What makes a company an ISV
The "independent" in the name means the vendor is not the platform owner. An ISV builds a product that runs on, extends or connects to software made by someone else, such as a CRM, an e-commerce platform or a cloud provider. A company that builds an app for a CRM's marketplace is an ISV from the CRM's point of view.
Most B2B SaaS companies are ISVs. The term is common in partner programs run by large platforms, which group the software companies building on top of them into an ISV or technology partner track.
How ISVs work as partners
ISV partnerships usually start with an integration. Once two products connect, both companies have a reason to work together:
- Referrals in both directions. Each vendor's customers are good prospects for the other's product.
- Co-selling. Sales teams bring each other into deals where the integration matters to the buyer.
- Joint marketing. Shared webinars, integration pages and launch announcements.
- Account mapping. Comparing customer and prospect lists to find overlap worth pursuing.
Why ISVs matter in a partner ecosystem
An ISV partner rarely resells your product, but it changes why customers buy and stay. A customer who uses your product with three integrated tools is harder to replace than one who uses it alone. For that reason, many programs measure ISV partners on influenced deals and retention, not only on revenue they sourced.
Example
Fjord Analytics sells reporting software. Its integration connects to a popular CRM, and Fjord joins that CRM's partner program as an ISV.
Fjord's own partner program also recruits ISVs. An inventory software vendor, Northwind Systems, builds a connector to Fjord. The two companies compare customer lists, find 40 shared customers and 120 prospects that use one product but not the other, and agree a referral fee in each direction. In the first quarter, Northwind refers six accounts and Fjord closes two, worth $24,000 in annual contracts.