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Looking for benchmarks on SaaS referral / reseller commission structures

If you are an enterprise-focused SaaS firm do you have referral / reseller arrangements with partners or IT consultants? If so, what compensation arrangements have you agreed to? We sell primarily annual, sometimes multiyear, contracts with annual or quarterly payment terms, and have our own enterprise sales force. We would like to use referral partners to accelerate access to large accounts. For a simple referral, we have proposed 10% of the first year subscription amount for the first sale to a customer. Subsequent expansion and renewals are not compensated. We're also considering whether to engage with full resellers, where the reseller carries the paper and provides first line support, with a backup from us for serious issues. We're just starting to negotiate these arrangements so it's not clear how much interest we'll get. I would appreciate any market intelligence the group can share. Thanks.

Answers

Topic Expert
Donald Koscheka
Title: Principal
Company: Bluecloud Communications
(Principal, Bluecloud Communications) |

We are partner to enterprise focused SAAS providers. Commissions generally follow the heuristic of a large first year payment (15-25%) and then a smaller commission for every year that the account renews (5-10%). This accounts for the fact that the partner may have had to do more investing in the account in year 1.

Anonymous
(Chief Financial Officer) |

Thanks. Are you a reseller -- i.e., buy from the provider, carry the customer paper, deliver first line support, etc. -- or a referral partner?

Erin Palmer
Title: CFO
Company: Leppo Group, Inc
LinkedIn Profile
(CFO, Leppo Group, Inc) |

We are a SaaS company with annual contracts payable annually, quarterly or monthly. We have our own sales team, but we have a few medium sized groups who have been champions of our product, so we have offered a select few of them referral agreements to test how well that works.

We actually use a tier system (1-19 is 15% for year 1; 20-49 is 15% for year 1 plus 10% for renewal year 2; etc). We require the referring party to continue to add a minimum of 10 new sign-ups per year in order to keep the tiers in place. We currently do a monthly reconciliation for payment, but we have a small group right now.

At this point, I can't tell you what impact it's had as we have really just implemented it about a month ago. I can say it has increased our chatter, and attendance at our demo webinars, but we are also coming into our busy season, so it could be coincidental at this point.

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