Partner Programs

How important are commissions to the success of partner acquisition and enablement?

When asked, for the most part, tech partner teams know commission payouts are of little consequence to the success of their partnerships with digital agencies.

In fact, more tech teams are realizing the nightmare paying commissions can become for their partner program, and are structuring their program with more non-compensatory incentives like:

Being included in a lead referral system
Bulk license discounts for clients
Showcasing their agency on a directory
Having a dedicated product support tech for their client needs
Being included in monthly co-marketing opportunities
…

Companies like Databox.com are leading this strategy and it’s paying off:

And agencies won’t be offended if you don’t offer commissions. We ask agencies when they onboard into Partnerhub how much of total revenue partner commission represents, and the answers are close to zero.

One of our agencies gave us his actual payout total on 142 payments for his approved referrals to tech partners over a 10 month period.

We asked our community of partner managers to post a comment on the question:

And their guesses ranged from $70,000 down to $20,000. But no one was even close to the actual payout from the 142 total payments:

The answer is: $6,906.67 total.

[Amongst these partner-payouts was commission from major tech programs like HubSpot and Klaviyo]

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Read some of the comments related to this poll below:

”You only pay commissions to pay back the time the agency invests into the partnership, not to make them money. That's one reason why your partner page should talk about investing back in your partners, not about big bags of cash you're using to buy their customers. But invest using more than money. Marketing, client referrals, etc. Your only mission running an agency partner program is to GROW THEIR BUSINESS.” -Sunir Shah, CSA

”Such a great thread. That's why I just refer to our fixed $ commission as"beer money to celebrate with the project team" no agency even asks how much it is.... The value in these relationships can't be easily reflected financially.” - Will Cass, Marsello

“Commissions are the last thing that I talk about in any partner pitch, and they're the last reason that anyone partners with us. We have approximately 100 signed partners, and they all get the same commission percentages, which max out at 10%. They know that we want to keep pricing low for our mutual customers, and appreciate that. Some don't even accept the commissions, and have us invest the money into co-marketing, or donate the money to the charity of their choosing. For some affiliates and reseller programs, commissions and discounts have a bigger impact, but we currently focus on referral partnerships. For the most part, our agency partners want to see results from the relationship like (1) Higher customer retention and success, (2) Customer referrals to grow their own business, (3) Marketing/events to help drive more leads to them, (4) Additional partner introductions to help them expand their network. The commissions are just meant to give partners some "skin in the game". - Robert Rand JetRails

The point being, referral partners will not refer to any software, nor will they choose to get onto your partner track, because of a potential commission payout.

Paying commissions will only create:

A need for an expensive $$$$ PRM
Channel conflict between partners and salespeople
International payouts issues
A ton of requests for explanation as to why they didn’t get commission on ____
Vendors, not partners. Debt collectors really.

Agencies are very committed to their partnerships because of the value the product brings to their clients and the support they receive. Sometimes it’s the leads the partnership brings in that makes the relationship last a long time. But product is at the top, then client needs, then support...

Let’s see what some tech partners have to say:

Aleksi from Vena Solutions :

“... Business can happen with great fit and no dollars exchanged, but the business won't happen if dollars are exchanged on a poor partner fit.”

Stacy from Smile:

“We found that commission has not been the catalyst to getting 3/4 of our partners active; instead, we are seeing co-marketing opportunities as the action that gets them invested in the program.”

Will from Marsello:

“We choose to let agencies decide. If they prefer a flat fee, we do that (so can all our customers). But if they want to truly partner, commissions isn't even a topic“

Sunir from the CSA:

“You only pay commissions to pay back the time the agency invests into the partnership, not to make them money. That's one reason why your partner page should talk about investing back in your partners, not about big bags of cash you're using to buy their customers. But invest using more than money. Marketing, client referrals, etc. Your only mission running an agency partner program is to GROW THEIR BUSINESS.”

Ben from Shopping Gives:

“We (ShoppingGives) offer a commission (ACV between $3k - $60k+), but the agency can decide. Paying a referral fee can provide an incentive but then the relationship is transactional and our product is all about humanizing transactions...therefore our partnership program is built in the same way.”

Robert from JetRails:

“Commissions are the last thing that I talk about in any partner pitch, and they're the last reason that anyone partners with us. We have approximately 100 signed partners, and they all get the same commission percentages, which max out at 10%. The commissions are just meant to give partners some "skin in the game".”

So now we know!

We can definitely say that commissions are NOT important to the success of 9 out of 10 of the partner programs existing today.

As SaaS onboarding becomes more and more user-friendly, and successful agencies are more strategic and able to continually raise prices, commissions will be less and less of a factor.

To find out for yourself, ask a HubSpot or Shopify agency partner if they would stop referring their clients to those tools if they stopped paying commission. The answer would be “no.” Probably more like; “Our clients come to us for support on those platforms so we wouldn’t have a business without those partnerships, so no.”

Most of us are not giant ecosystems like those two mentioned, but, if you fit into any of the following buckets, you can support a successful partner program without ever paying out commissions:

Your customer LTV is below $20K.
You company does or plans to refer users to expert partners for help.
Your product is awesome and being searched for on Google and marketplaces.
You have a marketing team willing / able to create partner-sourced content.

Always keep in mind that agencies are looking for strategic partners who help them win new business by including them in co-marketing, co-selling and your website. In other words, you both are going after the same goals using your combined resources.

A.K.A. a “Partnership”

I hope this was helpful!

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