Why Comp Neutrality is Essential for a Successful Cloud Marketplace Motion
One of the biggest challenges for ISVs creating a cloud marketplace motion is building a plan to compensate and incentive your internal sales reps. Your sellers are a critical piece of the GTM motion but can be reluctant to lean into selling with partners. The fear of disrupting their sales cycles or the belief that they can hit quota without partners often cause friction between the alliance / partner team and sellers. The best way to circumvent the tension? Incentives. Sellers must be properly motivated and rewarded in order to turn the motion into a flywheel. What’s the first step to getting sellers bought in? Comp Neutrality.
Hyperscaler Cloud Marketplaces like AWS, Azure and Google Cloud take 1-3% of each transaction and Salesforce as much as 15%. It might be tempting to take that percentage out of the sales rep’s commission or quota retirement to make up for that lost profit. But why penalize a rep for utilizing the marketplace to close a deal? Transacting through marketplace helps with
- Driving volume
- Expose your solution to a whole new audience
- Often result in larger and faster deals
- Building your partner status
So how do you take advantage of the perks of selling on a cloud marketplace without disincentivizing your sellers? Comp neutrality, bonuses, and spiffs.
What is comp neutrality?
Broadly speaking, comp neutrality is compensating a rep the same (or retiring quota at the same rate), whether or not the product or solution is sold through the cloud marketplace, another channel, or direct.
What to consider when implementing comp neutrality
As you’re building your comp neutrality plan, make sure that your rules for each deal cycle are clear:
- Who owns the account?
- Who leads the sale?
- How is the deal registered in the CRM?
- What is the pricing strategy for marketplace deals?
Why is comp neutrality important for cloud marketplaces?
At first, co-selling with Salesforce and the hyperscalers, unlocking committed spend, and closing cloud marketplace deals can feel a bit intimidating (and even mind boggling), especially if a sales rep is unfamiliar with partner selling. Now imagine taking comp neutrality out of the picture: Why would a sales rep take the time to upskill themselves and change their process in order to close marketplace deals if they’re losing money on commission?
For ISVs that have already made the upfront investment in cloud marketplaces (e.g., getting listed, spending marketing dollars, hiring an alliance manager), your focus should be on building a sales motion and channel opportunity that leads to long-term revenue growth. This is not the time to pinch pennies.
In the long run, closing deals on the marketplace saves ISVs time and money – sales cycles are faster, renewals are easier, and deal sizes are bigger. Over time, the 1-3% becomes a negligible cost to the business. And if you close enough deals with the cloud marketplace, you’ll also reap the benefits of the partner programs, which can include cloud credits, co-marketing opportunities, and cloud sales reps who introduce your solution to their book of business.
Spiffs, bonuses, quota relief, and other marketplace incentives
Getting started on cloud marketplaces is a major initiative that requires some grease to get the wheels rolling on the sales side, especially if sales reps have never sold with partners before.
Rather than reducing a rep’s pay, we encourage ISVs to offer special incentives to get the flywheel rolling, like spiffs, bonuses, or fun prizes.
Spiffs
A spiff is sales slang for a bonus paid immediately following a sale. You might offer a spiff for each cloud marketplace deal if the motion is brand new and volume is low. Or you might offer a spiff the first time any rep closes a deal on the marketplace or when the rep reaches a certain amount of marketplace deals. How you structure your spiff depends on the size of your sales team and deal volume.
Bonuses
Another option for ISVs is to build cloud marketplace deals into their bonus structure, whether at the end of the quarter or the fiscal year. Under a bonus regime, you have a few options. You could consider offering a percentage of all deals closed via cloud marketplaces, or you might offer a special bonus for sales reps who closed the most deals and made the most revenue on the marketplace.
Quota relief
Marketplace deals should also go towards retiring a sales rep’s quota and the count the same as deals closed on the ISV’s paper (e.g., dollar for dollar, not $.97 for dollar).
Other incentives
In addition to bonuses and spiffs, you can also offer more fun prizes, like gift cards and prizes (who wouldn’t want a Nintendo Switch?) to drum up excitement internally for your cloud marketplace selling mission.
What happens when you don’t implement comp neutrality?
Not having a strategic compensation plan for your sales team can have negative impacts on business, from creating partner conflict and lost business opportunities to frustrated prospects and customers.
Nurturing relationships and building trust takes time. Rewarding your sales team for embracing a new motion can help smooth over the process and drive long-term, ecosystem-led growth.
What about other channels?
When you open up the question of other types of partners, the question of compensation becomes more challenging. Resellers, including value-added resellers (VARs), service partners, and referral partners are a different story and require their own compensation structures
Invisory for Cloud Marketplace Success
Whether you’re an established ISV with a track record of success in cloud marketplaces like Azure, AWS, Google Cloud Marketplace or the Salesforce AppExchange, a brand new startup, or somewhere in between, Invisory can help you drive success on multiple marketplaces.
With our solution, you receive access to:
- API integrations that get you listed and transacting faster
- Expert-built playbooks for navigating the Azure Marketplace ecosystem
- Go-to-market templates and expert guidance
- Co-selling playbooks & dedicated enablement on selling with cloud marketplace sellers
- Dedicated customer success manager
- Support for developing a multi-cloud marketplace strategy
Ready to dive in? Reach out today.
