- The simplest way to think of payments to partners is as a marketing cost.
- The reality is, it’s tough to acquire a good customer for < 20%-25% of your first year ACV anyway. So anything in this range is a good deal viewed as a marketing program.
- What is much harder is when partners want an annuity, a piece of later years. If possible, avoid that.
If you keep a customer for 10 years, paying 25% of Year 1 to a partner is … nothing.
The tough part ends up not being the 20%-25% to the partner. The tough parts are:
- Double commission. You’ll probably also have to pay your own reps a commission to avoid channel conflict issues. This will double the cost, effectively. But it’s OK.
- Dubious credit. Some partners want credit for customers where they really didn’t create the lead or relationship. This is super frustrating. But, Shopify, Apple and Salesforce charge everyone 20%-30%+, and they take revenue from every year, not just Year 1. So get a bit zen. If a partner gives you access, it’s not the end of the world to pay for it.
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Published on March 31, 2019