Why you should read this eBook:
This book is for sales leaders, business owners, and partner managers who want to understand the intricacies of working with channel partners. By reading this book, you'll gain insights into:
- Identifying the right time to engage with partners.
- Establishing clear responsibilities and fair compensation for partners.
- Designing commission structures that motivate and reward partner performance.
Designing effective commission models
A significant portion of the book is dedicated to explaining different commission models. It talks about how having a straightforward commission structure is vital for capturing your partners' attention and ensuring they prioritize your product over others.
Common Commission Models
- Revenue-based commission: Partners earn a percentage of the total revenue generated from their sales. For example, an 8% commission on $50,000 sales yields $4,000.
- Flat-fee commission: Partners receive a fixed amount for each sale, regardless of the sale's revenue. For instance, a $5 flat fee per sale means earning $50 for 10 sales.
Tiered Commissions
- Volume-Based Tiers: Commission rates increase with higher sales volumes.
- Revenue-Based Tiers: Higher revenue generation results in higher commission percentages.
- Performance-Based Tiers: Increasing commissions based on sales performance relative to set targets.
Establishing Fair Compensation
To compensate partners fairly, consider the following tips:
- Align with sales cycle: The frequency of payouts should align with your sales cycle, whether monthly, quarterly, half-yearly, or annually.
- Invoice-based payments: It's common to pay partners based on cleared invoices rather than closed deals to prevent unethical practices.
- Profitability: Ensure your commission rates are profitable by understanding your margins and cost of sales.
- Competitor benchmarking: Compare your rates with competitors to stay competitive while ensuring sustainability.
Addressing Edge Cases
The book covers how to handle edge cases to ensure a fair and transparent partner program. These scenarios help businesses prepare for various situations that may arise in their partner relationships.
- Deal reopen: Compensation for previously aided deals that reopen.
- Deal split: Allocation of commission when a partner collaborates with a sales rep.
- Cross-selling and upselling: Structuring commissions for additional products or services sold beyond the initial deal.
- External factors: Addressing commissions when deals are lost due to factors beyond the partner's control.
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