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Guide to SaaS Reseller Commission Plans

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A well-rounded sales channel includes various types of partners to support your organization’s growth. With each different type of partner, there are essential idiosyncrasies to understand, such as recruitment strategies, enablement best practices, and compensation models.

If you’re considering expanding your sales channel to include resellers, it’s critical to understand how to develop a strong commission structure that will motivate partners while ensuring your business remains profitable.

How Are Resellers Typically Compensated for Closed Deals?

SaaS resellers are compensated for closed deals through commissions. Commissions paid to resellers account for a percentage of the sale. With other types, a partner may bring in a lead, then your team closes the deal, and the referring organization is rewarded for its influence. In contrast, resellers are only compensated for deals they close.

What is the average SaaS reseller commission rate?

SaaS reseller commission rates vary based on a few factors but typically fall in the 10-35% range.

Consider conducting competitive research to determine how much other organizations in your space compensate their partners. After all, if a reseller can get twice the commission rate working with a competitor, they’re less likely to want to work with you.

What influences a SaaS reseller commission rate?

You may award resellers with a higher commission percentage based on their expertise, loyalty to your program, and partner tier. Keep in mind the value a partner delivers to your organization, along with the effort required to manage them.

For example, if a partner can handle more of the sale on their own (run demos, answer questions) and has an established network of target buyers, it makes sense to compensate them more for the time your team saves.

The following table provides an example of how you might distribute reseller commissions:

To further explore commission variables and potential structures, discover Best Practices for Channel Partner Commission Structures.

What Software & Operational Needs Support Reseller Commission Management?

Depending on the size of your reseller program and the partners you work with, your needs will vary significantly. For example, if you work mainly with large, established organizations as resellers, you’ll need a bigger team to meet their needs.

At the bare minimum, you’ll need a Reseller Partner Manager to recruit, onboard, train, and support partners. However, as your program grows — or when you begin working with larger partners — it will help to have specialized team members focused on reseller marketing and other specific functions.

Meanwhile, a partner relationship management platform (PRM) will help manage compensation. Tracking partner commissions and managing payouts is a large task, made much easier with a PRM. Your PRM will help you track resellers’ in-progress and closed deals, making it easier to determine how much commission a partner has earned and ensure you pay out appropriately.

The Allbound Incentive Dashboard provides visibility into top-performing partners and reps. See the incentive amount, status, and type at a glance, making it easy to evaluate the health of your reseller channel. Further, Allbound supports incentive calculation, making it easier than ever to award partners for deal progress.

How Should You Handle Internal Conflict When Working with Resellers?

It can be hard enough to get your internal team bought in on partnerships. Without expertise on the value of partners and the potential benefit to your organization, other functional departments can feel threatened by expanded resource allocation to the channel program.

When a reseller brings in a deal that someone on the sales team had already engaged with or when a sales rep is needed to close a deal, channel conflict can arise. Salespeople may feel owed a commission. Meanwhile, you’ve already made a commitment to your reseller partner. So, who gets paid? 

Our recent Partner Channel Podcast guest, Jason Ashman, Senior Director of Strategic Alliances and Partnerships at SaaS Labs, shared a few ways you can handle this scenario.

“You must ensure those plans are really attractive and fair to incentivize and get salespeople excited about this stuff,” Jason highlighted. “I know some companies have done this, where if a lead comes in or an opportunity comes in from a reseller, and they bring in a sales rep, some of those sales reps don’t always get that full commission. I think that should be the opposite sometimes. If you can, give them the full commission or even maybe an extra spiff on top of that, which keeps them motivated.”

You must ensure those plans are really attractive and fair to incentivize and get salespeople excited about this stuff. I know some companies have done this, where if a lead comes in or an opportunity comes in from a reseller, and they bring in a sales rep, some of those sales reps don’t always get that full commission. I think that should be the opposite sometimes. If you can, give them the full commission or even maybe an extra spiff on top of that, which keeps them motivated.”

Jason Ashman

Senior Director of Strategic Alliances & Partnerships, SaaS Labs

Our takeaway is that the best commission distribution strategy incentivizes salespeople to collaborate with partners. This doesn’t always have to involve increased commissions. You can build goals for your salespeople to support deals with a certain number of partners within an established timeframe and provide a reward for hitting that metric.

Consider also taking the time to emphasize the value of reseller partners within your channel. These organizations can reduce your acquisition cost, increase the return on marketing costs, and grow customer loyalty. Highlight the benefits your organization experiences from referral partners — potentially announcing new deals closed in Slack — to keep your entire organization up-to-date on why you’re investing in reseller partners.

Frequently Asked Questions About Reseller Commission Plans

When should you pay out
reseller commissions?

Your payout timing will depend on your business. Naturally, partners will prefer if you pay sooner, but it’s important not to jeopardize your operations by trying to pay out too quickly.

You may choose to pay partners as soon as a deal is closed. However, there are risks with this. On the longer end of the spectrum, Salesforce pays its partners 30 days after the end of the quarter, meaning resellers may wait up to four months for payment.

No matter the timeline you set for your payment terms, it’s critical to include this information in your reseller partner agreement so everyone is on the same page.

How long do you pay out SaaS reseller commissions?

With SaaS products, closed deals aren’t one-and-done. Instead, you expect customers to commit to working with you for years. Keeping this in mind, you have to consider how long you’ll continue paying commissions and the commission rate over time.

Typically, paying your resellers commissions for at least the first two years of a contract is a good rule of thumb. However, this will ultimately depend on your business model and if that’s sustainable for you.

You don’t have to pay the same commission for the lifetime of a contract. For example, you can offer a 25% commission the first year, then 15% for subsequent years.

How do VARs differ from resellers when it comes to commissions?

Value-added resellers (VARs) provide additional services to customers along with reselling your solution. Since a VAR does more work to close a deal and retain the customer long-term, it’s worth paying them a more significant percentage.

Grow a Successful Reseller Partner Program

Resellers can be a beneficial arm of your channel partner program. Paying out commissions is critical to rewarding partners for their efforts and incentivizing them to continue supporting your organization. Following the outlined reseller commission best practices, you can build a compensation structure that will influence partners to close new deals.

SPIFF + Incentive Program Tips for Partner Sales — Different types of partners call for varied incentive structures. A SPIFF program is a time-sensitive way to influence sales and other desired partner actions. Discover the nine steps to developing an effective SPIFF program, including defining goals, building a marketing plan, inspiring competition, and more.

Deal Registration Software & Program Best Practices — Deal registration software is critical for tracking partner influence, managing owed commissions, and monitoring the overall success of your partner program. Discover the software and program best practices you need to keep in mind for successful deal registration.

11 Channel Partner Engagement Strategies for 2023 — Keeping your resellers engaged requires more than a strong commission plan. If your channel partner engagement is faltering, consider these 11 strategies, including thoughtful training, establishing incentives, developing a healthy competitive outlook, and more.

Of All Reseller Marketing Strategies, This One Is Most Important: Co-Marketing — Reseller commission plans mean very little if no one generates significant leads. Enter, co-marketing! In this piece, we dive into various tactics for co-marketing with resellers to amplify awareness and strengthen the shared relationship.

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