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043 - How channel renewals drive sustainable revenue · Partnerships Unraveled

• 0:07
  Welcome back to partnerships unraveled, the podcast where we unravel the mysteries of partnerships and the channel on a weekly basis.
• 0:15
  My name is Rick van de Bosch and I'm the CEO and founder at Channext and I'm here together with Alex Withford VP partners at Channext.
• 0:22
  Alex, how are you doing today?
• 0:23
  I'm doing terrible, Rick, because never know what to answer when you ask how am I doing?
• 0:27
  Because I say the same thing every single time and then Britt who works in our production team has a go at me.
• 0:33
  So sorry Britt, but I'm doing really well, thanks.
• 0:37
  I think it might be time for a different opening question.
• 0:40
  Honestly, it's the most taxing bit of the whole podcast.
• 0:43
  I can talk about the channel for like a 100 hours but if you ask me how I'm doing, I'm so British, the only thing I want to say is I'm doing well, thanks.
• 0:51
  How are you?
• 0:52
  So I'm doing well, thanks Rick, how are you?
• 0:54
  Yeah, I'm doing great.
• 0:56
  I think with this opportunity I'm going to ask a question to our listeners.
• 1:01
  Like if you think about a certain question that we should replace the current opening question with.
• 1:08
  Do you actually care how we're doing?
• 1:09
  If not, we can just skip this forever.
• 1:11
  So comment below, I suppose.
• 1:12
  Dive right into the challenge of the day.
• 1:16
  Yeah, there you go.
• 1:16
  Excellent.
• 1:18
  Well let's do that.
• 1:21
  What the last I was waiting for your laugh to enter and then I was.
• 1:28
  Also this is the most natural this is the most natural we've ever been because it's a genuine annoyance of mine that I'd never know what to answer.
• 1:37
  Anyway, go on.
• 1:37
  Sorry.
• 1:38
  We're about to talk about renewals, everyone.
• 1:40
  Renewals are really important.
• 1:42
  So let's dive into the topic of today renewals because the last three episodes we've been starting the new series self sustainable partner revenue.
• 1:51
  So how do you get your partners to find close, renew and upsell opportunities on their own and really get skill into your channel?
• 1:59
  We've already touched upon the concept as a whole in the first episode we've touched upon finding opportunities, we've touched upon closing opportunities and today we are going to look at renewing opportunities and I think opening question of the day, what are the actual challenges of renewing customers and end users within the channel with partners?
• 2:21
  Yeah, I think just before we touch on what's challenging, I think why is it important just for the uninitiated?
• 2:27
  Renewals are the reason that SaaS businesses are so highly valued because one of the key metrics that they track is NRS and net revenue retention and you need to see growth.
• 2:37
  What that basically means is even if you acquire no new customers, that business should still grow over time because it's upselling and renewing so much.
• 2:47
  And that's so consistently important because if you've got that leaky bucket and suddenly you have to keep selling even more deals just to stay flat, that's really where investors in the market will really start to look negatively at a business.
• 3:02
  So net revenue retention is highly important.
• 3:04
  Renewals are a key element of that being so important.
• 3:08
  But the challenges is that renewals done within the channel are incredibly difficult.
• 3:13
  In fact, it's one of the major down points of the channel at the moment is they're not particularly well set up for renewals today.
• 3:21
  And what we see is a much lower renewal rate in the channel versus direct.
• 3:27
  Yeah, I think indeed that's in general, what we hear everywhere is that it's so much lower.
• 3:31
  Like it's not a couple of percentages, but it's way off.
• 3:35
  But on the other hand, you also see examples like HubSpot where the renewals are way higher when partners are involved.
• 3:41
  So what do you think?
• 3:41
  Is that difference or why are some companies really struggling and others really thriving?
• 3:46
  Yeah, there's a really simple reason it's one type of business has actually built a renewal model and the other type of businesses haven't thought about it, so they haven't built an end to end partner program design.
• 3:56
  And so partners don't understand why renewals are important, what's in it for them, and how to do them at scale.
• 4:02
  And if you do those things and the partners are incentivized correctly, then they will absolutely do it.
• 4:07
  It's much more difficult to acquire net new customers than it is to renew those.
• 4:11
  And so if you build your program effectively educating partners on how to do it and what's really in it for them monetarily and why retention is so important, then partners will absolutely do it because it's in their best interest.
• 4:23
  I just feel so many vendors miss out because they don't tie the renewal into the best interest of the partner.
• 4:30
  I think maybe to touch upon HubSpot a little bit, it's always my favorite.
• 4:34
  Your favorite company, it's your version of Microsoft for me, I get it.
• 4:38
  What I see there is what they've done excellent is that the services of the partners are so well integrated in their product.
• 4:45
  So they know the more the partner sells of their services and the more value they bring with those services, the more value they will get out of HubSpot as well.
• 4:53
  And I think that's such an interesting way of thinking about it in your renewal process, like the better, you can actually accelerate those services within your customer base with your partners, and your partners get more excited about it.
• 5:04
  The end user gets more value, and that will almost automatically drive that retention rhythm.
• 5:10
  Because the partner wants to continue, the end user wants to continue, and there's, of course, a lot of program to build around it.
• 5:15
  But I just wanted to touch upon that for a second because if you really figure out how the services of your partners drive retention for them and for you, that's a very interesting flywheel you want to get to.
• 5:26
  Yeah, it's services, but what I love there, there's two elements there that I think we've got to touch on.
• 5:31
  One, HubSpot is an incredibly sticky product, right?
• 5:34
  They're not interested in selling a solution to a customer for a year.
• 5:38
  They're building a ten year strategy with product like growth and upsells and services all tied in, which is an amazingly sticky solution and it's absolutely the ambition of every product out there, right?
• 5:49
  No one's interested in selling a product for a year.
• 5:51
  And how do we drive that continual renewal motion?
• 5:54
  How do we continue to deepen our value within customers?
• 5:57
  So that is the sort of customer philosophy.
• 6:00
  But the partner philosophy is the partner intrinsically understands the benefit for themselves.
• 6:04
  And so those two things tie together means that hang on, if I sell this product or this solution, I'm going to sell it for ten years because we're going to renew every year.
• 6:12
  That means my target next year is a little bit smaller because I know that this deal is coming in.
• 6:16
  And then the second is how can I continue to upsell my own services or wrap around solutions?
• 6:21
  How do I have a continual mechanism to drive value into that end user?
• 6:25
  You can absolutely understand why that proposition is wildly different to a box shift that we're going to sell via a partner.
• 6:31
  And so suddenly you can see, okay, the partner has really, really bought into this strategy.
• 6:36
  And we're not talking about just closing deals, which is typically what partner programs talk about.
• 6:41
  We're talking about the lifecycle of that customer and how long that lifecycle should be.
• 6:45
  So we're really talking with the end goal in mind, which is not to close a deal, it's to renew a customer ten years in a row.
• 6:51
  And what's also interesting what they did was they made it mandatory.
• 6:54
  So if you buy HubSpot's, marketing Hub, the marketing automation piece, you have to have it implemented by one of their partners.
• 7:01
  And it's always on the quote that you receive as a company, we had the same and therefore immediately a relationship starts there.
• 7:08
  Even though if they sell directly, they still tag along a partner because they know the retention is so much higher.
• 7:14
  Yeah, it's a partner first strategy, right, which is absolutely the mechanism, what HubSpot have done so brilliantly.
• 7:23
  It's a partner first strategy, which is what HubSpot have done so brilliantly.
• 7:27
  Even though they've got a direct go to market motion, they intrinsically understand the value that the partner brings in terms of retention.
• 7:35
  And so they have forced that mechanism to work so well.
• 7:38
  And I love that because they've understood the end user need and they've understood the partner requirement and they've tied those two businesses together and they've made it mandatory, which is genius because they've gone, hang on a second, we sell direct but we know we retain or there's a minimized risk of churn when a partner is introduced.
• 7:57
  Well, let's just glue those elements together, the partners getting their services and value add.
• 8:01
  They love working with HubSpot because they're getting lots of free opportunities tied to them.
• 8:05
  HubSpot wins, partner wins, customer wins.
• 8:07
  And as we've spoken about time and time again on this channel is if you've got that triple win, you've got a scalable motion that will continue to grow.
• 8:15
  And they've just built that triple win.
• 8:16
  So a great, great example.
• 8:18
  Yeah, I think that's the ultimate situation that we're all building towards.
• 8:22
  But of course, we also see a lot of vendors and a lot of companies who are building their partner program, where unfortunately that is not the case yet.
• 8:30
  What are some of the challenges or examples of what you see going wrong in such a channel environment?
• 8:35
  Yeah, they should just give up.
• 8:35
  No, I'm joking.
• 8:37
  No, what we see so consistently is that they haven't got a clear operational mechanism to renew.
• 8:45
  That's the biggest challenge that I see.
• 8:47
  So, for example, so many SaaS services out there are automatic renewal.
• 8:53
  Well, automatic renewal doesn't exist via partners because partners need to place POS.
• 8:57
  So no one has done the operational due diligence of how do we connect an end user via a partner, via a distributor into our platform.
• 9:05
  And how does that automatic renewal work?
• 9:07
  Oh, it doesn't.
• 9:08
  Okay, well then we need a manual PO renewal routing mechanism designed.
• 9:14
  Okay.
• 9:14
  Or we need to implement an automatic PO transfer through the end user all the way up the channel through to the vendor.
• 9:21
  If you don't have those basic operational duties, what happens?
• 9:25
  Churn happens, right.
• 9:26
  Most of why renewals happen, especially in the SME space, is that they're automatic.
• 9:31
  Right?
• 9:31
  There's no mandatory action.
• 9:33
  But in the enterprise, that absolutely isn't the case.
• 9:36
  You're generating a renewal plan that has to be executed by the partner.
• 9:41
  If you've not really ingrained your strategy to drive for a renewal, that's where that churn happens.
• 9:45
  So a bit like closing a customer.
• 9:47
  You need a closing plan.
• 9:48
  A renewal plan needs to be designed where we intrinsically understand what the vendor has to do, what the disti has to do, what the partner has to do, what the end user has to do.
• 9:56
  That's time bound and measured, and then we know exactly who should be doing what.
• 10:01
  When and if anything fails, it's immediately escalated.
• 10:06
  I think within such a plan, what is really a crucial piece to start with is what are the expectation of the customers?
• 10:12
  And I think that's where actually the closing of the opportunity is a very important piece of the renewal as well, because if you've gone wrong there or you've over promised, then you're set up for failure already.
• 10:23
  And I think therefore it's crucial also to get a very good sales to CS handover within the partner.
• 10:29
  So how do you make sure that the sales team sells the right things, but then the implementation team has the right information?
• 10:36
  Do you have some best practices there or things you've seen done well or maybe less well.
• 10:40
  Yeah, 100%.
• 10:42
  I feel that I can typically ask an AE before a deal is closed if a churn is likely.
• 10:49
  And that gives me a really good indication have the proper sales practices being followed.
• 10:54
  And typically that's because we don't have the right documentation and process designed through the closure process, which sets up the criteria for renewal.
• 11:02
  Why have they bought the proposition?
• 11:04
  What are they expected to see?
• 11:05
  What's the expected ROI.
• 11:07
  How and when are we measuring, proving and showing that back which triggers our renewal process that's not implemented.
• 11:13
  You are basically playing fast and loose and it's guesswork whether the renewal will happen.
• 11:18
  Whereas if they're expected to see 10% growth or 5% reduction in cost or whatever the metric is as to why they've bought the solution and then you show and prove that through the process, then you're fairly confident it will be renewed as long as the renewal criteria is in place.
• 11:34
  So the first thing I would ask any customer success process, what's the criteria for renewal?
• 11:41
  How and when are we measuring that?
• 11:43
  And are they bought into the proof and the analysis?
• 11:46
  If those things are yes yes yes.
• 11:46
  Then great.
• 11:48
  We've just got to ensure that when we deliver the product, that value is derived, and if it's not, we know it's high risk of churn.
• 11:57
  And I think therefore, indeed, really what you learn in the renewal process is also really tying that back into your sales process.
• 12:03
  Because indeed, if you find out that there are certain levers that actually help the renewal or things that have been promised that actually have the opposite effect, I think that's what you want to know early on.
• 12:14
  So within your sales process, you can very clearly highlight to your partners, these are the five things you need to know about this end user before you close the deal, for example.
• 12:23
  And if you know that, then we know that we can help you become more successful in the renewal and make sure that the partner and the end user actually get into that continuous renewal motion.
• 12:33
  Yeah, we were actually in a meeting the other day where we found out a customer success strategy from Slack, which I thought was an excellent one.
• 12:40
  Slack basically have really good data to understand that once an end user sends 2000 Slack messages internally, there's like a very, very low probability that they churn.
• 12:52
  So they actually embedded that into the sales process so that the salesperson does a proof of concept and they send 2000 Slack messages before they've even signed the final agreement.
• 13:03
  That means that before they've even signed, they're at a really low risk of churn because the product's been so highly adopted.
• 13:09
  That clever data driven insights into what measures churn is what you then want to enable your partnerships.
• 13:16
  Right?
• 13:16
  So if I'm building a partnerships team at Slack I embed the same processes into my partners to incentivize them, to drive that behavior into their end users so that they're setting up proof of concepts, they're driving adoption.
• 13:28
  That means that their end users will send those 2000 messages and they will benefit from that reduction in churn as well.
• 13:34
  And so suddenly you're really building your sales plan not about closing deals, but about retention because that's going to give you that longevity.
• 13:43
  That's beneficial for the end user because they don't have to keep swapping in and out of technology, but it's beneficial for the partners because they're going to see that renewal every year.
• 13:51
  And it's beneficial for the vendor because we keep our NRR really high.
• 13:55
  It's an interesting point we touch upon here, I think.
• 13:59
  How long or like at what stage should a salesperson really hand over a certain account?
• 14:05
  Or are they involved for a longer period of time within that partner space?
• 14:10
  Have we some examples maybe there like what do we see as in best practice?
• 14:15
  Because I think that's indeed an interesting thing.
• 14:17
  Like if your salesperson is involved longer throughout the sales cycle there but also implementation, then maybe there's a bit less time on closing new opportunities.
• 14:26
  But it could have maybe a beneficial thing towards renewal and upsell eventually.
• 14:31
  Yeah, the exact answer is the AE responsible for closing the deal should be involved as long as the AE is needed.
• 14:38
  And so as long as the AE is needed is a moving timescale depending on complexity and value of the customer.
• 14:44
  So, for example, most enterprise organizations, the AE remains the owner of that account even once they've been a customer for three, five years.
• 14:53
  Right.
• 14:53
  There's still always that contact point and that AE is paid on the upsell or negatively on the downsell of that deal.
• 15:01
  Right.
• 15:02
  They have to sell more stuff if that customer downsells.
• 15:05
  And so what you suddenly see is like oh, that AE is responsible for the relationship at all times and a CSM is there to help drive adoption and completion and measurement of metrics.
• 15:15
  Excellent.
• 15:15
  But the AE is always that spearhead that is less required at the SME level.
• 15:21
  And so what I would be doing again with your partner and your partner program is designing the gates based on data to understand hang on, when should we pull an AE out?
• 15:31
  Yes, the ideal solution AE closes a deal is onto the next deal, is onto the next deal, is onto the next deal.
• 15:36
  But you can only do that if there's 0% chance or very, very low chance of churn and of that customer of having that leaky bucket through your partner journey.
• 15:46
  So instead tie the AE in as long as there is value derived there.
• 15:51
  And for the enterprise deals, that value is typically consistent.
• 15:55
  Yeah.
• 15:55
  So for enterprise, you might maybe even say like the AE never leaves because there's so much upsell opportunities, so many new business units regions, et cetera, to sell into, but indeed, for a bit, as more small, medium enterprise customers, it might be a quicker handover.
• 16:12
  And there's really a separate function as well in terms of implementation.
• 16:16
  The implementation team really takes it from there, like as soon as the sales to CS handover has happened.
• 16:21
  Yeah, what I've really heard is an AE should be involved, especially in the Enterprise, until they reach maturity.
• 16:28
  And typically when they're maturity, they're so high value, you don't want to risk any level of churn.
• 16:33
  So you keep the AE in because there's always new product development, there's always new ways to monetize those large accounts, and they almost never reach total maturity.
• 16:42
  And if they do well, why would you risk that in any way?
• 16:45
  Keep them landed, keep them captured, keep them there, and keep paying the AE on that.
• 16:49
  But yeah, ideally you want your AES capturing as much new business as possible.
• 16:54
  And what we typically see is the requirements for SME and mid market are less stringent than Enterprise, and then you can have a much more macro and automated approach and that's what your partners are there for.
• 17:05
  I think maybe to summarize that a little bit, if your AE is there further down the journey after closing as well, then obviously there's a little less concerns around handover because it's the same person who's still doing a lot of that contact with the customer.
• 17:19
  But still, even if there's no handover, it's crucial to have very clear expectations for your partners.
• 17:24
  But also internally, what do we need to know about a customer before we close them?
• 17:28
  Because the better you have that in place, the higher the chances that you will actually achieve the sales promise that you did and therefore have a good opportunity towards renewal, maybe.
• 17:38
  I think a thing that we touch upon a lot also with our customer success team is what they always say in customer success, is that the renewal is one already in the onboarding phase of a customer.
• 17:47
  So there you really set the expectations, the pace of the partnership.
• 17:51
  There you set the plan, so to say, or the plan is already there, but you execute on the plan immediately.
• 17:56
  Why do you think that's so important in renewal, especially when you're in a channel environment?
• 18:01
  Yeah, I think it's almost as basic as first impressions matter.
• 18:05
  Right.
• 18:06
  I think when you're closing the deal, you're typically speaking to a very select group of people within your customer and then as you close and then implement and onboard the customer, you're speaking to a much wider set.
• 18:19
  And if those first impressions for the wider set is terrible, you're basically doomed from the outset.
• 18:25
  Whereas if the first impressions and the plan and it's all very well thought out and it's very detailed and we understand exactly what we're doing, well, it's probably going to work then, right?
• 18:34
  Because you've built the right level of Thor thought into the success of your solution into the customer.
• 18:40
  And people very much resonate with having the detail and the confidence in what you're trying to deliver.
• 18:45
  If that's poorly executed, I can basically tell you within six weeks whether you're going to churn.
• 18:50
  And it's so much work to recapture that customer once that bad first impression has been made.
• 18:57
  Like, it takes so much work, it's almost worth churning them out and just getting a new customer and doing it properly from the outset.
• 19:03
  It's so painful.
• 19:05
  So what I would say is skip all the pain and just get it right the first time.
• 19:09
  It's better to grow slower and not churn, not have that leaky bucket, but really put the right level of detail and the right level of thought.
• 19:17
  Making sure your partners understand what the expectation is, making sure the end users understand who's doing what and how you're going to help them.
• 19:24
  Really get the first six weeks of that contract done very, very well.
• 19:28
  Have an outlined plan that you then follow consistently because then you are going to set yourself up for success.
• 19:33
  I think there's also an education thing there towards your partners, like what we call it in sales, multithreading.
• 19:38
  So making sure that you get networked into a lot of stakeholders within your account together with the partner.
• 19:44
  And that's also something you should really focus on when your partner starts onboarding and when they start bringing value to the account.
• 19:51
  What stakeholders do we need exactly towards that renewal and where do we need to prove what ROI to?
• 19:57
  And the better you have those personas in place and you can guide your partners to networking into those stakeholders, the higher the likability.
• 20:04
  And I think the onboarding phase is the ultimate phase to do so, because that's when you tie together all your customer success and implementation people from your partner with the people from the end user.
• 20:15
  Yeah, we've obviously spoken.
• 20:16
  I think we even mentioned it in the last episode.
• 20:18
  Don't just teach them what to sell, but how to sell well.
• 20:21
  Don't just teach them what to renew, but how to renew.
• 20:24
  Right.
• 20:24
  Give them a renewal plan.
• 20:26
  Give them an onboarding plan that starts at the beginning of the contract, not six months out of the renewal, but day one of that contract.
• 20:33
  Because, like you say, if you cock up the first six weeks, I could basically guarantee you that either one of two things will happen.
• 20:40
  The customer will churn, or you are going to have to put so many hours into ensuring that they don't churn that could have been spent elsewhere, which is bad partners management and bad end user management.
• 20:53
  Something to desperately avoid.
• 20:55
  What's the best way to track progress in the onboarding phase?
• 20:58
  Like, when you're working on multiple endusers with a partner, for example?
• 21:02
  Yeah, the same way you would track anything, right?
• 21:04
  Ideally using technology and automation.
• 21:06
  But what are the gates that you need to see were those gates fulfilled in the right time to the right quality?
• 21:12
  And that should be data influence.
• 21:12
  Right.
• 21:13
  If you know, like the Slack example, they've sent 2000 Slack messages, that means they've done well.
• 21:19
  There's a load of leading indicators that runs to that.
• 21:23
  Has it been adopted properly?
• 21:24
  Has the training been done?
• 21:25
  Has the why messaging been drilled into the business about why this product and solution is going to help them drive forward?
• 21:31
  All of that needs to be embedded into an onboarding plan and if we are not hitting the gates that it's flagged immediately.
• 21:38
  So either the partner can spend more attention or even the vendor getting involved to ensure the right usage.
• 21:44
  Yeah, I think if you look at the customer journey, the onboarding phase typically ends after first value.
• 21:50
  So did the end user really get the first value out of the product?
• 21:54
  And I think the Slack example is excellent.
• 21:56
  When they have 2000 plus they have their first value and enough value that it's sticky and therefore I need looking at.
• 22:02
  Okay, but how do we get them there?
• 22:04
  So, if you have a cybersecurity product and you have the same, like there's ten threats that you have identified, that's the first value that you give to a customer.
• 22:13
  What steps do you together with your partner take to show that to the end user?
• 22:18
  Because if you can already show that first value in the onboarding, the excitement is immediately there.
• 22:22
  Yeah, and what I love about that is you can imagine right there's a whole load of work into getting a customer to send 2000 messages.
• 22:30
  And how much work do you need to do after that?
• 22:32
  Well, not very much like they're bought in.
• 22:34
  They understand how to use the platform.
• 22:36
  They're using the platform, it's providing value and then it sort of just runs itself.
• 22:40
  That's why a bit like generating a renewal is typically done in the first six weeks in that onboarding.
• 22:46
  Yes, there's a load of work to make sure it's done, but then it's done and we can move on to the next thing.
• 22:52
  And so I would be looking especially if it's high enterprise, what is your onboarding process?
• 22:56
  Who is responsible for that?
• 22:58
  Who is accountable with that?
• 22:59
  Who is reporting on that in all of your customers?
• 23:01
  It's why enterprise organizations pay so much money for excellent CSMS, because they drive renewal.
• 23:09
  And we'll touch on the next episode how they drive upsell as well.
• 23:12
  But that is so critical to being done and you've got to make sure the data and the measurement criteria set out very, very clearly and you've got that escalation method when you need to.
• 23:23
  Yeah, that one is crucial indeed.
• 23:25
  I think also around renewals, one of the things that always amazes me is everything around like incentives.
• 23:31
  So how are we incentivizing our partners for renewals?
• 23:34
  Because I think because the incentives for new business is so much higher automatically.
• 23:39
  That's my assumption at least the attention redirects more towards that new business.
• 23:44
  What do you see there and what do you think we should do about that?
• 23:47
  Yeah, this will be a really well received message to all the partners out there.
• 23:51
  If you only pay incentives on new deals, do not expect the partner to do anything and in fact you might even expect them to sell against you.
• 24:00
  Because if I only get paid on bringing a new customer in, well year two, they're also my customer.
• 24:06
  And if I'm not receiving any impact, no incentive, no revenue, no margin for making that deal happen, I'm probably going to try and switch sell it at that point.
• 24:14
  Right, because they're my customer too.
• 24:16
  In fact, they've probably been my customer longer than they've been yours.
• 24:20
  So first off, make sure the partner is correctly incentivized for renewals.
• 24:25
  And the second off, you may even add an extra incentive in there for renewal because it is so important if the partner is doing most of the work for that renewal.
• 24:36
  And that means you can pivot your high touch guys into closing new deals.
• 24:40
  Great, then double incentivize on renewals.
• 24:42
  But channel programs that reward new deals over renewals to me have it backwards because us in SaaS, we know this renewals are actually more important than new customers because that NRR number is critical to long term growth.
• 24:58
  And I think if you approach it like, let's say, worst case scenario in an organization, the leadership team says, no, we don't have any margin for renewals for partners, then almost as a partner person would say, okay, then the partners should not own the renewals because if they get zero reward for it, then there won't be the right actions against it.
• 25:16
  So then we need a referral model where the partner only brings them in and we do everything for the rest ourselves.
• 25:23
  I think if you don't have that and indeed there is more bandwidth for it, then you really need to balance that.
• 25:29
  If there's a resell model, what does a partners get for new business?
• 25:32
  What do they get for renewals?
• 25:33
  Obviously it can't be exactly the same.
• 25:35
  That's the same as it works like in sales and renewals as well in a direct model.
• 25:40
  But you really need to have strong incentives for your partners.
• 25:43
  Like the better they are at renewals the better it is.
• 25:45
  Yeah, or you do what HubSpot do, right?
• 25:47
  Which is they're not paying the partners on deals that are referred in by HubSpot that HubSpot sells directly but they're such intrinsic value to the partner in terms of services, solution design, implementation, wraparound that they can deliver that partners are heavily incentivized to ensure HubSpot stays ingrained into the end users.
• 26:07
  And that's why it's so critical for long term success.
• 26:10
  But what HubSpot have done, they've built the value proposition so tightly into the partner that even if the partner is not.
• 26:17
  Directly.
• 26:17
  Monetizing HubSpot All the subsidiary monetization that's happening is so important and valuable to them.
• 26:24
  If an end user goes, oh, should we move away from HubSpot?
• 26:27
  The answer will be no, please don't move away.
• 26:29
  It's a brilliant product and here's how we can help you.
• 26:31
  And they are so tightly involved into ensuring that the end user has maximal value there.
• 26:36
  So you don't necessarily need to monetize it, but you do need the incentive to be there, even if it's not directly your incentive.
• 26:43
  Yeah, that's correct.
• 26:44
  I think with HubSpot they had infinite period of time on there, actually the percentage that the partner was getting for sourcing an opportunity.
• 26:53
  But now in it, half a year ago or so, I read an announcement that they want to change it to like three to four years.
• 26:59
  But immediately there was like a lot of hassle within the channel.
• 27:02
  And I think that's really the balance you really need to figure out.
• 27:05
  You need to be able to explain it to a partner.
• 27:07
  If it's really the partner who does everything in terms of renewals, in terms of give them the same percentage that they would get every year because they are handling it completely.
• 27:16
  There you go.
• 27:17
  If there's a certain amount of work you need to do, explain that to the partner.
• 27:21
  Explain them why it can't be forever.
• 27:24
  And that's crucial there because I fully agree with what you said a couple of minutes ago.
• 27:29
  If you don't do it, then you incentivize the wrong behavior.
• 27:32
  Because if it's their customer, why won't they switch sell to another vendor?
• 27:35
  Because then they get the new business reward again.
• 27:37
  Yeah.
• 27:37
  And you'd be twice as sure.
• 27:39
  Right.
• 27:39
  HubSpot will be or salesforce will be double incentivizing partners to switch sell out HubSpot.
• 27:44
  Right.
• 27:44
  People are switched on to the competition that is in the channel and they very much understand how that should work.
• 27:52
  And so whenever you change program rules, there's always going to be some level of uproar.
• 27:58
  Right.
• 27:58
  People are always going to be kicked off because people get very used to the status quo very, very quickly.
• 28:05
  If this is what I've always been used to and you make it worse, I'm going to feel very aggrieved.
• 28:10
  However, like you say, if you've got the right information no, these are the exact criteria as to why it would be worse.
• 28:16
  And if you're doing this extra value, it won't be that way.
• 28:19
  Suddenly partners can very much understand, okay, if I'm providing value, I am being rewarded for my value.
• 28:24
  But like you say, if a partner feels they're providing value and they're not being rewarded, you will in fact incentivize the exact opposite behavior to what you.
• 28:32
  Want to see 100%.
• 28:34
  I think there's a good way to close off this episode today around renewals, we've touched upon the sales promise, how important it is to get the right sales promise in to the end user.
• 28:44
  Because otherwise you're set up for failure.
• 28:46
  We've touched upon how important it is to start early.
• 28:48
  Like the renewals are one in the onboarding, so make sure you have a very good onboarding plan.
• 28:53
  How do you get your customers to first value?
• 28:55
  And very important, get the right stakeholders to feel that first value because they are responsible eventually for making the decision towards a renewal.
• 29:03
  And indeed, also how important it is to incentivize the right behavior.
• 29:07
  Because only with the right incentives, you will actually drive the behavior that you want with good renewals, good revenue retention, and therefore very strong growth within your company.
• 29:17
  Thanks again for sharing today, Alex.
• 29:19
  Thank you to our listeners for listening.
• 29:21
  Next week we're going to touch upon the upsell and hope to see you there.