March 27, 2023
5 min read
That is certainly a question...
Many in the partner community will argue that commissions or spiffs are a poor motivator and that they should go away.
I was one of those people.
But the great thing about being a part of an incredible community is the ability to think again out loud, and to reconsider previously held beliefs without fear of judgment or ridicule.
So here goes my argument for why commissions are actually critical to any partner enablement program focused on agency or channel partnerships.
When done correctly, commission programs can be the driving force behind partner success and overall revenue growth.
A compensation plan that incentivizes partners to sell your product or service by offering them a non-trivial percentage of the revenue generated from each sale can be an excellent way to drive leads into your organization.
I am less keen on flat fees as they don't continue into perpetuity and may not have high enough margins to get the attention of the consultancies you aim to incentivize.
Every great lesson starts with a tangible reward. The intrinsic rewards of "this is a much better solution for our customers," or, "this pushes on our ecosystem flywheel" or even one of my favorites, "I want to be the first giver," are frequently lost in the forming of new partnerships.
Commission programs provide partners with a tangible reward for their efforts as a way to get to the realization of intangible rewards such as the former. When partners know that they will be compensated for each sale they make, they are more likely to put in the time and effort needed to close those deals. This is especially true if the commission percentage is high enough to make a significant impact on their bottom line.
Commission programs also help partners feel more invested in your product or service. When partners are compensated for sales, they have a vested interest in the success of your business. This can lead to increased loyalty and a stronger partnership overall.
Commission programs can help partners prioritize your product or service over others. When partners have a choice between multiple products or services to sell, they are more likely to choose the one that offers the highest commission rate. This can give your product or service a competitive edge in the marketplace.
Commission programs aren't without their challenges.
You've got to ensure that partners are selling your product or service for the right reasons. If partners are solely motivated by the commission they will earn, they may overlook important details or misrepresent your product or service to make a sale. This can ultimately damage your reputation and hurt your business in the long run.
To mitigate this risk, it's important to provide partners with the right training and resources to sell your product or service effectively. This includes educating them on the features and benefits of your product or service, as well as how it fits into the market and meets the needs of your target audience.
The proper motivation, such as a meaningful commission structure, can lead to a solid understanding of your better-together story. The commission should be just one part of an overall partner enablement strategy to avoid the pitfalls that lead to junk leads, or high-churn customers.
Commission + Communication + Great Story is an excellent strategy for winning the hearts and minds of the sellers in your ecosystem.