This is part 3 in our Reseller Agreements & Partner Negotiations series.
You can read part 1 Channel Start – Software Reseller Agreements & Partner Negotiations here, and part 2: Your First Reseller Agreement: Concerned to Confident here.
I wanted to share further thoughts with you on resolving concerns with reseller agreements. I’ve seen that weight lifted from the shoulders of clients and workshop participants with Tenego’s approach to partner agreements.
Creating your first Reseller Agreement is painful for many people and one of the first concerns for companies starting in partnering.
In our earlier articles in the series, we discussed:
• How to structure the agreement, commissions, bonuses, Exclusivity, targets, marketing funds etc
• Negotiating Partner Agreements doesn’t need to be a barrier to starting a partnership, and negotiations don’t need to be confrontational.
• Being prepared and confident with your Reseller Agreement is setting a clear start to your partnership.
• In our second article, we heard about Paul and his company starting in sales channels. We outlined Paul’s initial concerns, how he addressed these concerns, and his team’s new confidence in engaging resellers and referral partners.
I also highlighted that Reseller Partner Agreements don’t need to be complicated legal documents.
Too many Partner Agreements are cumbersome, cold, and harsh legal documents that don’t represent the commercial relationship you have been building to date.
We’re not lawyers and will only speak on the commercial aspects of partner agreements. We urge you to work with your legal teams to make their agreements representative of the relationship you want with partners.
I want to address one key concern: Exclusivity, and how to respond to Reseller requests.
Many Resellers ask for Exclusivity in their region, and some are valid. I want to give you a response to a resellers request for Exclusivity:
• You want your Resellers to be successful in selling your product, and you want to give them adequate market space and support to do so.
• You assure them that you are not planning to sign multiple competing partners immediately in their region.
• If a Reseller is covering the market demand and even generating new opportunities, then you have no reason to appoint another partner in this region.
• If the Reseller is not covering market demand, then they must already have sufficient business. By this logic, there must also be room in the market for another partner.
• In this scenario, you reserve the right to appoint another partner. We don’t feel we need to reflect this in the agreement.
The scenarios where Exclusivity may be valid are:
1) Where the Reseller is going to invest in creating a market for your product, then they rightly should have the time and space to get a return on their investment.
2) Where your product offers a clear competitive advantage to a reseller, then you are in a good negotiation position for upfront payment or minimum revenue for awarding Exclusivity.
3) A Reseller may reasonably request that they have Exclusivity for a period with their existing customers, which is a reasonable request. Prospect Exclusivity or even Deal Registration can be used to manage this scenario.
In all Exclusivity scenarios, agree on minimum market engagement activity targets for them to retain Exclusivity. Otherwise, you have the right to revoke the Exclusivity.
You should have a clear structure Reseller Agreements, that is easy to follow and understand:
• Short is good
• The standard terms, typically non-changeable terms, are in the main body of the agreement
• Agreement schedules or appendices contains the terms that may vary from partner to partner
–Recommended End-User Pricing – The Vendor, that is you, controls End-user pricing, with discounts or commissions of this
–Commissions and Bonuses – Be clear on the basis of commissions, % of what?
——% for Year 1 only
—–% for New Business
—-% for Renewals
—-Bonuses on targets met
–Systems Access
—–for Deal Registration
—-for Reporting etc
—-for Partner Portal
—-Internal use licences
–Agreement Work Plan
—-Promotional Budgets etc
—-Marketing and Promotion; Launch Events, Regular Marketing
—-Activity Targets
On Negotiations, you need to understand your terms and parameters to ease your negotiations to find the right balance of base commissions and on target commissions. You really should be confident and comfortable talking through the points, to secure an agreement and quickly move to market engagement.
When you take all the various concerns people have on partner agreements, they define your partner program and the relationship you want with your resellers.
• We have gathered critical issues and feedback from clients and workshop participants.
• We have pulled together all the key issues companies have with partner agreements and negotiations.
• We plan to make it easier and faster for you to define your Reseller Partner Agreements and take the concern and confrontation out of negotiations.
In our next article, we will outline how Tenego Academy plans to help you create your partnership agreement, define your reseller commissions, determine activity targets and prepare for partner negotiations.
We will have a time-limited launch offer for you, so do watch out for our article.
I would like to hear any questions and comments you have on this topic. Please send your comments.