Exactly a year ago I told of NetSuite new channel program, SP100, that saw them aggressively move their partner revenue model. Under SP100, partners got the entire first year software revenue, and then received 10% of renewal revenue. SP100 was a program that sought to help traditional resellers, who have business models built on lucrative revenue streams from on-premise deployments, move to a recurring revenue model – the 100 is positive for revenue flows for VARs in the initial years when they feel the most impact from the move from on-premise to cloud.
I had a call from Craig West, VP of Channel Sales t NetSuite, last week to give me a pre-briefing on their new partner program, a significant extension of SP100 that aims to make NetSuite partners even more attracted to the brand. The new offering, titled “NetSuite SuiteStart Service, covers a range of different sweeteners for partners;
- The option to realize 100 percent of a new customer’s first-year revenue, with a 10 percent share of renewals in future years. New partners may also choose NetSuite’s conventional revenue-sharing agreements while enjoying the other benefits of the SP100 program;
- The NetSuite SuiteStart Service, designed to give partners immediate mastery of the cloud, and a shorter horizon to initial customer wins;
- Waivers of first-year program enrollment fees for new channel partners (an immediate $5,000 value);
- Free first-year training in the NetSuite sales training and methodology courses for up to three sales reps;
- Comprehensive go-to-market support, including marketing templates, start-up leads, and access to ongoing leads for top-performing partners;
- A free NetSuite license for partners, in good standing, to use to operate their own business.
It’s a pretty generous set of offers, and I wanted to grill West about the reasons behind the move. A few of my curmudgeonly colleagues would say that this is a response to ongoing channel fears about what cloud will do to their revenue streams and lack of pick up. I West shared with me some statistics about channel uptake. The partner program was flat previously to the introduction of SP100 – partner numbers were fairly static. The past year since the launch of SP100 has seen a 40% increase in partner numbers and West believe that this new suite of offers will see them continue that 40% year on year partner growth going forwards.
I also quizzed West on hat the move means for their on-again off-again situation with regards to direct sales. NetSuite has come full circle, they started out as primarily a direct sales company and have strongly moved to a channel strategy – could this program indicate the demise of much of their direct sales? This question is especially valid given that part of the offering is lead- generation for the top partners. West was quick to assure me that NetSuite still values its direct sales channel – I’m not entirely convinced that they’ll retain this approach going forwards – more and more there will be tension between partner and direct sales strategies – both from an internal perspective but also with external messaging.
Much of what is on offer makes sense – charging enrolment and training fees for a solution that essentially asks partners to relearn the way they work is a significant barrier to adoption., Similarly offering partners free access to the application is a no brainer – the marginal cost to NetSuite is zero and it’s a great way to have partners truly fly the flag.