Last week’s blog post generated a question from Wendy M. I want to thank her for her question and I am sharing the question and answer here because many I have spoken to share the same issue.
Can you provide some guidance on compensation when both the partner and the internal salesperson have both provided value within a sales transaction?
First, having a system that can accurately track that both parties contributed to the sale is critical. A partner portal with deal registration, which is integrated into your CRM, is my recommendation if it is possible. I have seen many cases where poor technology leads to questionable behavior on both the part of partners and sales teams.
Assuming you have a high level of confidence both parties participated in the sale, I like to reward both if you have the margin to do so. For a lot of the companies I work with who sell indirect via distribution, channel sales teams are paid on sell through. This is based on POS data from distribution. In this case, the inside team gets credit towards their quota and the partner gets whatever carrot you provide as part of the deal registration process. This is typically a few extra margin points and exclusivity to this registered opportunity as long as the deal meets your company’s requirements. Some typical requirements include:
- Minimum size in dollars or units
- The type of account being sold to (i.e. not a national, government, named account, etc.)
- Has not been registered by another partner previously
- Is not being worked by internal sales team members (see below)
- Is updated at least every 30 days to keep it active
In the case where partners buy directly from your company, this gets a little tougher. The model I like to see is to reward the partner for registering the deal with you as mentioned above. If you have an internal sales team that works with partners, I like paying them for sales through their partners so they again would get credit towards their quota—which should be part of a compensation plan that is already in place.
From your question it is my suspicion, however, that neither of the two scenarios above apply. If neither case above applies it means there is some kind of channel conflict between a direct sales team and your partner network. This arises many times from the lack of a deal registration program or a poorly implemented one with unclear rules of engagement. In this case, a partner is working an opportunity with a customer and a direct sales team member is working the same opportunity simultaneously. The deal closes. Now who do you pay?
At this point, my philosophy is that you must pay both. If you don’t, you will lose your relationship with the partner. If this partner was part of a nice sized opportunity that closed, do you want to lose them? Do you want them to spread the news to other partners that your company “steals opportunities from partners”? If you don’t pay your internal sales team member, you have a similar problem.
The solution in this scenario isn’t who to pay, but to prevent the conflict from the beginning. A good partner program with solid opportunity or deal registration and clear rules of engagement will help to prevent this type of conflict. In the case above, if the partner registered the opportunity in the company’s partner portal and the sales team was already working it, they would have been denied the deal registration and subsequently the incremental commission. Conversely, if the partner working the opportunity registered it and received approval for it, prior to the sales team member working on the deal—then when the sales team member went to enter the opportunity or lead into the CRM system, s/he would see that the partner got there first and would move on.
I want to thank Wendy again for her question and the inspiration for this week's blog post.