Commissions: Apples, Oranges, Potatoes & Spam

By , July 12, 2016

Today, a master agency complained that our commission percentages don’t match the high rates offered by some other vendors. My response:

Yes, our commission percentages don’t look impressive when compared to other vendors who sell different services, and others whose channel programs are designed quite differently.

  • We don’t sell the same service that other vendors sell — we don’t sell DIA (Direct Internet Access, at customer premises), but premium IP Transit at 100+ global data center POPs.
  • We don’t exclude any MRC (monthly recurring charges) from commission.
  • We pay the same commission percentage on the entire order (not high commissions on select services, but lower or no commissions on others).
  • We don’t charge huge non-commissionable setup fees (nearly all contracts have $0 setup).
  • Our aggressive pricing leaves less margin than some vendors promise on much higher pricing for equivalent (and non-equivalent) services.
  • I’ve demanded absolute price parity, so our direct staff can never quote better pricing than our agents.
  • We experimented with allowing channel partners to “mark up” services and retain the premium, but those customers always “called around” and learned that lower pricing was being quoted, so we dropped this feature.
  • We provide a strong lead registration system, so agents will never find their efforts wasted when a deal is “poached” or “sniped” by direct sales staff nor by other agents.
  • We provide true evergreen commissions.
  • To date, our agents earned bonuses of at least $1,000 each on 35% of all contracts (in addition to evergreen commissions).
  • We don’t rely on “add-on fees” like cross-connect fees, remote-hands fees, or metered electric charges (with or without commission).
  • Our program has no commitments, quotas, or minimums, nor do we pay different commission tiers based on unrealistic performance tiers.
  • We provide incredibly fast response times to agents, including fast pricing, fast lead registration, fast quotes, fast contracts, and fast turn-up.  We can move an agent opportunity from initial inquiry to live service on the same day.
  • At all locations (except Fremont), customers cannot buy our service unless they also buy another service from a different vendor — so agents can earn commissions from multiple vendors on the deal.)

I certainly recognize that it’s difficult in this industry to find reasonable ways to compare “apples to apples,” but our successful agents have found that our program provides a unique opportunity to combine services from multiple vendors to earn excellent profits.

Please let me know how I can help [your master agency] move forward as a Hurricane Electric channel partner.

Thank you for your courtesy.

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