The revenue sharing that channel partner agreements set out can be complex – but the contract defining it doesn’t have to be.
This deep dive looks at what a channel partner agreement is and who it affects, how complexity in these contracts can cause problems, and how and why people choose to simplify both their channel partner agreement content and process. Use the navigation below to find out more, or explore our deep dives on other contracts, like NDAs and SaaS agreements.
What’s a channel partner agreement? | Who do channel partner agreements affect? | Why simplify channel partner agreements? | How to simplify the channel partner agreement process | How to simplify your channel partner agreement content | Useful features | Learn more
What’s a channel partner agreement?
In a channel partner agreement, two businesses set out and agree the terms of their commercial partnership. An example of a channel partner agreement is the contract between two SaaS companies, whereby one party agrees to include the other in its marketplace or to provide referral traffic in exchange for a percentage of any revenue that this generates.
Many businesses derive a significant portion of their revenue from partnerships, like the Salesforce AppExchange, the Slack app directory or the HubSpot marketplace. These arrangements are governed by channel partner agreements, which codify the revenue relationship between the two parties.
Who do channel partner agreements affect?
Channel partner agreements can be crucial to a company’s revenue and growth. Because of this, they can affect lots of different people across the business:
Legal counsel. The obligations that channel partner agreements create, in terms of revenue but also data use, can have long-lasting impacts. Because of this, the in-house legal team will usually own and manage channel partner agreements.
Sales. Channel partnership agreements might concern various sales roles. There may be a partnerships manager who looks after channel partner relationships, sales operations who need to contribute to the process and individual salespeople who take forward the leads that arrive through the channel.
Finance. The finance and revenue operations teams will want to be in the loop when it comes to headline terms. CFOs often turn to contract collaboration software because a manual workflow makes forecasting difficult.
Marketing. If a channel partnership is a key distribution channel for the business, the marketing team will want sight of their obligations and responsibilities when it comes to promotion, revenue sharing, and so on.
The channel partner is also a key stakeholder, of course, as is the company’s authorized signatory – which in SaaS companies and marketplaces is often still the CEO.
Complexity introduces friction, which can have serious consequences – particularly for venture-backed scaleups that have aggressive growth targets to meet
Why simplify channel partner agreements?
Agreeing a mutually beneficial channel partnership can be a hugely effective growth tactic. Some of the world’s most successful or fast-growing SaaS companies accelerated their revenues by finding partners that delivered reliable volumes of relevant traffic.
But as the value and impact of these commercial relationships increase, so too can the complexity, density and length of the contracts used to agree them – both in terms of content and process.
Complexity introduces friction into the legal process, which can have serious consequences – particularly for venture-backed scaleups that have aggressive growth targets to meet. Anything that slows down deal cycles and makes legal a blocker, rather than enabler, is a problem that must be solved.
When we look at companies working to simplify their channel partnership agreement process, the pain they feel usually falls into one of two main categories:
Multiple tools. Legal and commercial teams working on channel partner agreements by using a heavily manual process often find themselves jumping between several tools: templates in Microsoft Word, key details and negotiations over email, input from colleagues in Slack, tracked changes from counterparties on documents, final contracts ready for eSignature in PDF format, and fully signed contracts to be managed in shared drives.
Static files. Channel partner agreements that exist as Word documents, or PDFs, are built from unstructured data. This means they’re not searchable, and all the advantages that come with dynamic, digital documents aren’t available - like audit trails, in-browser negotiation, and never needing to worry about version control.
How to simplify the channel partner agreement process
To address these pain points, we find that businesses typically need a contract collaboration platform that can do the following:
Handle everything in one unified workspace
Businesses will often look to simplify the channel partner agreement process by ending the endless back-and-forth between systems. It’s hard to overestimate the time and efficiency savings that you can achieve by handling all stages of the contract lifecycle with one system. Find a single platform in which you can create a contract from a template, collaborate, agree, sign and track the document, all in one unified workspace. Switching between systems will never be a problem again.
Create your contracts as structured data
To create contracts from searchable, structured data, you need a contract collaboration platform with a native editor that facilitates this. Lots of AI contract review tools help you to read your old Word and PDF contracts. But wouldn’t it be better to create contracts in a format that’s actually machine-readable? You can find out more in this whitepaper about machine-readable contracts, and the benefits they offer.
It’s hard to overestimate the time and efficiency savings that you can achieve by handling all stages of the contract lifecycle with one system
How to simplify your channel partner agreement content
More and more companies are waking up to the benefits of incorporating design thinking in their legal agreements, and channel partner agreements should be no different. These important contracts are often one of the first – and certainly the most important – written touchpoints between two companies, so it’s essential to set the right tone with a friendly, accessible document that everyone can understand.
The specifics of terms you’ll include, remove, soften or strengthen are tough questions for the legal team. But there are also some quick ways for you to make your channel partner agreements simpler and friendlier to counterparties:.
Foreground the key terms. If partnership negotiations usually centre on two or three key issues, then don’t bury them in subclauses or dense paragraphs. People will find them (and why are you trying to hoodwink your new commercial partner anyway?) We’re big fans of Verity White’s reverse sandwich approach to contract design.
Brand it. Incorporating your company’s logo, colours and branding will make the document easier to read and simpler to navigate. With the right contracts platform you can even bring in visual elements like infographics and animations.
Check out the ‘Modern contract handbook’, in which experts explore every stage of the contract lifecycle.
Useful features for simplifying channel partner agreements
If you want to simplify your channel partner agreement process, look for the following features:
Internal and external commenting. Keeping things brief should reduce how much you and your channel partner negotiate the agreement, but make sure your contracting platform allows in-browser commenting, so you can provide extra details quickly and transparently.
Dynamic editor. To add features like logos as JPEGs or even GIFs, you’ll need a rich text editor that can handle visual content.
Conditional logic. This will allow you to codify common fallback positions in your contracts, making it easier to change the content according to the demands of the deal.
Mobile-responsive eSigning. You simplified your channel partner agreement to make a quick signature more likely – so make sure you’ve got technology that allows secure signing on any device.
If your contract workflow is supercharged with all these features, your simplified channel partner agreements will enable commercial and business teams to achieve a faster time-to-close and – hopefully – happiness on both sides of the contract.
Is simplifying channel partner agreements a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?
If so, try collaborating with Juro and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts, all in one unified workspace.