Why Cisco Is Embracing a Commission-Based Sales Model

Cisco channel leaders are framing the referral agent partner model as key to accessing down-market customers.

Cisco on Tuesday announced a new partnership with the tech solutions brokerage Telarus. The agreement followed an alliance Cisco signed with Intelisys last summer. Both agreements give partner firms an opportunity to sell Cisco Webex in a commission-based model. Although many suppliers have already been offering Cisco-based solutions to agents, many of the agents’ larger customers have been asking to interface more directly with Cisco. On the other hand, many of Cisco’s traditional VAR partners had been asking for a more cost-effective way to transact with smaller customers.

Cisco’s Kristyn Hogan

Cisco vice president of collaboration partner sales Kristyn Hogan said adopting the agent model expands the vendor’s sales footprint and gives customers more flexibility.

“This was an opportunity for us to unlock a whole new partner set and really listen to our customers on how, where and with whom they want to buy,” Hogan told Channel Futures.

Hogan said hybrid work has led to a larger set of customers that are looking for Cisco’s offering.

“It has really unlocked a much bigger market for Cisco, particularly Cisco collaboration,” Hogan told Channel Futures.

More specifically, Hogan said down-market customers, which Cisco doesn’t normally transact with, are more interested than ever. And agents could serve as a bridge to those customers.

“These are folks who have been talking to customers that historically we have not talked to. And these are customers who all have a need now more than ever for a hybrid work solution,” Hogan said.

Enter Agents

That leads to driver No. 2: expanding Cisco’s partner base. It’s not just expansion in terms of customer volume, but also expertise. Specifically, agents know how to sell subscription-based offerings.

“They are not new to this cloud, recurring-revenue road and have been living in this world in some cases long before we have been,” Hogan said.

Athenium’s Jolene Langford

Cisco CEO Chuck Robbins recently said the company was earning just over $3 billion in software subscriptions when he took the reigns in 2015. That number hit $12 billion in fiscal year 2021.

“I think this move reinforces what a lot of people already knew, which is that Cisco was a little slow to pivot away from the hardware business,” Jolene Langford, founder of Athenium Technology Group, told Channel Futures. She said one customer has requested Webex in the last five years.

Langford said she’s enthusiastic.

AireSpring’s Shane Speakman

“It’s always been a little unfair that VARs could sell Cisco and be agents. But pure-play agents like me couldn’t sell Cisco. So this levels the playing field.”

Telarus vice president of UCaaS Shane Speakman said agents will play a key role in helping Cisco penetrate the cloud communications market.

“They’re just not seeing the cloud adoption from some of their traditional channels, and they really see this channel as the future of cloud sales,” Speakman said in an interview with Channel Futures Tuesday.

However, many of these agents have been selling rival collaboration offerings over the last decade.

“The agent community has been selling against Webex for years,” said Kate Jaffe, who leads business development and strategic consulting for Helm Partners .”By making Webex a commissionable offering, Cisco now gets …

… to join its competitors on the table in our partner offerings.”

Helm Partners’ Kate Jaffe

Existing Cisco Partners

In addition to adding new partner types, Hogan said adding the agent model allows Cisco to go deeper with its existing partners. She said she initially underestimated the appetite of traditional reseller partners for earning an evergreen commission in deals with their smaller customers.

“Some of our best and biggest partners came to us when we launched this new route and said, ‘Thank you. We now have a really profitable, easy, frictionless, no-risk way to service these down-market customers like we’ve never had before,'” Hogan said.

She said established Meraki sellers have jumped at the opportunity to sell Webex in a manner that requires less investment. Cisco can take the reins for much of the account management and life cycle support that the partner would have needed to do in the traditional resale model.

“There’s a handful of really fantastic, strong Meraki partners who play in that swim lane, don’t really cross over into the collaboration space, and don’t really have an interest to go build out those teams and that expertise,” she said.

Product Expansion

Cisco channel executives and partners alike say they are hoping the commission-based model expands beyond Webex. For example, Hogan said strong demand exists for Cisco to bring in a contact center offer.

Langford agreed.

“I can’t say I’m terribly excited about this initial offering, but if they bring UCaaS and contact center, or even Meraki, that could be huge for us,” she said.

Hogan said she looks forward to a future expansion.

“I think what will really differentiate Cisco in this space is the ability to have that cross-architecture — a true, complete technology platform for these down market customers,” Hogan said.

However, she said Cisco is taking a “walk, crawl, run” approach to establishing this new model. And that will require a methodical approach to ensure a good experience for partners, she said.

“We didn’t want to go too fast and not provide the best experience for these technology brokers, their partners and our customers,” Hogan said.