How Does HubSpot Pay Its Partners Commissions? It Can Actually HURT Their Customers!
TL;DR: A commission-based payment system can be a great way to incentivize salespeople and partners. But it can also have some negative consequences. HubSpot, a leading marketing automation company, learned this the hard way.
HubSpot’s Solutions Partner Program has unknowingly worked against their customers’ benefits. We’ll go over how agencies might use this model to their advantage.
So … What’s HubSpot? 🤔
If you have anything to do with marketing and haven’t heard the term HubSpot, you may have been living under a rock! As HubSpot has fast become one of the biggest names in digital marketing platforms today, you could well be one of the thousands of users who are already using the platform and finding value in its tools and resources!
With great marketing and sales tools, inbound methodology, and super-helpful resources, HubSpot promises extraordinary results, and those who have committed to utilising the platform with passion and have put the effort in have proven some outstanding levels of success! HubSpot is an all-in-one CRM platform with easy-to-use integrations for marketing, sales, content management, and customer service.
With their thriving community, they help you master the inbound principles and get the most out of HubSpot tools. A heads up, though … whilst they offer free tier plans, you get what you pay for — and to access premium features, you will need to upgrade to a paid plan.
HubSpot charges you based on the number of ‘marketing contacts’ you have. As per HubSpot, you only should pay for contacts you want to market to — therefore, they allow you to add up to 15 million non-marketing contacts. Obviously, you don’t have to pay for the non-marketing contacts (as these are free to collect). Still, you have to subscribe annually for ‘contacts’ you want to send marketing communication and ad targeted emails.
However, if you have been adding many marketing contacts into your database, you may be subject to a bill shock on renewal. This is not uncommon, but you must be watchful about permitting users to bulk upload marketing contacts.
But, wait, there’s something more you need to be cautious about, i.e. HubSpot’s commission model. Our short blog will give you a brief rundown of the partnership model and its multifaceted aspects.
Introducing HubSpot’s Commission Model 💰
Through the commission model, marketing agencies sell HubSpot’s tools to other businesses and are paid a percentage of commission for each sale. Ideally, those agencies take responsibility for providing the new HubSpot customer they have referred with a smooth onboarding process, ongoing support, and future maintenance, albeit with associated service fees as agreed.
Though an excellent first step in helping businesses scale and grow better, the HubSpot Commission Model might be too easy to negotiate according to the agencies’ twists and turns. Marketing agencies and solutions partners sometimes manipulate the lifetime commission model that promises 20% commission on each new sign-up.
It’s true that marketing agencies have been helping clients with custom integrations and complex implementations of HubSpot products — but HubSpot has been the master at teaching the clients the principles of inbound methodology and working to build and nurture businesses of all sizes. Overall, it’s a win-win for both agencies and clients.
Despite all the excellent work, marketing agencies that are rebranded as solutions partners (with gold, platinum, and diamond tiers) may be more incentivised to get you signing up to HubSpot than meets the eye.
What Is The HubSpot Solutions Partner Program? 🧐
It all started in 2010 with HubSpot’s Agency Partner Program, which taught businesses the inbound marketing principles.
As the company grew, the agency program was rebranded as the Solutions Partner Program, which is designed to partner with marketing agencies all over the world to serve and resell their popular software solution to their own end-user customers.
Hubspot Solutions Partner Program is for marketing agencies; therefore, it’s for service providers looking to expand their offerings and offer expertise in HubSpot. They help other companies with their expertise in marketing, sales, customer service, web design, CRM, or IT Services — with promises of accelerating their clients’ growth with continued assistance.
However, the shared mission of helping countless organisations grow better by partnering with other B2B agencies at first glance is most often not fully realised. This is often to do with HubSpot’s lifetime commission model.
How Does The Solutions Partner Program Work? 🤷♂️
With HubSpot’s Solutions Partner Program, marketing agencies gain exclusive benefits upon reaching each higher level tier — each level offers ‘extra’ perks, which the agency gains with the level of success they achieve with clients using HubSpot’s platform.
Tiers are ranked from gold (rookie) to elite (pro). When an agency joins its program, they are either solutions providers or solutions partners. The provider package makes a lower commitment to sell and service HubSpot, whereas the partner package provides them with a wide range of benefits.
One of the first things a marketing agency does upon joining the partnership program is lead registration — a process of claiming a prospective company that they want to refer or resell HubSpot at some point. If a lead buys HubSpot and has been registered as a prospect by an agency, the agency will generally receive a revenue share for that deal. Once a lead is registered, the marketing agency also can ethically reach out to that company for further sales and other interactions. [However, a new agency may sell the client other HubSpot products or an upgrade/upsell if the client wants to switch marketing agencies. Afterwards, the new agency will receive the commission for that upsell or upgrade.]
However, to join this program, an agency needs a valid certification — and based on the sold and managed monthly recurring revenue (MRR), they are assigned the tier levels.
For example, if they generate sold MRR worth $70,000 per month along with a managed MRR of $210,000, they will become an elite solutions partner, the highest tier level possible.
Sold MRR and managed MRR are key metrics in those agencies’ progression through the tiering structure. Each MRR generated offers the solutions partners a commission as long as the customers maintain their subscriptions.
In short, the marketing agencies benefit from you for a lifetime.
HubSpot Solutions Partner Tiers 📈
Before the tiers, there were two divisions: solutions provider and solutions partner. Solution providers are not obliged (or pressured) to meet any MRR requirements.
However, there are four tier levels for a solutions partner: gold, platinum, diamond, and elite. According to HubSpot, the tiers represent the partners’ growth path and a way to differentiate themselves from other marketing agencies. The tier levels are determined based on a combination of metrics — including the monthly sold and managed MRR, customer retention, software engagement, and inbound marketing success.
Here’s a breakdown of the solution partner tiers as per HubSpot. All amounts below are in Australian dollars.
|Tier Names||Thresholds for Sold MRR||Thresholds for Managed MRR|
Across all tiers, the marketing agencies make a flat 20% profit out of your HubSpot subscription. To help your business scale and grow, those agencies also get a range of people support, marketing, sales, services, and enablement tools, and the HubSpot community support — but sometimes they do not seem to genuinely invest in your business. Once the commission is in, things might not look so colourful.
Can HubSpot’s Commission Model Be Abused? 😨
How do we know that the commission model is open for taking advantage of?
Well, it’s because of our own experience with HubSpot’s solutions partner program!
Many clients have come to us seeking expert advice and opening up about their pain points and frustrations working with other HubSpot solutions partners. They complain about poor onboarding experience, lack of technical support, and no customised maintenance: the list goes on and on.
Despite the ‘platinum’ or ‘diamond’ badges some of these marketing agencies may crow about, they often fail in providing their clients with a smooth HubSpot experience, despite helping them scale their products and assist them in their overall growth.
The lifetime commission perk seems to have left some HubSpot partners unmotivated and uncaring to help businesses like yours continue to grow. Frankly, it annoys the heck out of me!
HubSpot is a very efficient tool for inbound marketing; there’s no doubt about that. It’s a high-quality CRM, marketing/sales, and operations platform. HubSpot delivers results because you become proficient in inbound marketing, yet whilst their commission model makes sense on paper, the way some resellers or agencies utilise it, it can end up being like fingernails on a chalkboard — the dreadful noise (in this case, a silent motive) will end up giving the client the shivers!
Conclusion – Our Honest Advice 🤝
The bottom line is — if marketing agencies are incentivised by the lucrative lifetime commission for getting businesses to sign up and use HubSpot, there isn’t a lot of motivation to keep providing an outstanding level of service as they will receive a commission for the lifetime of the end user’s subscription regardless of who performs their ongoing HubSpot work/services.
Bluntly put … an agency can promise you “castles in the air” about HubSpot simply to onboard you, and when the “honeymoon” is over, drop you like a hot potato. If you decide to part ways and either set up your own internal marketing department or engage another marketing agency’s services (HubSpot partner or not), the initial agency you onboarded with still gets paid commission from your subscription with HubSpot, whether you like it or not.
So, if you are a HubSpot fan (which you should be), you aren’t going to leave the platform for another one, are you? Hey, your whole CRM is in HubSpot now! Do you really want the drama to start all over again? I believe most of you would say, No, can’t be bothered,… because HubSpot makes it so easy.
I suppose the bottom line is that the person who onboarded you to HubSpot will get a cut of your subscription fees for the lifetime you are using it, so you need to be comfortable with that before going in. All we suggest is that you do due research to ensure that they are trustworthy, sustainable, and ethical partner long-term who shares your objectives and outcomes because the HubSpot commission model doesn’t encourage that level of commitment and engagement or partnership loyalty on its own.
The Solution? ✅
Before you sign up for a HubSpot product via your marketing agency, ensure the agency is working with your best interests in mind and cultivating or maintaining a healthy and engaging long term relationship with you as the customer. Only that way, the sign-up will be beneficial for all parties, not just the one paying recurring commissions. If you want to discuss HubSpot more, please drop us a line here
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