Subscription Insight Series: thought leadership and practical help for modernising your subscription business
Many businesses that operate on a subscription model (like SaaS providers or companies providing business services on subscription or box subscription retailers), choose to allow partners to resell their offering. With many brands this is the normal operating mode, like in the Microsoft channel where most sales and customer services are partner-network driven. In a partner channel, resellers of a subscription from the provider get commissions and incentives to resell or bundle up the subscription with their own services to customers.
If your business is using sales channels, such as resellers, brokers, partners, VARs, dealers, agents or consultancy firms, tracking of all sales of licenses and subscriptions against the channel becomes a critical business requirement, including the calculation of commission or royalties.
If you’re needing to automate the process of selling trough a partner channel and capturing commission in a highly automated and efficient fashion, then read more about how Bluefort’s Licensing and Subscription App for Microsoft Dynamics 365 Finance, Commerce and Supply Chain management deals with this requirement.
You can also download our Partner Guide here.
Partner channel management
If you’ve got partners, building your channel is a core activity for you. The driver for a healthy relationship between your business and your partner channel is to generate successful end-customer relations and revenue. That revenue will create subscription-based commissions for partners and will give you more market reach to end customers. However, maintaining a solid flow of events in the business administration of your business does have a myriad of activities to deal with. Let’s have a look at the flow of information.
- You sign-up new partners with a partner plans providing commission;
- Your partner drives a sales cycle for your license or subscriptions to an end-customer;
- Your partner closes a new deal and re-sells your licenses or subscription;
- Your partner upsells additional licenses and subscriptions;
- You change your license and subscription plans on renewal (indexing or price changes) and need to inform your partners and end-customers;
- Your partner has an end-customer that stops using the licenses or subscriptions.
At first glance these activities look straightforward and manageable, and they are if you have a handful of partners. But if you engage with a partner channel across the globe, with different currencies and plans or agreements, your finance and administration team might have a very different view on matters!
Automation of partner channel agreements and transactions
The automation starts with the mapping of the partner journey as well as the end-customer journey into your own finance team’s journey to manage the transactional interaction. Let’s follow the recruit-to-sell and quote-to-cash cycle to explain the different steps.
Recruit-to-Sell: Onboarding partners
The process of onboarding partners starts with a joined view on opportunities and results into an agreement between the subscription provider and the partner reselling the subscriptions. To reflect the agreement most subscription providers, offer partner programs or plans. Each plan has tiers in terms of sales volume and revenue generated, resulting into commission pay-outs on a periodic basis. To automate the commission calculation, the basis of the calculation must be determined. Best practice is to keep things simple. With our applications in conjunctions with Dynamics 365 Finance, we offer the following practices for recording agreements:
- Create partners as suppliers and indirect customers in Dynamics 365 Finance
- Setup incentive schemes to capture a percentage of all revenue invoiced based on the partner plan or schema
- Setup tiers for commission, like over 100K revenue high percentage of commission reflecting e.g. bronze, silver and gold partnership tiers
- Connect all sales agreements to the partner (see below)
In this manner, all sales will be driven towards automatic calculation of the partner commission plan which each invoice produced for the subscription sales.
The calculated commission can be made payable to the partner by generating a proposed commission claim using the broker management standard functionality that links up with Bluefort’s License and Subscription Application. Now your partner commission calculations and payments are automated!
Lead-to-order: Partner pipeline insights
At this point we have the partner program and commission payment process optimised. Let’s focus on managing partner pipeline in Microsoft Dynamics 365. First, we can use Bluefort’s add-in for Microsoft Dynamics 365 Sales to capture subscription sales opportunities and quotations. Alternatively, we can use the opportunity and quotation features in Microsoft Dynamics 356 Supply Chain Management. The required fields to enter a subscription are added to the sales quotation.
Each quotation and opportunity are linked to the partner selling it, making it easy to track partner pipelines with a team of partner managers that support the channel.
Lead-to-order: Partner sells subscription to end-customer
When the sales pursuit comes to a close, you can enter the subscription plan into the license and subscription cockpit, including all required data and information, such as:
- The term of the agreement;
- The renewal conditions;
- The revenue and cost recognition tied to this agreement;
- Any pre-payments or deposits;
- Subscription products (linked to the product information management module in Supply Chain management)
- Commercial price and discounts as per agreement;
When the details are entered in the License and Subscription App, the subscription can be made effective so that automatic billing and other actions can be automated.
It is also possible to get the subscription from Microsoft Dynamics 365 eCommerce, from Sana or from Magento eCommerce sites, so that your B2B or B2C customer can actually create their own subscription orders that are pushed into the Licence and Subscription App in Microsoft Dynamics 365. This enables you to establish a modern subscription self-service capability for your customer and provide them with ways to self-manage their subscriptions. Kindly note that this does require some custom configuration to reflect your eCommerce sites using one of the above options.
Once the subscription is activated and invoiced using the automated action framework, the following automation can be triggered:
- Create and send customer invoice via PDF and email;
- Create partner commission transaction and send email to partner;
- Create all required revenue transactions in accordance to compliance;
Lead-to-order: Partner adds or upsells licenses
One of the aspects that makes licence and subscription administration complex is continued changes. Partners can receive add-on orders or increases in subscription volumes and quantities.
Changes on subscription plans or agreements require updates to the agreement and adding new products from a specific date.
The updates to licenses or subscriptions can be triggered ideally from a partner portal or end user portal or eCommerce site, promoting self-service. The result is an up to date subscription, reflecting changed and new licenses, entitlements, and deliveries that the end customer is entitled to based on the updated subscription.
The change management mechanism to reflect partner driven changes is based on re-opening the subscription and create all required changes (add new subscription lines or change volume or quantities) and activating the subscription for automation processing. In turn, this adds on to the partners commission based on the partner commission model.
Lead-to-order: Partner information about upcoming renewals and index changes
Based on policy changes in line with terms and conditions partner will need to be informed about any new index changes for impacting their end customers. At the same time, it is key to provide partners with details about upcoming renewals of current licenses and subscriptions.
Bluefort’s License and Subscription App relates to Microsoft Power Automate so that any license or subscription changes are immediately triggering email notification to partners.
This automation drives strong automated notification management to your partners and relays upcoming changes instantly. In turn, partners can inform their end-customers.
Ready to scale up your subscription business?
Contact us and take the next step here to gain the competitive edge with a modern subscription management solution.