Building a Channel Sales Program – Setting Commissions

Many people feel that 10% is the magic number for Channel Sales commission.  I don’t know where they came up with this number or how.  My guess would be people are trying to limit the cost of sales as we all know that Channel Sales are more expensive then direct sales. In my view it is an exercise of cutting your nose off to spite your face.  These are deals you would never have found on your own.  It is the definition of found money.  Yes, the margins are slimmer. Get over it!  It is a fact you must accept if you want to have a successful channel program.

Frankly, commission levels are all over the board. So are the success rates of Channel Programs.  Let’s limit this discussion to the most successful programs I have seen. It all starts with a KISS.  Keep It Simple Stupid!  If your Channel Partners need a calculator to figure out what their commission will be, your Channel Sales program will fail. That is rule number 1.  Rule number 2 is refer back to rule number 1.

In todays reseller world 10% is not going to get anyone’s attention. If you are just launching a Channel Sales program and you want to get some attention, I suggest upping the ante.  Start at 18% with an achievable path to 20%. I say this because there are a lot of programs out there at the 10-15% level. I know what you are thinking.  But my offering is better, I am using only top grade gear, I did not cut any corners, we have the best customer support on the planet, etc… You’re right, you have all these things and more.  What you do not have is TOP PRODUCING CHANNEL PARTNERS. And if you try to nickel and dime them you won’t have any. Remember you are just launching your channel program and need to garner attention from the rainmakers. Nothing gets their attention better then gold.

Once you have established your Channel Sales Program and you have a solid reputation for really taking care of your Channel Partners, you can dial back your rate a few points. This will likely be a year or two in the future. Join me next time as we dive even deeper into Channel Sales Programs and discuss training.

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