Howdy Partners #39: Incentivization: Business and Employee Needs

Will and Tom discuss incentivization structures. They weigh different paths, discussing how to meet the monetary needs of the business and the monetary and emotional needs of employees.

They discuss how to figure out which structure best fits your needs, highlighting different forms of gamification, discussing how to uncover key micro-actions, product certification methods, and more.

Subscribe & Listen On:

Full Transcript:

Tom Burgess 0:04
Howdy partners, welcome back, much like last week where we'll and I debated actually remember the topic of this point. But we had a fun kind of back and forth on, you know, one of us taking a hard stance on a topic versus the other person. And I feel like it was really fun to do. So I think we're going to bring that back. So today, that topic is going to be rewarding partners. And stemming from Do you Do you drive your rewards based on hard cash commissions? Right, so they refer a customer you get Commission's versus more of like the incentive, incentivizing? You know, can you build kind of like a game around it gamifying. And so let's start there will, you're gonna take the stance on more of like the incentive side in that road. But let's talk about the first point, which is hard cash. That is really what businesses care about. So in my mind, you know, being able to build a program with one of the main benefits being commissions off of referred customers, is really kind of easy to do, like from like a sheer, like, program. Journey standpoint, it's just easy to add, like, 20% commission on any customers so and to some degree, you know, depending on what your product actually cost, that that commission can actually be a substantial chunk change. I know you and I've talked, commissions, not is not necessarily the driving factor behind a partner wanting to partner with you. I in fact, I think it's almost the reverse, like most of the time that that's seen is kind of that mailbox, money side. But for that point, why do you think why do you think? Or how do you think incentivizing or gamifying I guess like beats out hard commissions just from like a visible like physical thing.

Will Taylor 1:58
The the reason that I think businesses do like the hard Commission's is because it's, it's clear, they they know what's coming in, they have some form of expectation, they can, you know, maybe plan for it a bit more. And we know that, you know, if it's a tech to tech partnership, they probably care a little bit less about the Commission's and more about the, you know, the leads that they can get, but if we're thinking about, you know, affiliates, affiliates care, mostly about the Commission's and more transactional elements, and they are going to treat it like, How can I drive more leads, and then make X amount of conversion based on the conversion rate, and so on, and so forth. So it is simple and straightforward. However, I think the the major challenge is, and this I would say is, kind of across a business is, it may be good for the business, and incentivizes the business, but it doesn't incentivize the individuals, because the individuals care about more than just the dollars, for the most part, if they are incentivized through, you know, a gift that they can receive that they either really want themselves, or, you know, if there's this opportunity to win air pods, and they want to give it to their kids or read gift, something, whatever it is, there's this additional sentimental value, and there's more of a meaningful value to it. And that has additional impacts that a business cannot directly track. And so there's basically this dissonance between a business wants to track it, and then they can operationalize it put a process around it. But that doesn't always actually drive behavior. And the things that do drive behavior, they are harder to track. And I think it kind of breaks down when it gets into, you know, how can we manage this like a funnel, and treat it like a business piece? So I think that may be the main difference between like, what actually motivates the business and the people involved? Yeah, and

Tom Burgess 4:13
you and I both talked that, you know, revenue, from a partner standpoint, I mean, revenue drives business, it drives business for every business. That's why businesses are in business, talk about that tongue twister, but I think the most important thing to look at here is that it this is, this is going to differ product to product, you know, if if you're selling $10,000 pieces of software, and you're giving 20% Commission to partners, that is that is a substantial amount of money that you know, deal to deal could be important so versus you know, like lower dollar, lower dollar SaaS products. It's going to be a drop in the bucket, but I think more importantly, the reason why I'm I'm For the hard Commission's as at least a part of your benefits package, keep in mind, I'm not saying this is the entirety is it's just it's, it's it's fairly standard across across partnerships, as is now and I say that, you know, with some asterisks next to it, but it's been done before, and it's not hard to operate. I think one of the things that is like some of the blind spots that you could face with incentivizing is that, you know, from an operation standpoint, of course, there's tech out there like Alice and etc, that, you know, allow you to kind of like build this gamifying process where like, you know, every five qualified leads you bring in here is a piece of swag, or, you know, 500 leads, here's your air pods, but you still need to invest in tech to really make it operationally sound. So I, I think, to me, it scared it. It scares me to think about how many people hours may be spent to operate the gamifying side. But with that said, I still understand where you're going with it. Now, as we kind of progress along, I want to talk about the long term effects of why I believe commission's work towards a partner companies advantage, which is, if you think on this continuum, where you know, let's say your your partners are making 20% Commission's on every deal that comes across the line in perpetuity. So I think there's a value to be placed on, you know, trying to help activate your partners to be that CX role, right. So you're not throwing CX reps in partner for customers, because your partner is there. And, and I guess, in the sense of like a channel or agency partner, they're doing a lot of the same things. So my point is, as you think about you know, your customer, churn rates and customer, like your customer LTV across the board, by incentivizing or buying by driving commissions in perpetuity, you know, if that customer churns that that commission is not there. So I think there's some emphasis on, you know, you're building a lot of urgency, or I guess, like a sense of purpose or responsibility on the partner in by saying, listen, we're gonna give you 20% perpetuity, but that means like, we're expecting you to help manage that customer to be like the experts on the ground to some degree, and help us just like, bring value. How long are they gonna stay with us, and that that, to me means, you know, that that places emphasis on commissions being commissions having more byproducts, or more by factors around like being effective. And in what you're talking about here is now a partner has buying responsibility across the board, they're not just going to sell a product, and then kind of stand back. We know those partners. And honestly, that's where like the affiliate model comes in, which is, hey, maybe you get commission on the first year, nothing else. But to that matter. If you think down the road, what you're actually doing, too, is saving a lot of people hours by saying no, we don't need the X reps to come in and work with, you know, partner refer customers, or maybe we do but like for the most part, if you are activating your partners enough, then you're you're stickiness and long term effects of, of having commissions as a benefit is really powerful.

Will Taylor 8:24
What is important there is the identification of whether or not they're actually taking action on the account. And I know that that's something that we even, you know, back when we were working together, we had, I wouldn't say a lot of trouble around it. But I would say it was something that was a big topic of discussion of, you know, how do we know it's this agency versus this agency that's now working on this account? How do we make sure that we validate that, that I think is where incentives can come in where, you know, if you are able to incentivize, let's say, the agency logging in for the partner, or rather ROG logging in for the customer into the account? So are you actually managing the instance? You know, are you actually communicating with them and with us, and like this same thread. That's where these micro incentives can not only drive that behavior by saying, hey, over time, the more interactions that you have, the better because you'll then have this log of all these points that you can redeem. But then also, it'll give data for the partner team to say, Well, yeah, there's this track record of it. And we've been incentivizing it so that they do it more so that they are actually managing the client as well. And so I think the that's kind of where the the hard Commission's break down again, going back to what drives the behavior. Because if I sign on a customer of yours, and I get 20%, in perpetuity, and there's this assumption maybe contractually, or what have you that I'm going to continue to service the account in some form or, you know, influence the the account. There's no incentive for me to do that, you know, there is the incentive, oh, hey, you'll get your 20% taken away. But that's like a negative incentive. There isn't this ongoing behavior incentive that's going on? And so that's where I would say, once you can truly understand what is driving the behavior that you want, and properly incentivizing for that, that's when you can start to move away from the hard commissions. Now. I think one of the challenges with incentives and you know, gamification of activities, is, what do I gamify? What do I how much do I incent? What does that eventually lead to? You know, is it a point system? Is it when they download resources? Is it when they send me an email? You know, like, what do I actually apply these points to? And I think that's where a lot of people then think, Well, I'm just gonna go back to those hard commissions. But then they're faced with what I just talked about, which is, it's not actually driving the behavior. So I can understand how some people, if you've thought about this in the past, you'll be on either side. But what are your thoughts on that? Before we talk about, like, what people could try? Or were do

Tom Burgess 11:41
the one product that I feel like did a somewhat good job at really showing you how, like, talking about the point of like, how do you know your partners are actually managing that account, beyond even a month or beyond even referring the customer like, that's, that's where from a partner organization standpoint, you just kind of like, close your eyes and shoot the arrow and hope hold that it's like there's so managing the customer. But it's it you're you're inevitably going to be pushing commissions to, to partners that are no longer working with customers that they referred. And that's a really tough thing. But HubSpot, HubSpot did build that mechanism into their software, where it's like, you've got the scorecard of like, it's almost like a product held assessment. And I like it in one degree because it's, it's, it's both this I guess, like, selfishly, partner organizations can use it, because you can go into, you can go into accounts and be like, hey, our partner is actually still using this. I'm sure you can operate it or automate it to some degree. But what I will tell you is that it's still did a lot of like, cutthroat style, it brought a lot of cutthroat strategies in where like, even if you're, you know, you don't have this HubSpot customer anymore, where you still have access to their HubSpot account, you can just pop in and do a couple things and still get the commission that's beyond the point. I agree with your thought. And your your idea around hard commissions or like commissions, long term can be very spread out in terms of how you can control it, like you almost lose control once the customer comes through the door. Whereas with the, the, the incentive side, you know, I almost look at it like you're gamifying this journey, it's like, it's like for all the Zelda play like nerds out there, which I'm one of them. You know, you a lot of this is choose your own adventure. But can we put these certain milestones or quests or adventures into play, where you can earn something, whether it's, you know, to your point points that then can be, you know, turned in like Chucky Cheese, like tokens where you can get prizes, get whatever you want. And I think the one thing I will say on that side that I really like is that you can, you can always guide the partner journey, meaning if one of your goals early on with new partners is to help enable them on your product to help, you know enable them on how to position your product or just become a successful partner. I think the incentive and gamification of have like a benefit is, is really powerful. Again, I think like you can help guide them to say, did you know you can go here and earn five points by reading our persona documentation or doing all this and so on one side, I really liked that. But once again, what I will come back to you is that I think you need to have a fully functioning team, or at least a very solid team around you to help build that journey. And that takes time. And is it time well spent? Well, you don't know. It's it's kind of like you're taking that strategic guess. But I don't know it's really hard for me to get past like how many hours you would need to put into place to build that proper journey to then say by the end of this, you know, partners can turn in points for dollars or whatever. It goes back to you, just seems like a lot of work a lot of tech, a lot of people hours, I want to your thoughts.

Will Taylor 15:06
Yeah. And it also makes me think of, you know, if you're, if you have an idea, and you want to build something, whether it's enablement or a partnership, you need to validate it first. And so I would say, you know, I've never built the incentive itself, but I have consumed a lot of content on it, people want to learn more Magento tricks does talk about this. And so I recommend checking out, you know, what they're working on, and then also some of their content. But what I would say is, there are some fundamental things that you know, that if you drive more of that behavior, then there will be, you know, more adoption of the partner program, or more engagement or more communication in some form. So let's say, you know, you have some partners that are not really engaged, and you know, maybe they open an email once in a while, or, you know, click on something, but you want to incentivize more of that engagement, you want to reengage them in some form? Well, if you let them know, Hey, we have this, you know, marketing program that's relevant, it's timely, you can deploy it now. You know, here's what the likely outcome is going to be, go into the partner portal, you know, click on the resource, check it out, that could be an incentive, at least getting them into that environment. And then the second incentive is, well are they actually, you know, clicking the button to then, you know, download it, move it to their, their instance, whatever that is, that's going to be extremely high value. So I would say, if, if anyone is thinking about this incentive journey, I would say just start very, very small, and think of those micro actions that your partners are not doing today that you wish they would be doing. And then think about how you can incentivize. And of course, if you have, you know, a system that allows for this, I know, magenta tricks does this where, you know, if you click a certain thing, or download a certain resource, then you get a certain amount of points. But even if you're just starting to try and plot this out of what are those key actions that I want these partners to take, that's going to probably give you a lot of insight into some of the potential deficits of the partnerships that you have, or how you're engaging with them. But then also how you can incentivize those actions. So I guess my, my slight rebuttal is, it may not need to be that big. But it can be definitely that big. But it can also be very small, and you can start small. And I would say you're probably better off starting small, because you don't want to try and go from, you know, marketing program to closed one business to managing the client. Start with just getting your partners engaged in more engaged in the program. And then that will kind of Cascade out. And I would say, that's the also the start of the journey. You know, what's what's step one in the journey? What's step two? Well, it's getting more engaged in the partnership, step one, and then you know, taking action, deploying resources, etc, is step two, and so on and so forth.

Tom Burgess 18:22
Yeah. And I, you and I were talking beforehand to like, it makes total sense. Like, I think from an end user perspective, you know, I, I'm more intrigued by, by trying to kind of like, you know, earn points and like, go up this leaderboard and turning these points for something like that, that excites me. So from like, a buy in standpoint, I don't think we need to worry about like, you from a user experience, would you be bought in or not. But I I completely agree that starting in this like micro level, or this like micro micro dosing, for that matter, is going to be really critical. And I what I would add to your point is, get, get a sense for what you're, if you have an existing partner program, ask your partners, be like, hey, you know, like, Commission's Commission's, it's not going away. But if I could, like gamify, a couple of things to help you maybe enable faster or enable smarter, and you could earn points and rewards for it, like, how does that sound, there's no reason you shouldn't ask your partners, if it would be sound, and if it would be something worthwhile. And I The other thing that I want to mention is that, you know, I talked earlier that like the long term commission, maybe detractors that you you kind of lose control over like, the things that you want to control, which is how do we know if this partner is still managing this customer? And in some sense, like you, you, you probably have a semblance of that same losing control if you gamify to like, if you're saying, you know, I just need to download this asset and I get one point well, great, I'll do it and it will sit on my desktop and then die. You know what I mean? Like, I think The biggest point that we'll made there that I would emphasize is, yeah, the idea of taking action is really what you're trying to like incentivize. And it's really hard to get partner organizations to do that sometimes because they're so focused, it's not to a fault, but like they need to be focused on their own revenue generating activities. So if you can do it in a way that makes it very easy for them to self educate or like, gain the knowledge and hit the goal that you're trying to grasp at the end of it, do it, because I will tell you, the organization and the people inside of it to become better partners will do that. And I had one thought, after this whole thing, which is, you know, we're debating, we're debating a topic on hard commissions, or just commissions in general, versus like, Can building more of like a proper incentive structure. But to me, and I would love to hear your thoughts you will, I honestly think it's partially both like to build a really unique and really sound system, you have to have a little bit of both. Now, my idea would be, okay, you come in as a new partner, maybe you, you automatically have the rights or in 10%, in perpetuity on all your customers. But we've got a couple of certifications over here that are gamified and incentivized by, if you come back and become product certified, or you know, like, solution certified or selling certified, whatever it may be, okay, now your commission structure goes up. So I can you get selling certified, now you can earn 15%. Now, now you're starting to kind of like, meld both together. I would love to hear your thoughts on that.

Will Taylor 21:37
Yeah, I think there's definitely a marriage between the two. And what I would say, to try and create like a clear distinction, I guess, although they can exist together, the distinction is like, money is what a business primarily cares about, not necessarily what an individual cares about, that's not going to motivate the person. You know, when a business gets money, they say, Okay, I'm going to do more of that thing. But an individual, they have other needs, and maybe they want other things. And they want this, you know, sense of achievement, a business doesn't care about a sense of achievement, it doesn't feel good about getting the certification doesn't feel good about, you know, reaching a milestone and then being moved to the next tier. You know, there are business benefits, but it's not, it doesn't care, there's no clear path forward, and there's no emotional drive behind it. And so I completely agree that they can live together. And in fact, he made a really good point that they should live together, where if you are, you know, reaching these milestones through, let's say, the gamification and these points, then you can get more of these, you know, hard Commission's being paid out as well, because then you're meeting the business needs, which is, business needs money, people need money, too. So if he's getting paid out to them, they're gonna have that. But then also people need this more meaningful experience this behavior driving, you know, emotion driving incentives that lead to them to a sense of accomplishment, a sense of feeling like they did something that was perceived as valuable, feeling appreciated, so on and so forth. And so, yes, 100%, I think they can live together. And the, although I didn't, you know, lean in as much to what I just laid out. But that behavior piece and the individual versus the business and like, what incentivizes them, is a very good thing to think about, because that opens up the door of, well, what if I send gifts to my partners? Or what if the AES on my partner's team that I'm trying to reach and get them more engaged? What if I am sending them things that they care about whether that's leads or spiffs? Or, you know, whatever it is, that is going to get you to think more about? Okay, well, people are not just a business, they are people. So they're incentivized and motivated by specific things.

Tom Burgess 24:13
Yeah, I agree. And I think it's spot on. I feel like we just won Shark Tank with our greater view here of bringing both together. But also like, you need to be able to decipher and connect the dots between the individuals needs and the business needs, because there's not always going to be a scenario where your main point of contact is the CEO, what at which point like you kind of hit both and one person. In most scenarios, you're working with people that work for the CEO, right? They are an individual contributor, some degree. And so I think maybe you can start to align both the business needs or business goals of your partners, and the individual wants and needs to help like drive what what makes them tick, you're going to be on to something. So with that said, well, great debate. I actually love how we melded it together this time. And I feel like we came together and acted as one. So I hope we have more of these sessions. But stay tuned for more on that we do have some guests coming up in the coming weeks so we won't bore you with just ourselves anymore. But have a great day and thank you for tuning in to another episode of howdy partners. Thanks everyone.

You've successfully subscribed to PartnerHacker
Great! Next, complete checkout to get full access to all premium content.
Error! Could not sign up. invalid link.
Welcome back! You've successfully signed in.
Error! Could not sign in. Please try again.
Success! Your account is fully activated, you now have access to all content.
Error! Stripe checkout failed.
Success! Your billing info is updated.
Error! Billing info update failed.