ISPs Profit With Partnership Programs — continued

[December 23, 2002]

[DL replied] "The one thing to be careful with is once you start paying a partner a recurring commission they may start to slack off. We currently pay either a onetime fee or recurring but we do not pay a partner both."

Recurring works out well for both companies. If you pay a onetime for each customer that stays on for three months then if the user cancels you would have only paid the partner $6.00 at 10% but if the user stays on for more than a year then the partner makes out better in a recurring fee system. The recurring fee system gives them a little incentive to keep the user happy. You will find that they will even do some of the tech support for you.

We are looking into getting away from one time and going strictly recurring with higher percentages but the partner will only get paid a certain percentage based on the prior month's signups. This way, if he starts off with a bang and then six months later slows down to a trickle, you are not paying as much. This should keep them interested because they have to earn their commission. But I would set up several different levels even going down to where the partner would not receive any commission if they show no signups for a given period of time.

We have had a partner program for over three years and things are going well. If anyone has any suggestions I would love to hear them."

[DL suggested] "We base the commissions off the average income for all new customers in the previous month for each partner. The reason I would base it off the average monthly income is so that a partner does not figure out that he could sign up all annual accounts and reach the higher goal. When you look at the average monthly cost most accounts are close in price. For example:

Monthly $16.99

Quarterly $47.00 = $15.67 per month

Annual $175.00 = $14.58 per month

• 20%: $751.00+
• 10%: $201.00 - $750.00
• 8%: $51.00 - $200.00
• 6%: $25.00 - $50.00
• 4%: $1.00 - $24.00

If partner A signs up in January and brings in $600.00 in new (average monthly) income then that month he would get paid 10%. If, in the following month, he only brought in $30.00 in new (average monthly) income, he would only get paid 6% on both January and February users. In March, if partner A was to bring in $900.00 in new (average monthly) income, he would be paid 20% on all users he has signed up. This would keep the partner from referring a lot of users in the first few months and then resting because he is happy with the commission he is receiving. That is the problem that we are having now.

If a user signs up a certain amount of users they will get paid a percentage based on that. For example:

• 1-44 subscribers, 6%
• 45-54 subscribers, 8%
• 54+ subscribers, 10%

Bottom line: pay the partner based on income generated."

[BM responded] "So if they do not bring in any new subscribers in a month, they don't get any income at all, correct? Or do you use the minimum?"

[DL said] "Correct. Or you could say that if they do not bring in any income in three months, they get nothing. How hard is it for them to give out a CD with each system they build? We provide all our dealers with CDs with their own unique activation code. The CD uses Microsoft's IEAK and dials an 800 number so a customer can sign up anytime. We also give the partners referrals. If a customer doesn't want to wait for a CD to come to them, they will often go to a partner. It is hard not to sign up at least one user a month.

[DD concluded] "I have a number of 'channel distributors' aka small PC retailers who do suprisingly well out of our arrangement. Cannot discuss on this list because these relationships are commercially sensitive."

—End

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