Zscaler: How Partners Drive Massive Growth 52% CAGR

Ever wondered how big partnerships can get? Well, 🗽 a staggering 93% (almost all) of Zscaler's $1Bn+ revenue is generated through their partners. Let’s dive into their GTM playbook.

But first, is such heavy reliance on partners even healthy for the business?

Over the past five years, Zscaler boasted a remarkable 52% CAGR growth. Clearly their partnership strategy isn’t just an afterthought - it’s the cornerstone of their performance.

Founder and CEO, Jay Chaudhry, emphasizes:

“We have a record pipeline, and we're seeing pretty good momentum in our business… year after year, or in the past several quarters, channel providing more leverage to us. That means doing more work for us. ”

🎯 In their Go-To-Market, Zscaler leans on partners for lead generation

But their sales team also collaborates extensively with partners. (see slides)

They adopt a joint sales approach where their sales force builds relationships directly with customers. In collaboration with partner account teams, they focus on account penetration, coordination, sales, and overall market development.

Their sales strategy varies across market segments:

Major Enterprise Segment - Zscaler takes charge with high-touch sales, but system integrators and service providers are right there supporting them.

Enterprise Segment - It’s a collective effort with system integrators and value-added resellers.

SMBs - Here, they lean heavily on VAR partners.

Partners assist Zscaler in expanding their reach, enhancing procurement, and speeding up customer fulfillment.

And of course Zscaler partners with cloud marketplaces. This is MUST have today.

📊 An incredible 40% of Zscaler revenue in FY2020 came from their top 5 channel partners and their affiliates.

While many might say that's a risky consolidation, Zscaler has been strategically diversifying, reducing this figure to 28% in fiscal 2022.

This still reflects a heavy reliance on a select group of partners. That said, the adage that 80% of revenue is generated by 20% of partners rings true in many partnership dynamics. At least in my observations.

🙌 Zscaler still prioritizes nurturing direct customer relationships, because this helps to upsell among other things

“Our customer care and success teams maintain high-touch relationships with our customers to deploy and manage our cloud platform…

We believe customer service touchpoints are opportunities to further develop our relationship with our customers and potentially generate incremental revenue through the addition of new users and services.”

💡 Achieving a 52% CAGR in today’s environment, Zscaler's performance underscores that a company can scale strong partnerships all the way and win.

Don’t you think?

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