Nearbound GTM—involving partners in every part of the buyer journey—is gaining momentum. But formalizing partnerships with contracts can be a pain, and often sucks the momentum out of the relationship.
What if you could turn the legal process into an advantage, rather than something to dread?
There isn’t a perfect template, since every company is different, but there is a process and key points to be considered. If you follow this, your life will be a lot easier!
Make friends with legal
Partner pros need to leave any baggage they may have with Legal in the past and find a way to turn them into your best friend.
The first step is to assess your existing partnership agreements. Once you have identified the gaps and drafted a couple of ideas, the next step is to go and pitch your idea to your legal team.
Make sure that you pitch the idea in a scalable way, this means that the revamped contracts can be used as a blueprint to develop and roll out contracts for the sales teams.
How to structure partner contracts
Making a contract is more than just writing fancy legal terms in a 30-page-long document, it’s about making everything comprehensible and the most functional way possible. It’s all about legal design.
Legal design and structure
Traditional contracts are usually designed only for lawyers to understand them, but a good contract needs to be understood by anyone reading it. The key to making that mindset shift is to have a design and human-focused approach.
The legal design approach prioritizes legal information and enhances its accessibility through a visual framework for reading. Rather than replacing legal texts, legal design makes them easier to read and emphasizes key points.
Revamping your contract involves 3 steps:
- Identify the pain
- Give your ideas a clear structure
- Test and run
The process starts with identifying the pain. The pain usually stems from a lack of understanding of the different conditions and not having transparent contracts that describe how the partner relationship should look.
“You should use contracts as a tool rather than as a burden.” - Sylvain Mlodyszewski, Partnerships Director at Ultimate
Once you have understood the pain, start with planning the structure. A layered approach often works best. Here are some things that you need to consider before getting started:
- Who are the people involved?
- What’s going on?
- Additional notes space - A dedicated space for any tweaks, changes, or extra agreements that can take place.
Ultimate found that a better structure was taking a layered approach:
1. The intro. This section includes who’s who (the definition of your partner’s business and yours), what is expected from the agreement, general partner terms, date, the type of contract, the partnership details, a note section, and the confirmation (signature).
The goal here is to put the critical information front and center, rather than buried in the body of the terms or attached as schedules.
2. The specifics. In this section, Ultimate includes all the specific information about the type of partner engaged: Do’s and Don’ts, expectations, working conditions, important definitions (any practical information that can help to develop a better partnership), the right rules of the game, etc.
This needs to be tailored according to the type of partner you’re doing business with and the specific needs of your partner program—don’t adopt something that already exists. However, don’t inundate with a high level of detail because you need to give the business a certain degree of flexibility.
This part of the structure is also useful in case Ultimate’s partner starts as a referral, and then grows into a co-seller or reseller. As the relationship evolves, the relevant partner-specific terms can be “bolted on”
so the rest of the
contract remains the same—is like building a lego house.
Tip: Include aspects that make sense not only from the legal standpoint but also from the business perspective. This is a reflection of your business practices, so use language that you use in partnerships.
3. General terms. In this layer, Ultimate includes everything that applies to everyone involved, which means all the generic partner T&Cs, and topics related to intellectual property, liability, security compliance, etc.
Tip: to make your contract more functional, we suggest hyperlinking standard legal conditions and generic business operations items rather than bolting on an extra 20 pages of legal text. These terms can be easily updated if they are found online.
“Let’s just use the contract as a frame of discussion” - Sylvain Mlodyszewski, Partnerships Director at Ultimate
Once you have your contract drafted, test it. One easy way to know if the contract is understandable and easy to use is to test it with your sales teams, if they understand it, it means it’s ready to go, if not, just make the necessary changes.
If you have negative feedback from your sales teams, try to identify the key negative words they are using, and start working from there.
The seven principles of a good contract
No one said that revamping your partnership contracts was an easy task, and you might have more questions than when you started, but there’s nothing that can’t be done if you follow these 7 principles:
1. Assess your contracts. Take a look at what you have: do you know your current situation, what your final result would be, and if your new contract will protect you from any risk? What are the challenges and what does “good” look like?
While assessing your contracts, consider the readability score (should be higher than 60, plain English) and the reading grade (should be appropriate for your audience). You can use a tool like data.yze to benchmark how easy
your document is to read.
2. Have good planning. Identify the main persona who’s going to read the contract, and the best time frame to revamp your contract.
3. Get your executive’s buy-in. Create a partnerships contracts plan which includes a presentation and includes WHY you want to do this (an analysis of your old and new contracts, plus the benefits of the revamping) and HOW you’ll make it happen.
4. Give structure. As we previously mentioned, the structure is really important, and it must be design and human-centered. Start drafting the new contract, identify the mechanisms you want to use to deliver the T&Cs, and the language you want to use.
5. Prototype. Adapt the contract according to your business use case, and address the needs of your partner and yours. You can use Google Docs as a tool. Build your contract in the easiest way possible, almost as a partner enablement tool.
6. Test your ideas. Have feedback, and have your audience’s input.
7. Sign and close the deal. Ask for feedback during the final stages of the deal.
For a deeper understanding of these 7 principles, download our checklist here.
Be mindful that before starting this process, you will need to ask these questions:
- Take a look at what you have: what is good, and what could be better?
- What type of partners does my company need? Check out this blog.
- What mechanics can you use (website, software, or tools) to deliver your terms?
- How can you communicate the content? (Think about simple language, layout, visuals, graphics, etc.)
- What are the expected outcomes of the contract?
- What’s the contract you want to improve?
The beginning of a partnership—Tips
We know there are different types of partner contracts, and it might take considerable time to go through all of them, so, for now, let’s start with these tips so you can get your partnership started:
The financial component
If you have a manual compensation process and you want to get your finance team on board, show them how with your new contracts the commission process will be simplified. Instead of having “x” different ways of doing commissions, now you’re going to have one with minor tweaks (depending on the percentage of the referral or resale).
Approach them from the process and billing perspective. Let them know the commission percentages (tiers/amounts), what triggers them, and the timeline for paying the fees of your vendors/contractors/partners.
Co-marketing agreements
How you create these types of contracts depends on your partner program and how you planned to interact with your partners. We know that there are several ways to do co-marketing, so, instead of changing the contract every time, be flexible and add a tick box to your contract. Add the details of how is it going to work in each case—include the most relevant parts of that agreement.
Referral agreements
Look for partners with complementary offerings or partners that operate in the same industry. With the companies that belong to your ecosystem, tweak your contracts in a way that everything is mutual, and that the agreement is exclusive to those tech partners.
Integration/ISV partners
Before actually building an integration, find if both companies fit together, set the agreement rules, which include the ways you’re going to market each other, and the way you’re going to market, then figure out the integration.
Ecosystem tech partners help you ease your GTM strategy, usually, they don’t need commercial structure (commissions), and when they do, try to include them in the alliance section and not in the tech integration section.
Key takeaways
- To revamp your partner contracts make sure you identify the pain, create the proper structure that addresses the pain, and before launching your contract, test it with your sales team.
- The optimal structure for your contract includes an intro section, specific information about your partnership, and the general T&Cs.
- The 7 principles of a great contract include: assessment, planning, executive’s buy-in, structure, prototyping, testing, and closing the deal.
Before a contract, you need a partnership. If you want to discover the best companies to partner with, signup to Reveal for free!
