In SaaS, we often talk about the “mutual benefit” or “win-wins” of partnerships — greater brand awareness, easier market entry and penetration and, of course, more revenue.
What we don’t often talk about is the inherent risk partners have to take to get to that point.
Implementation and agency partners have to invest significant time and effort into product training and certification. Referral partners’ reputations are on the line every time they hand you a lead. Channel partners constantly worry about demand — if there’s not enough, they can’t hit the numbers in their agreement.
How do you make up for these risks? By creating commission structures that adequately compensate partners for taking them.
In this article, with the help of Bianca Balazic, Enterprise Customer Success Manager at PartnerStack, we review:
- What partner commission structures are
- Why they’re so critical to the success of your program
- How to design one that makes partners want to bet on your product or services
What is a partner commission structure?
A commission structure is a set of rewards designed to drive partner behavior.
As Balazic puts it, “Commission structures cut to the very core of the word partnerships. If you ask someone for something, they expect you to give them something in return. And they expect it to be of comparable value.”
The best commission structures guide partners on a path to revenue, showing them:
- How you reward success: What top-tier partners get
- How you invest in them: Enablement, MDFs, payouts, etc.
- How they get there: The milestones they have to hit
Because every partner program is different, it’s important to keep in mind the following key considerations.
Commissions can be flexible
Incentives could be for a time period, for example partners that generate the most leads in a quarter get a bonus or they could be evergreen such as partners get a percentage of a closed referral customer’s annual contract value.
Depending on the types of partnerships you have, your commission payouts may be:
- A flat fee: $X per qualified lead
- A percentage: X% of a closed sale
To encourage program participation, some commission structures are tiered, meaning partners are only eligible for specific incentives when they register a certain number of deals or get certified in your product.
Commissions aren’t just about money
Though we often think of commission incentives as monetary, they don’t have to be entirely. You could offer partners:
- A dedicated partner manager
- 24/7 product support
- One-on-one training
- Free demo instances
- Co-marketing dollars
These incentives could be particularly appealing to partners operating on a margin-based selling model, where the amount they could earn is capped. Plus, non-monetary incentives can make your commission structure even more robust in a down market.
Balazic explains, “I’d say 90 per cent of programs have adjusted their commissions this year because of the economy. The ones that invested in non-monetary incentives and put a lot of thought into enablement came out on top — most didn’t even see a dip in revenue.”
Because there’s so much you could include in your commission structure, we’ve put together a list of six best practices to get your program moving in the right direction.
Steps to design a solid commission structure
Look for inspiration internally
If you’re building a commission structure from scratch, it can be tough to know where to start. So look at a structure that already exists.
Balazic advises: “The simplest way to gather information and set benchmarks is to ask your sales team about their AE commission structure.”
Consider asking:
- Did they do any sort of tiering?
- Does it differ by region or territory?
- What pointers do they have for you?
- Have they changed the structure over time?
Having these conversations will give you a framework for what to research next.
You might also like: Revenue-focused goals following partner activation.
Assess your competitors
Your commission structure needs to match — or at least be close to — that of other vendors in your vertical and industry.
“The best partners aren’t looking for a side hustle — they’re looking to boost their revenue. That means they’re going to do research on what they’re being paid,” Balazic explains.
“Partners can’t afford to carry a huge deal through a long sales cycle only to get a measly commission.”
Do some due diligence to ensure your commissions are on par with what other vendors are offering.
Most companies advertise their commission structure (or at least outline part of it) on the partner section of their website. If you can’t find relevant information, ask your trusted partners or colleagues what they know and then use those data points as you start forming your structure.
If you already have a commission structure in place, consider doing a SWOT analysis:
- Strengths: Which partners resonate particularly well with your structure? Are they the ones you want to be working with?
- Weaknesses: Where is your structure lacking? Can you make up for any budget restrictions with non-monetary incentives?
- Opportunities: How can you make your commission structure stand out?
- Threats: What are your competitors doing that you’re not? Is there anything you can do to get around or offset that?
Related: How to keep top-performing affiliates engaged — and how to push them away.
Set your structure
With your internal and external research out of the way, you should have a baseline idea of how your commission structure will look.
As you put it together, remember to:
- Review your partner program goals. Are your incentives aligned with your revenue targets? Do they set up your partners (and, by extension, your customers) for long-term success?
- Foster trust among your partners. Add necessary resources and training and certifications to your partner onboarding process. Establish (and stick to) payout SLAs.
- Get creative. Budgets are tight, so think outside the box with your incentives, inviting top partners to company offsites, asking SMEs to come on your podcast, giving them extra tickets to your annual conference or sending them extra swag.
Test with trusted partners
Once you’ve got your base structure in place, it’s time to preview it to partners. Set up calls with three to five partners you already have a good relationship with and ask them what they think.
- Do the numbers look reasonable?
- Is your structure consistent with what they’re seeing in the market?
- If your compensation is on the low end, what other non-monetary incentives would be enticing?
- Does anything jump out at them as confusing?
If you get conflicting feedback, you may need to talk to more partners. Put together a short survey and send it to five to ten more partners. With more data, you can zero in on what feels off about your structure.
“If you can’t decide between two similar structures, try a simple A/B test by segmenting your trusted partners into two groups,” Balazic suggests. “You can get some granular feedback this way.”
Publish and communicate (more than you think you need to)
The two questions every partner has when they join a program are:
- How will I get paid? Stripe? PayPal? Direct Deposit?
- When will I get paid? Next week? Net 45?
Balazic says that for best results, you should answer those two questions off the bat.
“Don’t hide them in FAQs or wait to review them on your regular call. Include them in your email announcement about your new commission structure, put them on your portal home page and display them anywhere else your partners might see them.”
Make your criteria for hitting each commission level just as clear and transparent. Use your partner portal to your advantage here. You can build real-time dashboards to show partners how much progress they’ve made. You can build automated email workflows congratulating them on every new lead, sale or completed training. You can also send announcements to remind them of the resources at their disposal.
If you’re revamping an existing structure, Balazic advice is similar but a bit more involved.
“If you’re changing the status quo, partners need to know what changes are coming, when these changes are happening and how it will impact their current pipeline.”
Being proactive — notifying partners of changes up to a quarter in advance — builds trust, allowing them to ask questions and giving them ample time to adjust their GTM strategies to fit your new structure.
Refine it
The market is always changing, and your commission structure needs to change with it. For instance, your sales goals may be too aggressive for partners in a bear market. Can you reward them for qualified signups rather than actual transactions?
Or, perhaps partners have been asking for more variety in your incentives. Maybe you notice natural stratifications are starting to form in your partner program that could warrant a tiered commission structure.
Balazic points out, “Programs that are leading edge, the ones seeing hockey stick growth, are diversifying their partner base, which means they have to diversify their commission structures over time.”
Read more: The B2B buyer’s guide to partnerships software in 2025.
Last word of advice: don’t overcomplicate
An overly complex commission structure isn’t just confusing to your partners; it creates an excessive amount of work for you on the backend.
So keep it simple. Only incentivize the milestones you care most about. Clearly define each one and avoid adding layers of dependency.
Want to simplify your commission structure even further?
Use PartnerStack to track partner progress, share valuable resources, keep partners in the know and automate their payouts. Book a demo today to see how much time you can save with an all-in-one partner ecosystem platform.
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