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The Partner Channel Podcast | Season 2, Episode 16

3 Ways to Structure Partner Incentives

Show Synopsis

Join Tori Barlow, VP of Marketing at Allbound and Daniel Lancioni, Global Senior Director Partnerships at Reveal. Together they talk about incentivizing partners to increase engagement and how partnerships will become the driving force for profitability in the years to come.

Highlights:

  • Why incentivizing the right way is fundamental to having a successful program
  • When you should collaborate with your partners on incentives with getting their buy-in
  • What three categories make up the Reveal ideal of incentives

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The Script

Tori Barlow: Welcome to the Partner Channel podcast, the voice of the Channel. I’m Tori Barlow, VP of Marketing at Allbound. Excited to be here with Daniel Lancioni, Global Senior Director Partnerships at Reveal. Welcome, Daniel. We’re excited to have you.

Daniel Lancioni: I’m so excited to be here.

Tori Barlow: Yeah, you have a lot in your bag. You previously ran EMEA and APAC alliances at Quantum Metric and Braze, where the partner and ecosystem strategy at Braze formed a critical component of their successful IPO last year. And spoiler alert, they’re an Allbound customer. And then before jumping into the SaaS world, Dan ran Walgreens-Boots Alliance is eight figure media spend at Mediacom, a WPP agency owning the partnerships with Facebook and Google. Let me just take a breath there, because that’s a lot. You have a lot going on. And today we’re talking about something really important within the channel. Breaking down incentives or incentivizing partners. And before we get into that, you guys are doing amazing things at reveal. As a marketer, I am obsessed with your marketing and also obsessed with the way you guys are doing partnerships. You also recently announced your series A and just curious, what have you been up to lately and why is your role so important?

Daniel Lancioni: I told you, I think I want you to do every intro for me in the whole world. How do I how do I make that happen as a side thing? We’ll talk after the pod and figure that one out. But yeah, regarding Reveal and my role, I almost kind of don’t know where to start. So what I’m doing now in the business is entirely different.. When I joined Reveal in April, I was running our partner success team and that’s essentially helping our freemium customers adopt and love and advocate our solution. And hopefully we kind of move them into paid plans down the line. And we grew the team really quickly from 3 to 7 at 150% of goal plus in Q2, which was great. And two of my direct reports have now been promoted up into one running partner success in EMEA and one running partner success over in the Americas, which is really, really good. And as we’re growing and growing that email, but as of early July, so just a few weeks back, I’ve now transitioned into the global partnerships role, building partnerships with companies like yourself, which is why we’re here and it’s great to be working with you and I’m super excited about our partnership moving forward. And why my role in partnerships is really, really important to reveal as a business is firstly, we’re a partner tech company.

Daniel Lancioni: We need to eat our own dog food or drink our own champagne, depending on your preference. So as a partner tech company ourselves, we’ve got these incredible partnership leaders in our own business and we need to show our customers and our prospects the way forward with our solution. So we’re using an approach which we call reveal on Reveal. So I’m almost acting like a Reveal customer within Reveal, and building and running all of our partnerships off the back of our platform and testing all of our new features as they get deployed. So I can be our own advocate of our own business. So that’s the first point. The second point and Tori, I know you’re completely agree with me on this, but partnerships data is an absolute goldmine. So sales teams are using a lot of third party tools at the moment to get access to where where are my partners SDKs being stored, and where are my tags, are my tags deployed? But the data is far from perfect and it’s sometimes quite hard to enrich. So my big dream is to get real data into the hands of SDR teams, account executives, marketing teams, product teams and customer success teams.

Daniel Lancioni: But in the platforms that are nearest and dearest to their hearts, I’m not trying to pull them into the Reveal UI all the time, but give them access to that Reveal data in the platforms they love and that they use every single day. And then the third and final thing and again, I’m sure you’re completely on board with me on this one as well, Tori, is getting partnerships as the driver of SaaS sales for the next decade. That’s a real belief that I have in our business. That partnership is going to drive profitability for software companies for the next ten years. And if you look at the recent Chief Sales Officer report by Gartner, it shows that on average a buyer of your solution is only speaking to your seller about 5% of the time. And the rest of the time they’re doing other things and they’re not engaging with your business whatsoever. And I see that as an incredible opportunity that 95% of their other time was not being used talking to your business. You could be engaging your partners through partner marketing, through co-sale, through intel sharing. And there’s so many other approaches. And I think that is really critical for why partnerships is such a key component of our business.

Tori Barlow: Yeah. I think you hit a really good three points in a row. And just to kind of tie it in a bow for our listeners, the way folks should think about Reveal is kind of like in the beginning of a partner life cycle, trying to find partners, figure out who could be a really key component, but also go to market with partners and how to co-sell. And then there’s that phase of enabling your partners, getting them onboarded, and then that final lifecycle of just managing the partner lifecycle. So reveal is constantly being used throughout that partner lifecycle. Would you say so?

Daniel Lancioni: I totally agree. And that’s why I’m such a big believer in sort of the reveal plus Allbound story. It’s a fully collaborative end to end solution. It’s using us at that discovery phase and building out your partnerships and then using platforms like Allbound to really activate and drive those forward. It’s such a synonymous relationship.

Tori Barlow: Daniel I feel like we could talk for hours just about the partner ecosystem, but today we’ll kind of hone in on incentives. And this is something that you have a really good science around how to incentivize partner reps. And I think this is a big piece where there’s not one method to the madness here. You have a really interesting way of looking at it. Can you talk about why it’s such a fundamental piece to the puzzle here?

Daniel Lancioni: I think the main reason incentives for me a massive is as much as we want everyone to promote and evangelize our products for free, and don’t get me wrong you’re going to find people like that that are going to do that and they just love you and they and they want to push your products because of that adoption of your business. The reality is that every single person has their own targets, their own things they’re working on, their own personal ambitions and incentives are really a key part of being able to to support people against those. So remember, like every second that you’re asking of someone’s time, that could be an end customer, it could be a partner. Just recognize that you’re taking their time away from something else. So you need to value that. And I think incentives is a wonderful middle ground to do that. So when you’re thinking about incentives, I want everyone to kind of think about three stakeholders and everything for me works in three. So you wait here we go through things. One, two, three. It’s always my approach, but the first key stakeholder in an incentive structure tends to be the end customer or end prospect. So this is normally where your joint value proposition with your partner really comes to light. It’s your one plus one equals three story, but often it needs to go kind of deeper than just the solution is what does the end buyer actually care about? Do they care about getting a promotion? Do they care about looking good in front of their boss? Do they care about reducing total cost of ownership? Like what is it that they really, really care about? And how does your joint value proposition support that? So there’s no commercials in that incentive, but it’s an incentive in terms of how your partnership helps that end customer and prospect.

Daniel Lancioni: But the next stakeholder is the partner company. So the company that’s helping you break into that prospect or that customer. So if someone in the partner company is referring you to a piece of business, what is that partner getting in return for allowing one of their employees to use their time spending with your business to help you out? Are they getting a lead back in return? Are they getting a slice of your revenues over a period of time that you’re determining? Are they going to put your deal on their paperwork to increase stickiness? Think about all the different components that you’re going to be able to help that partner company. But the third stakeholder, and I’d say this is the most important stakeholder in making incentives work, is what is the incentive to the employee at that partner company.

Daniel Lancioni: And that’s the big one for me. And so many companies miss this one out. They cover the first two off just fine. And they don’t think about that individual. That person helping you out at that part of the company could be an AE, an AM, a customer success manager. It could even be an SDR. It’s whoever is that gatekeeper to that client and that person who has a relationship with the individual that you’re trying to break into to help your deals progress. So you really, really think about how you incentivizing those individuals at your partners. There’s a guy, at Gorgeous, which is a competitor to Zendesk, Jeremy Horowitz, who put out an incredible post a few weeks back where he was talking about Gorgeous would be paying $300 in referral commission to anyone who referred a prospect to them that is currently using Zendesk, their main competitor, and then went on to take a demo. Just a demo. That’s a really cool incentive structure. And I asked a few Gorgeous folks since that incentive went live about how it’s going. And it’s like the floodgates have opened. It just shows like a really good incentive program can help. And if you can incentivize that individual that’s going to really propel your partner program much beyond if you’re just solving for the first two.

Tori Barlow: Yeah. The structure you’re talking about kind of reminds me of a book, I’m not sure if you’ve read it. How to Make Friends and Influence People by Dale Carnegie. And this is not just an internal vendor company setting up an incentive program, probably direction from the CEO or CRO and then putting it out to all partner types, no matter the blueprint when the reality is, to your point, understanding what these partners are seeking, what their goals are, and also what the end customer goals are. So making it a little more malleable and customizable to what they want. Yeah. And then it’s interesting going into your threes again, you have three buckets for incentivizing partner types. Can you kind of walk our audience through this a bit more?

Daniel Lancioni: The reason for my three things, by the way, is like I just find  it’s a simple way to follow. Like, I feel like my brain can only remember about three things. So.

Tori Barlow: Well, we’re up to nine now at this point, so.

Daniel Lancioni: I kind of feel work in multiples. Yeah. So, I mean, my views here are very subjective around like how you incentivize these various different buckets of partners. But the big thing I want to implore everyone is when they’re building out incentives is start speaking to your partners first. Like what do they care about? Like how? What do you need to do to help them? And how can you then assign your incentives to those requirements? And also, I see a lot of companies setting up incentives and rates that are uniform irregardless of the partner type. And that’s not really the right way to position your business. You need to think about like, how am I creating bespoke rates and my particular types of partners? But the first type of partnership that I look at and is can be probably the biggest impact in any business is your cloud partnership. So if you don’t have a cloud partnership yet, go to your CTO or your CIO. Ask them what platform your software is built on. If you’re a software vendor, is it AWS? Is it a Azure? Is it Google? And then start there. And once you find out who your business is running on, then do everything within your power to get on that cloud marketplace where you essentially can be resold by that cloud provider on their paper and be listed to their hundreds of thousands of customers that are leveraging their cloud applications every day. But the incentive structure within cloud businesses is so interesting.

Daniel Lancioni: So for example, like the at the cloud company who might be helping you, they can get massive amounts of quota retirement on any deal that you sell because your business, your company, your application is built on their own services. So every dollar spent on your platform is essentially kind of lining their pockets. And I’ve seen this quota attainment anywhere range from like 30% all the way up to 100% of the ARR that you’re selling. So, for example, if you sell a 4.5 million total contract value deal over a three year period through your cloud marketplace, that could be retiring up to $1.5 million of quota per annum. That’s a pretty powerful story for that. And then the partner manager at these cloud providers, they’re normally getting some sort of spiff or some comp based on the number of co sell motions that they’re driving or the number of deals that are transacted through their marketplace. So cloud partnerships have a really unique and special incentive structure that I think is kind of market leading because of the fact that you’re essentially one of their vendors. And the second bucket for me is the tech partnerships. And these are normally kind of your your OG integration partners and you’ve now graduated them into some sort of go to market motion. And I’ve seen a lot of people trying that same quota attainment model that I was talking about a second ago with cloud,

Daniel Lancioni: but the earning potential is so low compared to that cloud example that I’ve rarely see that quota attainment work so well in a tech to tech relationship. So we take partnerships. I’m a strong believer that it’s trying to get more short term incentives rolling, like that gorgeous example I was talking about earlier, earlier or kind of giving a lead in a direction back or generating some sort of spiff or upfront payment. They tend to be much more effective than something like quota attainment. And then the third bucket, which is agency partnerships, and I won’t beat around the bush on this one, but agencies really, really care about one thing and one thing only. And that services how many how much service revenue can they make off the back of your platform? And I’ve seen all sorts of wacky incentive schemes to help agencies really drive value. But really for me, it’s as simple as kind of giving them services alongside a slice of your platform revenues, because they’re called professional services companies for a reason. And I’ve got a good friend who’s running agency partnerships at B2B tech company, and she puts agency partners in every single one of her deals that’s over $50,000 in revenue. And guess what? Her partner program is absolutely humming and flying. So it’s no surprise to see those sorts of incentives doing really, really well.

Tori Barlow: You talked earlier about getting buy-in, and this is an interesting topic. So collaborating with your partners on incentives, getting their buy-in, how do you go about this? Especially if you’re let’s think of it in two ways: If you’re starting a program from scratch, you have these new partners. And then what if you have several hundreds of partners and you’re restructuring your incentive program, how do you prioritize getting buy-in?

Daniel Lancioni: So in terms of like buy in, just start as early as possible, align with all of your stakeholders, make sure you’re speaking to your partners. Like I also recommend when you’re thinking about your incentive structure from the ground up that you’re leveraging the network around you to find out what’s the norm like, what’s everyone else doing? Make sure you’re not kind of going in with any crazy commission rates, which are nowhere near in line with industry standards and what everyone’s doing. Loads of great places to do this. So lots of different partnership communities, partnership leaders. There’s a really good Salesforce one called GTM guides and then there’s one that I use all the time, which is our own one called The Society, doing the little shameless plug for Reveal in there as well. But what you want to do is once you’ve got those benchmarks of what a normal rate would look like, start speaking to some of those partners that you’re hearing lots and lots about in the field. So maybe your reps are mentioning them or your end customers are talking about them a lot and start talking to them about some incentive ideas that you’re working with. So meet that head of partnerships at your partner. Ask them, “What are your KPIs? What are your team’s KPIs? What are the KPIs of your key stakeholders around you? So your your VP of sales and your ratings and what incentives would motivate you, your team and your stakeholders to really drive this go to market forward?” And then those incentives, when you’ve spoken about them, do they actually align with kind of overall business KPIs? And if you can tie those incentives into a broader business plan, then that’s ultimately where your incentive structure is going to succeed.

Daniel Lancioni: You can’t just put stuff in place and expect it to just fly. You’ve got to tie it into some sort of business value. So if both partner heads can go back to their VP of sales or CROs and say, “This is the amount of pipeline that we’re going to get from this partnership, these are the costs and the incentives that we’re going to put in place. And then here is the ROI of that partnership as a result.” That’s a pretty powerful story. So if anyone’s looking to build out business plans and look at how you put incentive frameworks in place, I highly recommend Matt Bray, the VP of alliances at SAP Technavio. Wrote the book The Partnership Principle, and on page 27, he’s got this amazing methodology called The Lean Canvas. It’s a one pager business plan with all of that stuff incorporated.

Tori Barlow: Matt Bray is brilliant in the industry. All right, let’s see if I can nail him down. Daniel, today we talked about the three ways and how Reveal customers are taking over the ecosystem channel world. We talked about three ways in which to structure your framework for incentives and then the three partner buckets in order to think about maximizing your incentive plan. Thank you to our guests, Daniel, Global Senior Director of Partnerships at Reveal. And thank you to you, the listeners for joining us here at the Partner Channel podcast. If you like what you heard, subscribe to our podcast episodes wherever you like to listen to podcasts.