In this Channelnomics on-demand webinar, Chief Analyst Larry Walsh reframes how vendors should think about partner compensation, shifting the conversation from fixed payments to performance-based rewards and economic alignment.
The notion that vendors “pay” their partners is a persistent mischaracterization of how the channel operates. In truth, partners are not compensated in the traditional sense. Rather, they earn based on performance and contribution to outcomes.
Revenue flows only when partners execute — whether through demand generation, sales closure, or service delivery. In most resale and managed service models, the end customer is the source of payment. Partners earn only when they deliver measurable value. Vendors, in turn, benefit from deferred costs, relying on partners as a variable extension of their sales and delivery capabilities.
Discounts — often misconstrued as compensation — are in fact tools for pricing flexibility. They exist to facilitate transactions, not to ensure profitability. Similarly, incentives such as rebates and SPIFFs are conditional rewards that reflect performance. These are not fixed expenses but rather variable investments that vendors make to encourage desired behaviors and business outcomes.
The misconception frequently arises at the executive level, particularly among financial and sales leadership unfamiliar with channel dynamics. Questions about why partners “cost so much” overlook the economic rationale of the model: Vendors incur partner-related expenses only when there's a result. The alternative — building equivalent sales capacity internally — would be significantly more costly and operationally inflexible.
An effective partner strategy is one that aligns incentives with high-value activities. Deal registration, special pricing, and structured enablement programs support partners in securing new business. Back-end incentives should be outcome-driven, emphasizing growth, expansion, and retention. Transparency in these programs is critical; partners frequently report receiving incentive payments without understanding the basis, which undermines trust and long-term effectiveness.
Furthermore, partners consistently cite enablement — particularly training credits — as a critical component of a successful program. As training requirements increase in complexity and cost, providing resources to offset these investments becomes essential to sustained partner engagement.
Ultimately, partner compensation isn't about guaranteed payment; it's about rewarding meaningful performance. Vendors must design channel programs that balance risk and reward, align with mutual objectives, and drive measurable outcomes.
To explore this topic further, watch the full Channelnomics on-demand webinar replay featuring Chief Analyst Larry Walsh.
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