In the dynamic landscape of channel partnerships, commissions serve as the lifeblood, fueling the symbiotic relationship between technology vendors and their partners. This financial incentive represents a crucial revenue stream for channel partners, underpinning their business models and driving performance.
Together with that, as SaaS companies grow and evolve, commission model structures need to be adjusted. Some considerations for updating the commission model structure can be the impact on a vendor’s P&L and creating a more sustainable partner program, better alignment with the vendor’s strategy, rewarding the right partner behavior, and more.
Changing your commission model structure is a complex, multi-faceted process, and when done wrong, it can harm your reputation as a vendor and destroy the trust relationship you worked so hard to build with your partners over the years. It also poses a significant risk to future revenue growth, as existing partners may decide to leave your program or shift focus and resources to other vendors in their portfolio. This holds true even when you are an established vendor with an industry leading product, and partners are knocking on the door to join your partner program.
Drawing on our vast experience at monday.com in building and developing world-class SaaS partner programs, here are a few crucial steps to ensure that your journey towards a new commission model is successful.
Benchmarking
When it comes to strategizing your commission model restructure, it’s crucial to conduct thorough research on similar vendors and familiarizing yourself with SaaS partner program trends. While innovation is commendable, ensuring that your commission model aligns with industry standards is essential. Partners seasoned in developing practices around other leading SaaS vendors will easily spot the rare sunflowers in the desert.
Learning from and analyzing the mistakes of other vendors – that can be found via online research, conversing with industry colleagues or partners in your ecosystem working with vendors of interest – will help you avoid similar pitfalls and refine your strategy. Additionally, even if you have a clear vision in mind, stay flexible and open-minded throughout the process.
Partner-centricity
When considering changes to your commission model, avoid solely viewing them through a profit & loss perspective. Make an effort to truly understand through data and partner feedback how these changes will affect your partners’ businesses. Ensure that any modifications to the model maintain the right incentives for partners to continue investing in the partnership – it must remain economically viable for them. Moreover, consider the broader added value of the partnership and highlight additional revenue streams that can offset any short-term negative impact on partners.
Another key aspect is keeping the model logical and simple, making it easy for partner stakeholders to comprehend. Lastly, establish or optimize the infrastructure to enable partners to effortlessly track the commissions they are owed for their hard work.
Transparency
Let’s face it, adjusting your commission model structure is not an easy change for partners. That is why being fully transparent with them goes a long way. Communicating the changes clearly while avoiding convoluted explanations, shticks and tricks will be highly appreciated by your partners.
Provide sufficient advance notice
Your partners have been investing in the practice, building their plans, growing the dedicated team, and running their business based on your commission model structure. Some partners may have even built entire companies around your product. Be sensitive to that and give your partners enough time to make any necessary adjustments. With a recent change monday.com made to its commission model, we gave our partners over a year to plan for the change. There’s no one size fits all and every vendor has its own considerations, but be reasonable and do not make changes overnight.
Equip your partner managers with the right tools
Provide partner managers with a comprehensive communication kit that clearly explains the logic of the model. Make sure to also highlight the broader opportunity for partners and how other revenue streams can offset any short term impact. Lastly, with the help of our RevOps team, monday.com also created a calculator to demonstrate the immediate impact on our partners’ business and how the new model rewards the right type of partner behavior.
Tread carefully with your key partners
To ensure a smooth transition to the new commission model, it is crucial to communicate the changes early to key partners within your ecosystem. It is also highly recommended to have senior partner leadership presence in such discussions and show respect to your top performing partners.
Once an initial version of the new commission model structure is formulated, test the waters with your key partners and gauge their reactions. If they do not understand the new model’s logic or provide valuable feedback, be open to making last minute changes. Securing the buy-in from key partners is crucial for the successful rollout of a new commission model, fostering a sense of collaboration and strengthening the partnership throughout the process.
Conclusion
Designing and maintaining an effective partner commission model is paramount to the success of your partner program in an extremely competitive space.
In light of that, if your partner ecosystem acts as a strategic pillar like for us here at monday.com with 20% of our revenue coming from partnerships, you should take commission model changes very seriously. Without careful planning and execution, such changes can be detrimental to partner engagement, and in turn, the future growth of your company.
Partnership professionals that will follow the above mentioned steps can put themselves in a better position to come out on top following commission model restructures.
This blog post was co-written by:
Roi Bar On, Head of Partnerships GTM Strategy & Partner Development
Dror Spindel, Senior Director of Partnerships
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