Our small bootstrapped software startup has benefited tremendously from 2 key reseller partners that were in place before I started. They drive large portions of our revenue and are an excellent technological fit for both parties.
We have been discussing having me focus on expanding to new partners and solidifying this as a key Rev channel.
Since there is no precedent, we are struggling with coming up with a way to measure/ align expectations for this effort and set commission/compensation.
Since partners are not like direct sales, hard to just focus on ARR. it’s obviously much more of an enterprise motion and a relationship that grows over time. There would likely be an account management component where I would be nurturing, training and helping these target partners scale and grow as a reseller.
Trying find out how other Orgs structure their compensation & forecasting with such unknowns.
Here is my rough framework now to incentivize building the right long term relationship that benefits me and the company. Would love to hear if this sounds ridiculous or any feedback on how you have seen something similar structured:
- Compensatory base salary (already happy with what we agreed upon here)
- As soon as I bring on a new partner and they close a deal, a 12 month clock starts
- I am paid 35% of what revenue that new partner sells each quarter for the next 4 quarters
- After the 1st 12 months, that total year 1 revenue is adding up and locked in as that partner's "baseline" revenue. This is then divided by 4 for a quarterly baseline
- In every quarter after that first year, I am compensated 25% on ONLY THE GROWTH over and beyond that quarterly baseline
This way I am incentivized to grow these partner accounts but the company is not footing a giant residual commission check for me. They are only paying me on that growth.
Would love to hear your thoughts
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