How to comp your first Head of Partnerships
A VP of a top digital agency asked me what the going rate was for a first Head of Partnerships hire at an agency like theirs, and what factors make that salary higher or lower.
A bit of a loaded question...
But, I thought it was a good time to really think about what I would do in her shoes - having to figure out a compensation plan and OTE for a first partnerships hire.
It's not an easy task given how new the "partnerships" teams are for digitial agencies... So there are not a lot of examples out there to base the decision off of.
Most people in her shoes immediately look to the salesperson's comp structure at their org.
I strongly suggested this to her - IF you comp them the same way you'd comp a salesperson, they will become a salesperson and not cultivate true valuable reciprocal partnerships with other organizations (which is what they need this person to do).
Some of you may disagree with this mentality because you see a partner team as purely a net new lead driver for the business.
But, if staffed, trained, and trusted... a partnerships team can lift all KPIs for all departments.
What I asked her to ensure she was open to this logic before I got into the work of figuring out a logical way to determine this person's compensation was:
"Is this person going to have a revenue quota? If so, what would that look like and when would it start?"
She explained her thoughts on that, and I agreed the revenue quota should be there, but not kick in until after a 6-month (minimum) ramp time.
From there, it was important to know the "typical" base salary and OTE for a "Head of Partnerships" at a ~100 employee agency focusing on Mid-Market customers.
Based on my knowledge of a few other team leads, I said $120K base, and 20-30% commission opportunities on top = $150K-$160K OTE. Which should increase each year they hit their quota and/or with each new direct report.
But, that's average.
Some people are certainly more valuable right away than others (their past role, connections, knowledge of the ICP...).
Further, the agency culture and vertical / sector also can make partnerships development easier or harder - which means the base salary should be impacted by factors out of the control of the new hire.
To help, I created a simple spreadsheet with the main factors that can increase or decrease their comp plan, and added a weight selector between .5 and 1.5 (50% - 150%) for each factor to either increase their salary from the Mean or decrease it (depending on how much the factor applies to that person specifically).
This really helped her, so maybe it would help you too:
Dependencies to gauge the new hire by:
✅ Does this candidate have experience finding and activating partnerships in your vertical?
Very crucial for any role - have they done this before? Partnerships is a very unique strategy. Push too hard, and you will get branded a salesperson in the eyes of your partner. Don't push at all... and you will not prove your worth to the org by bringing in deals.
The more experience they have, the hire their base and OTE should be.
✅ Is your company in a high-partnerships-impact vertical (i.e. eCommerce) making it easy for your PM to find partners?
Call it a vertical, sector, industry... Some are ripe with partnerships activity. Others are not. You have to be honest with your team and your new hire about the difficulty for striking up new partnerships in your vertical and then activating them.
If partnerships are not something most of your competitors and service providers in your vertical are using, then you must increase the base salary of this new hire to accommodate the challenge.
✅ Does this candidate have experience managing a lot of partners?
THe keyword here is "managing." Anyone can be assigned and responsive to hundreds of partners. But, few can bring life to stale partners, be of value to those partners in need, create amazing shared customer stories with their managed partners, and manage their own stress levels in the process.
If your candidate has managed over 50 partners successfully, they should have a higher base salary.
✅ What "juice is left to squeeze" from the partners you have now?
This is for those who have had "partners" in their processes for a while before hiring. The reason - sometimes the product is so good... so easy to use... so partnerships-ready... Partners have forced their way in without needing anything but a great product in return. Founders, and other leaders internally, have been involving partners in sales / marketing since the beginning. And, therefore, a new partnerships lead may run into a rare wall in the fact that all current partners are happy and active, while most prospective partners have already heard of the company and made their decision.
If there is a blue ocean of opportunity... OTE should be higher and base lower. If the company has been partnerships-led from the beginning, then this individual must be very creative, patient, and opportunistic. Therefore their base should be higher in the latter situation.
✅ Is this candidate promising to bring relationships with them into your program?
Sometimes, the candidate has a lot of strong relationships with partners who would gladly come along. But, you have to be careful what you are promised by the candidate in relation to whom they say they will bring. Quality partners will always make the decision based on the quality of the company, not their previous relationships.
If the candidate has a lot of strong relationships from a previous company in your space, they may be paid a higher starting salary.
✅ In their last role, did this person deal with actual customers / clients? Or, did they only work with partners?
This is one of the most crucial aspects of hiring someone to "lead" a partner program at your company. It's my opinion that this individual needs experience with both partners and customers in your space. This could mean they were once working with clients as a service provider, or as a salesperson, or in a customer success role.
But, if they have only ever worked with partners, not customer strategy/support/sales, I believe they should have more incentive on the OTE side of comp.
✅ Are the other departments incentivized to support this individual as they bring more partners in?
Also crucial... Is your CRO and sales leader eager to work closely with partners? Is your marketing team ready to collaborate with partners on co-marketing? Is your product team open to input from expert partners?
If so, this person will have a much easier time being successful with partnerships in your org, and you can reduce base while increasing commissions or bonus structure.
✅ Overall, how much do you want them focused on single deals vs helping departments achieve large goals?
The reason we want to ask this question is simple - you will never have or want a team of 50 partner development managers like you would AE's or SDR's. And therefore, you need to be honest with your new partnerships hire about whether you need them "working deals" right now, or cultivating a "channel" for future growth.
*For the partnership leaders reading, you will also want to ensure you are not walking into a scenario wherein leadership simply wants you to take all you can get from current partners in preparation for an exit of some sort. I've seen this a lot with companies about to IPO - they will hire a lot of PDR's to try and get new business out of current partners. And in smaller orgs that have service providers in their CRM and want someone to come in and simply try to draw leads out of those who they already have as contacts. Partnerships is about baking a bigger pie together, so either scenario is not a true "partnerships" strategy.
A partnerships strategy will lift all departments KPIs, and therefore is a larger challenge and warrants a higher base pase.
If you want them to focus on drawing business out of current contacts, then a lower base and higher commissions.
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Here's the work in progress Google Sheet with the math in tact >
