Avalara Promises Partners More Service Work Amid Program Investment

‘This year, it has been my passion and my mission to make sure that we are telling that story of how Avalara was founded, that we are a partner-first business. ... And I need everybody at Avalara to understand the importance of partners and the role that they play in our business—to make sure that they treat them like they treat our customers,’ Meg Higgins, Avalara’s channel chief, tells CRN.

Tax compliance software vendor Avalara is investing in its partner program, which includes a partner-focused event in November, a new partner relationship management system in January and more services and implementation projects getting pushed to the channel.

Meg Higgins, promoted over the summer to Avalara’s channel chief —officially, the senior vice president of global partners—told CRN that the Seattle-based vendor has added partner measures to the key performance indicators (KPIs) of employees even outside the partner organization.

“This year, it has been my passion and my mission to make sure that we are telling that story of how Avalara was founded, that we are a partner-first business,” Higgins said. “We love our partners. I love our partners. And I need everybody at Avalara to understand the importance of partners and the role that they play in our business—to make sure that they treat them like they treat our customers. … They all go hand in hand.”

Avalara Invests In Partners

Kai Ranabargar, principal of San Marino, Calif.-based Avalara partner Tax Technology Group, told CRN that his Avalara practice has continued to keep him and his three full-time employees busy despite concerns around inflation in the U.S. and concerns of a potential recession.

He expects his business to grow between 10 percent and 20 percent in 2023 compared with last year and looks forward to Avalara pushing more implementation work to the channel.

“It doesn’t matter if it’s a boom economic cycle, people need these solutions,” Ranabargar said. “If it’s a bust and they’re getting audited, then they feel the pain, so then they have to do it. It doesn’t matter. It’s busy all the time.”

At least 80 percent of Avalara customers use a partner, said Higgins, a CRN 2022 Women of the Channel member who joined the vendor in 2019.

Greg Chapman, previously Avalara’s senior vice president of global partnerships and channels, became the vendor’s senior vice president and head of European operations late last year, according to the company.

In October, private equity firm Vista Equity Partners completed its acquisition of Avalara for $8.4 billion.

The vendor plans to improve on the partner program throughout 2024 after debuting a PRM system with self-service, on-boarding and other features for partners. Larger partners will have access to Avalara’s business development and recruitment team for support.

From Nov. 14 to 16 is Avalara Fuse in Boca Raton, Fla., the vendor’s partner-focused event with panels and speeches around scaling Avalara businesses, co-marketing, resisting a potential recession and more.

On the product side, Avalara has been at work adding generative AI capabilities to its offerings. In June, the vendor announced an integrated plugin for ChatGPT—the text-generator program created by Microsoft-backed OpenAI—that allows users to get sales tax rate calculations and research based on location.

This made Avalara the first tax compliance software vendor to work with OpenAI on an integrated plugin for ChatGPT, according to Avalara.

“We’re leveraging that for content. We’re going to be leveraging that for support. We have a lot of really interesting projects that are going on around leveraging generative AI,” Higgins said.

Avalara is also at work on its low-code Integration Studio to ease adoption of the vendor’s offerings and bringing its E-Invoicing and Live Reporting product to market for users working with overseas value-added and goods and services taxes, she said.

Here is more of what Higgins had to say is in store for Avalara partners.

What should partners know about you?

I’ve been at Avalara awhile now. And I’ve had a few different roles and more different hats since joining the company.

And back in March, they had actually asked me to expand my remit. I was leading our business development organization—so all commercial negotiations, partner acquisition, really tip-of-the-spear activity has been my remit since January of ’22.

And then in March of this year, they asked me to also lead strategy for our partner organization … Really helping to define our new partner program, lead the team to reimagine this business. Focus on some of the efficiencies around how we can think a little bit differently around all of the different activities around the business.

And then readjust our coverage model, our team. … I feel like I’ve been doing the job since March, but then officially in the role as of July 17. … So they basically gave me the keys, but I’ve been sitting in the front seat with my hands on the wheels for the last couple of months anyway.

What should Avalara partners be excited about for the future?

What I love about Avalara and our strategy has always been the foundation around partner. We call it our moat here.

But it is so unique, and it’s such a source of passion and energy that we have in this company—that partners are really at the center of everything that we do.

And candidly, over the last few years, we had a lot of change in leadership. Once we went [public], we were on a rocket ship of growth. And to some degree, we lost our way on that core mission a bit.

And so it’s always been central, but I think it wasn’t rooted in everybody’s KPIs. Everybody at Avalara is now coming back to our grass roots of where we started.

This year, it has been my passion and my mission to make sure that we are telling that story of how Avalara was founded, that we are a partner-first business.

We love our partners. I love our partners. And I need everybody at Avalara to understand the importance of partner and the role that they play in our business—to make sure that they treat them like they treat our customers. … They all go hand in hand.

And so in the short term, I want partners to know that partners are so important to us and that everybody in Avalara is going to be wearing that partner badge, not just the partner organization. We live it every day. But everyone that touches partner and has a role in the partner experience is getting this message consistently.

And we will start to change the KPIs of the entire organization. If you have any role in the partner experience, you’re going to be measured on that and you’re going to be really accountable to make sure that you treat the partner in the most optimal way.

That you’re always supporting the partner, you’re thinking about the partner. Little things like go-live tickets, or we’ll have support tickets, and we’re just changing even the talk track.

So every agent now has to say, ‘Who’s your partner?’ We got away from that a little bit. And so now it’s like, everybody has to say, ‘Who is your partner, and how can I make sure that your partner understands that you might also have a problem?’ And let’s bring the partner in.

This is a data point that I show all the time—at least 80 percent of our customers are also partner customers because they leverage the partner integrations.

If you’re dealing with a customer problem, it’s also the partner’s customers. So make them aware. See if they want to get involved. … Forward looking, that’ll just become a cultural shift. It takes awhile to get everybody on the cultural shift. Somebody said [to me], ‘What’s your chapter going to be at Avalara?’

My chapter is going to be titled, ‘How we reimagined the partner business.’ And so that is the chapter that I intend to be able to say I did that or at least I led that with the help of a lot of people. … And we are launching this big partner program.

This is not our first attempt. Avalara has done this in the past. And we have standardization around our models. But we’ve got a real opportunity to think differently about how we structure our partner program and refresh a lot of the things that have become a little dated. And also really re-energize our partner experience here.

When did this effort start?

So we started it last year. The other important point is I want our partners to know that we hear you.

We do an NPS [Net Promoter Score] survey every year. And they are so gracious with their feedback. We have PABs [Partner Advisory Boards] and we have different focus groups. We have a very large partner-facing team. And they’ve given us feedback over the years.

And I would say that we have ingested that feedback. But I’m not sure we’ve been really good at actioning that feedback. And so, at the end of last year, we hired a team focused around imagining and defining a new partner program.

And taking all of the feedback and saying, ‘What do you want to see us do differently? What are the changes you want to see?’

So we’ve been very thoughtful around taking that feedback and then building that into our next-gen program.

We’ve been at it since last fall, but fall was more [about] requirements gathering. And then this year is really into execution mode. And so we have a lot of big projects that are hard, that are complicated.

They affect many systems. We’re building a new PRM system. And so it’s going to take a long time and a village to bring this all together. … We are delivering this program in January of 2024. And we’re going to be super proud of it.

What should partners look forward to from the new program?

January is going to be our first version. … We have very lofty goals. And so what we’ve tried to do is be super deliberate around what are the things that are plaguing our partners that we need to address first.

That’s our core. That’s going to be our initial set of deliverables. And then just like software, we’re going to iterate on it. Throughout 2024, we will continue to improve. We’ll continue to get better. We’re continuing enhancements.

But January is our first big reveal. In November, we have our first partner-only event. … And that is when we intend to expose a lot of the details of this.

But it really won’t be operational until early Q1.

Is adding more partners part of your goals?

We have a lot of partners. And we always are looking for more of the right partner. So it isn’t necessarily quantity that is our goal as it is quality.

And what I’m looking for primarily is to look at our existing partner base and help them deliver more value to their business. And then there’s mutual value. Reciprocity. So we want to help grow with them and help deliver more value to them and their end customers.

And then because I used to lead BD [business development], and so it is near and dear to me to bring in more partners that have a good market need and a market fit.

So I would say over the years, we’ve been somewhat opportunistic around a lot of our partner engagement. It was really about more and more and more. And so over the last 18 to 24 months, we’ve said, ‘We love every partner’—and believe me, we do—‘but let’s make sure that it’s worth your while and it’s worth our time, too.’

Time is life’s most valuable currency, in my mind, and so I’m always looking to make sure do you have the fit? Do you have enough TAM [total addressable market] that’s going to really make sure that your time is best spent working with us. And vice versa.

As part of this PRM system, we will have a digital-only experience. So every partner is welcomed. You can come in and you can self-serve and you can on-board and you can do everything digitally without, necessarily, human capital deployment.

But then for the larger partners, we have a large BD team and a large recruitment team that we’ll work with to make sure that they understand everything they’re going to be signing up for.

Your ecosystem includes services-led partners as well?

Yes. We have our CIP program, which is the certified implementation partner program, and that has been growing significantly over the years.

And we love all the early indicators around that program. So all of those partners go through extensive technical training. … It’s anywhere from 14 to 20 hours of training, which is a big investment for partners.

Once you have that level of technical depth and training capability, it’s just a game-changer. Because now instead of it just being a referral motion, they’re doing a lot of qualification on their side and making sure they ask more discovery questions.

And then our intention is to continue to increase the amount of services projects that we give back to them. So we already give them services projects that they do the implementation, the go-live. But that is something that is an active initiative of ours. To say, ‘How do we continue to give back more service projects for them so they can start to earn more revenue by working with Avalara?’

What sort of partners are you looking to add to the ecosystem?

We have a set of core segments that are really good fits for Avalara services.

So ERP has traditionally been our primary area. E-commerce over the last 10-plus years … marketplaces. And then as taxes become so ubiquitous—point-of-sale systems, FinTech [financial technology] systems, even supply chain and manufacturing.

These new kinds of verticals where we don’t have nearly the partner penetration that we do in those mature industries like ERP and ecom, that is definitely an area that we’re looking at, saying, ‘These are some really interesting partners that can absolutely take advantage of a lot of our services.’

And it isn’t necessarily just all rooted in AvaTax, which has always been our traditional bread-and-butter. But we have Cross-Border services. We have Property Tax. We have a lot of really interesting tertiary services that present a lot of value to partners.

Why should solution providers become an Avalara partner?

Tax and compliance is not really just a nice-to-have. … It’s really a need-to-have. … We have 13,000 jurisdictions in the U.S. alone.

And so for a small business to try to go at it alone with automation and technology … Why would you want to spend your time on something like this versus just leveraging a software tool?

And if you get it wrong, the consequences are pretty steep. It’s real money. It’s real tax exposure. Real risk.

And so for me, I look at the continuing increased complexity of tax and compliance. And so for partners, their customers have a real need for this and real pain. And so it’s a win-win.

Not only do we create that bridge around the technology connection, so it makes it easier to do business together. And we have that tethering together. But also, we’ve got such a big partner ecosystem that we can centralize and aggregate all those different connection points.

And so there’s a very high probability that they have an end customer that needs this service—not wants the service but needs the service—and is already integrated with an ERP or already integrated with an LMS [learning management system] platform. And so they’re like, ‘Hey, if I add this’—they already have 90 percent of what they’re going to need to pull that data back together.

And so now I’m just another perfect fit into the Avalara partner ecosystem. And so for new partners, I would say they’re creating real value addition, differentiating themselves and saying, ‘OK, now I can add a tax module for you.’ … There are certainly other benefits of being part of the Avalara partner program.

And those benefits will continue to increase as we roll out our partner program.

What should partners be excited about on the product side?

One is definitely generative AI. … We’re first in the market around some of the advancements we’ve made there.

We’re leveraging that for content. We’re going to be leveraging that for support. We have a lot of really interesting projects that are going on around leveraging generative AI.

Secondly, we have a big investment around what we’re calling Integration Studio.

And so what that really means is we’re making it easier with low code to add all these additional services as part of the integration.

So historically, many of our partners come to us trying to solve the first and most immediate need of sales tax calculation. And so we talked about the integration requirements for sales tax calculation. And then we always talk about the other tertiary products that we have. Specifically returns.

So if you’re going to be calculating tax, eventually you’ve got to file that tax. And you have also got to get registered to collect tax. And then generally you have exemptions.

And so we have these core services that are like bookends to sales tax. But many partners are like, ‘OK, we’ll come back and we’ll add that after. We have a customer that has an immediate requirement for calculation.’

Inevitably, the road map gets in the way. And they’re like, ‘OK, we’ll add that later on.’

Well, if we make it super easy to integrate those services up front in order to add them to the existing integration, that to us is a game-changer.

And so it’s not going to be another 100 hours or 200 hours to add these other services. It’s a dozen hours. And so that’s what we’re trying to make sure—that it’s easier to implement and consume more of our services that we know complete that tax journey for their customers.

And then the third is around e-invoicing. And so e-invoicing is affecting a lot of European countries and multinational businesses and will inevitably make its way over here to the States as well.

But e-invoicing is you have to report and and transact all of your commerce details. Live reporting and invoicing. Live reporting to all those global tax jurisdictions, which isn’t necessarily new—Brazil has been doing this forever. And some other countries have been doing it forever.

But it is going to get increasingly harder and mandated in countries like France and Spain. And so at the time of the transaction, you have to send a file in a specified format, so they are going to unify the invoice and set requirements.

So you have to have a standardization for that. And then at the same time as you send the invoice, you have to send a copy of that to the government. And so they’re going to do the reconciliation.

The VAT [value-added tax] gap in Europe and how there’s all this fraud that’s happening over there—this is the solution to that.

And so it’s not optional. It’s mandated. Which has a lot of businesses in a tizzy because it’s going to be hard. So we have quite a few of our partners that are preparing for that so they can make sure that they’re ready for the mandate.

How is customer spending for Avalara, given inflation and recession concerns?

We are certainly seeing the effects of the market. But I do feel like we’re somewhat in a unique position. Because it’s not a nice-to-have. It’s a must-have.

Many businesses defer until it’s a crisis, which is unfortunate. So the more that businesses can be proactive in acknowledging that this is a must-have—plus the ROI is not that hard to do.

If you’re doing this manually, or if you’re paying somebody to do it by leveraging technology, that’s simple math to be able to support an ROI on this decision.

I would say the effects of the economy are there for sure. I think people are taking longer to make a software decision. That’s just inherent in the environment that we’re in.

Does Avalara face a lot of competition?

In select segments, certainly, there’s always some friendly competition. And that’s to be expected. But Avalara for sure enjoys a market leadership position.

And that’s why this partner moat is such a differentiator for us. Because we have this huge web of integrations that just simplify access, that our partners are able to support and that they can expose to their customers, etcetera.

When Scott [McFarlane, Avalara co-founder and CEO] first decided upon leaning into a partner-first business, it was genius, frankly.

So it’s very hard, unless you have a bespoke API -based integration—which, certainly, as you go upmarket, many enterprises want to do a direct API integration, so that’s different.

But most midmarket customers, mid and SMB, don’t have endless tech resources. So to be able to leverage a pre-existing integration, that’s gold. … We’ve got quite a broad ecosystem among accounting partners, channel partners, SIs , VARs, tech partners.

They all play a really important role.