The Churn That Wasn't

One of the real advantages of having a partner alongside you as an account exec is that you get an organization just as invested in the customer's success as you are, but with ways of monetizing the relationship you don't have on your own. If your solution needs compute, networking, and storage, that partner might also be a Google Cloud, AWS, or Microsoft Azure partner, combining your product into a larger customer-specific outcome, and doing the implementation, integration, or adoption work the customer actually needs along the way.

By renewal time, that partner often knows the customer as well as you do, sometimes better. They'd be glad to take the renewal onto their own books. You give up some margin for that, sure, but set against the actual cost of driving the renewal yourself, it's usually a small price.

So why does this end up a problem? Because finance has a rule: if a customer generated 100 in profit last year, anything less than 100 this year counts as churn. Move that same customer's renewal to a partner who takes an 8% cut, and the accounting sees a shortfall against last year's number. Churn, on paper, even though the customer never left and the deal renewed cleanly.

What that accounting doesn't capture is everything it saved. Handing the renewal to a partner who already has the relationship cuts down AE time, presales time, customer success time, renewals team time, and often closes faster too, since you're leveraging the partner's relationship on top of your own. Cash in hand sooner is worth something. It might not always be worth exactly 8%, but more often than not, it is.

The real problem sits in how the AE is compensated. If that accounting hit lands on their target, they have no reason to ever route a renewal through a partner, even when a partner is clearly the better path, even when the customer asks for it directly. And when an AE does want to use a partner anyway, the workaround becomes asking the partner to shave their own margin down, just to make the number look closer to whole.

Same as the other cases in this series, the accounting rule wasn't wrong on its own terms, and neither was the comp plan built on top of it. What was missing was anyone whose job it was to ask what that rule would do once a partner was in the picture. Finance set a churn definition to protect against real revenue loss. Sales comp inherited that definition without checking whether it still meant the same thing when the customer hadn't actually left, just moved to a different book. Nobody sat in the room whose job was to catch that gap before it became a live disincentive against exactly the motion that would have served the customer best.

That's not a partner problem. It's a measurement problem wearing a partner's face. Partner ecosystems are built on trust, with plenty of gives and gets, leading to a positive-sum game. But a measurement that focuses on one narrow cost, instead of the full cost of the customer relationship, can create enough friction that a partner stops focusing on what's right for both of you and starts focusing only on what's right for them. And when they do, they're only following your lead.