This is the first of a short series of articles on Reseller Agreements & Negotiations.
Partner Agreements are regularly one of the first worries for companies starting in partnering. People’s concerns can be heard with their first questions typically about ‘standard commissions’, exclusivity, and revenue targets.
Too much emphasis is placed on reseller commissions as a motivator within a partner proposition. This is not enough and there is more to offer.
What we are sharing is based on experience. In Tenego, we have been building Sales Channels for companies since 2008, and developing the methodologies for Companies Starting and Growing in Sales Channels. We have worked with many software companies / ISVs over the years, in preparing agreements, negotiations, and signings.
Over the coming articles, we will provide some practical details into constructing partner agreements. We want you to be confident in partner discussions and negotiations. We want you to be the seasoned channel professional, commanding trust with your knowledge and practical voice, bringing ease to negotiations.
We want your new partnership to focus on the joint-market engagement to determine the full opportunity in working together. We want to enable you to start your partnerships based on trust and action, AND for you to be a leader in making this happen.
In this, you build trust in how you will manage the relationship going forward.
Within your Reseller Agreement, you seek to capture the essential items of your Partner Program and your Partner Relationship:
1) The Structure, Purpose, and Expectations of the partnership
2) The Partner Commissions or Discounts
3) Your Product Pricing
4) Go-to-Market Plans
5) Training Provided
6) Your Sales and Marketing Supports
7) and maybe Revenue Targets.
People spend too much time and worry over their partner agreements. We want to save you time and worry and cover the essential topics in Creating your Reseller Partner Agreement. We will also cover the typical challenges, and in providing you with the standard industry agreement terms, we want to help you minimize risk in the relationship.
We want to give you practical guidelines on what commercial terms you should have in your agreements and make the typically contentious issues easy. We also want to provide you with a structure for reseller agreement negotiations.
Some key points in agreements:
• Reseller Commissions and Discounts, % of what?
•Resellers Targets, should you have them?
• Exclusivity, you will be asked
• Negotiations don’t need to be confrontational
• Your Partner Agreement is a legal document
• What are the standard commissions, and for SaaS companies?
• Should a reseller get the same commission for a customer renewal as they do for the first year?
Should you have Revenue Targets in an agreement? How do you determine these targets, and how do you manage your partners’ targets?
Rather than focusing on Revenue Targets, Focus on Activity Targets, focus on setting targets on the marketing and sales activities that generate revenues. Agree and manage activity targets such as customers or prospects engaged with leads, demos, proposals, and closed deals. With Activity Targets, you are focusing on actions from week 1, making the partnership easier to manage, identify issues and adjust quickly.
You will be asked for Exclusivity, but will you give it? Will you offer Exclusivity? We will outline the defined scenarios when Exclusivity makes sense, as part of your partner proposition and in managing Resellers.
Knowing these scenarios and the justifications makes your Exclusivity discussions so much easier.
Reseller Partner Agreements discussions should be non-confrontational, with clear, balanced arguments to get to the outcome. Your Partner Negotiations should be structured with logical explanations to ensure that your partnership agreement is not putting a barrier to progress. This is not haggling in a street market. There are a defined set of factors in a reseller agreement that affects the partner revenue share. There is also a list of parameters you can negotiate, and not only the revenue share.
For example, Exclusivity can be a difficult negotiation issue for people. We will outline the clear reasons where Exclusivity is valid and how you can manage it.
Your Partner Agreement IS a legal document, yet the big challenge is how it represents the partnership relationship you want to have, and how to you establish the business partnership. We are not lawyers, and you need to decide on your legal advice. We are partnership experts, and that is where we focus.
You can start quickly with a partner agreement template, and we’ll even give you one. We want to help you create your agreement to represent your business and the partnership you want.
We will provide you to with some items to help you get started:
- a Reseller Agreements Checklist – click here
- a Reseller Agreement Template
In our next article, I tell you a story about Paul and his business starting in sales channels. I will share Paul’s initial concerns about his partner proposition and agreements and resolving these concerns.
If you have comments, concerns, or queries on Partner Agreements and Negotiations, I’d like to hear them. So, do let me know.