NICE TSDs, TAs, Could Earn Less Under New Compensation Model

NICE is altering its partner compensation model for technology service distributors (TSDs) and technology advisors (TAs).

The vendor has made a shift to its commission-based compensation around discounting. According to a partner source, the vendor has introduced a formal process to inform partners if direct sales teams reach a certain threshold of discounting. If discounting goes into "the red," NICE may reduce the commission it NICE it provides to sales agents involved in the same deal.

These changes have occurred amid new contract negotiations between NICE and some of its tech services distributor partners. Robert DeVita, founder and CEO of Mejeticks, has a longstanding relationship with the contact center software and customer experience solutions provider as an agent via tech services distributors Intelisys and Avant.

"What we have been communicated [from the TSDs] is that a lot of the TSD contracts with NICE have expired and they have been renegotiating those contracts for the past six months. There will be a sliding scale-down of commission payments based on where NICE discounts deals for end users," DeVita told Channel Futures.

This denotes that the end price the customer sees will now reflect in the partner's commission rate for certain deals.

Mejeticks' Robert DeVita

"This affects any deals discounted over 50% of NICE's list rates, and right now those commissions are 20% for TSDs and can go as low as 10%," following the move to reduce NICE partner compensation models, DeVita said.

Partner Advice for Selling NICE

Lucas Salvage, CRO at Kairos Data Communications, said if you're looking to sell NICE, you first need to know a few things.

"Ensure that you are aligned with direct sellers on the opportunity and understand that if pricing is presented to your client, it needs to be reviewed with you first. This is to ensure that discount levels don’t dip below a threshold that would impact your compensation," he told Channel Futures.

Kairos' Lucas Salvage

At a high discount level, or over 50%, Salvage expect that NICE can and likely will reduce a partner's compensation.

"While this isn’t a fun idea for any technology advisor, it’s the new reality that we must understand and take action on," said Salvage.

From his understanding, anything above a 60% discount level, NICE will notify TSDs and technology advisors, and there will be a discussion to ensure that kind of discount is required to win the business.

"That 50%-60% is where the TA community needs to be vigilant," Salvage said. "My only advice is to ensure you are in lockstep with the direct seller. I have never been in a position where the direct seller sent a proposal to my client without Kairos first reviewing it, but understand that can and does happen, so make sure you own your relationship."

His second piece of guidance centers around setting calendar triggers around renewals.

"Again, my understanding is that TAs are only 'protected' on an account for 24 months, and as that comes up toward a potential renewal, it remains critical that you re-register the renewal activity," Salvage told Channel Futures.

While this change in compensation model certainly isn't favorable, Salvage suggests it gives partners the opportunity to "ensure we’re part of the solution and are the ones driving a renewal."

A 'Bad Move' For NICE Partners

For TSDs and TAs, DeVita says this is "bad" and echoes a move made by 8x8 more than a year ago. That company newly reversed course, believing it was no longer on a level playing field with other vendors, he added.

The move impacted unified-communications-as-a-service (UCaaS) deals and 8x8 changed its mind due to pushback and from lack of deal registrations, DeVita said.

"If I have a deal price point that needs to be met for whatever reason that the customer has, this is putting NICE at a significant advantage to their competition because they are increasing their take-home margin while everyone else keeps their commission models the same based on their contracts."

DeVita explained that going into a deal, he will "bring NICE in" and if a certain price point is necessary to win a deal, "we're expected to take a reduction, but are unsure if anyone on the NICE side is seeing a reduction, too."

Channel Futures raised the question to the contact-center-as-a-service (CCaaS) provider but did not hear anything before publication.

An Unusual Ask, All Things Considered

Under the existing model, TSDs and TAs have contributed to NICE's record operating margins and cloud margins, making the ask to take a cut an unusual one, DeVita insists.

With the contact center space being highly competitive, DeVita thinks the move to change NICE partner compensation models will put the company at a disadvantage.

What also remains unclear is if the move will impact renewals, another question we posed to NICE and are awaiting clarification on.

"We are under the impression that this new commission model will impact renewals," DeVita told Channel Futures.

DeVita says in the UCaaS/CCaaS space, there's been a trend toward vendors moving to more of an independent software vendor (ISV) model. This could be triggered by that notion and wanting to move away from the TA/resell model, he said.

"You can see that by the channel chiefs [industry players] hire. With resell, you can ... have resellers handle support, and they don't have the large monthly commission rates. I also think there is a shift in the NICE perception of where they believe their growth will come from," DeVita said.