partnerships are those that create a value multiplier effect for the customer. Integration is the technology glue that enables such a partnership.
Knowing how your integration strategy enables these kinds of relationships will help you choose the right ones and execute on them successfully.
Software Architecture
I intentionally emphasize the importance of the non-technical factors going into an effective integration strategy. Usually they are the overlooked ones. But, the fact remains, integration has a large technical piece to consider.
Some integration strategies require a lot of technical expertise, for example, individually bespoke integrations per customer or use of sophisticated iPaaS software. Others require less (but still some) technical expertise, like deploying a Zapier connector.
With strategies that are on the higher end of the technical expertise spectrum, you have to start considering the software architecture of your product.
Are you deployed to a certain cloud environment? Is your software multi-tenant or do you distribute databases per customer? How do you avoid noisy neighbor problems? How do you deploy integration- or customer-specific requirements? What’s your CI/CD process?
Especially when considering open source or commercial integration software to help you deploy your strategy, understanding the impact on and compatibility with your software architecture is important.
Conclusion
Your chosen integration strategy will have tentacles into many parts of your business. Acknowledging that and factoring them into your strategy will help you make better decisions.
Integration is a customer experience and operational concern, just as much as it is a technical one. Software companies who embrace this will create massive value for their customers.
