The Toxicity of SaaS Partnerships: A Call for Transparency and Integrity

Let’s pull back the covers and talk about an ugly truth that software vendors and service agencies do not want to talk about -- the under the table payments sent from software vendors to agencies for promoting and selling their products.

While partnerships between vendors and agencies are often talked about as being beneficial collaborations designed to create better client experiences, the reality is that many of these partnerships are toxic, driven by hidden financial motives that ultimately prove detrimental to the clients they are supposed to be serving.

There is a promise for strong vendor-agency partnerships, ones that are build on a foundation of mutual respect, deep subject matter expertise, and a shared commitment to client success but rarely do partnerships get to this point as the thirst for more revenue and faster growth has value based partnerships quickly replaced with affiliate referral, and reseller programs putting on the appearance of independent subject matter experts while being quietly supported financially by the very software vendors they are recommending.

In theory, agencies leverage their extensive knowledge and experience with specific vendors' platforms to provide clients with insightful recommendations and robust implementations - this is the model that we follow at 33 Sticks. These partnerships are meant to bring together the best of both worlds: the innovative capabilities of the software vendor and the practical, hands-on expertise of the agency.

The Reality: Agencies as Sales Channels

Unfortunately, as i mentioned, the thirst for more revenue and faster growth introduces a temptation to misuse partnerships that many vendors and agencies simply do not have the willpower to refuse.

Instead of serving as independent experts, many agencies act as full blown sales channels for software vendors. They are not motivated to provide unbiased recommendations or prioritize their client’s best interests, instead, they are driven by commissions, kickbacks, and quotas that require them to sell a certain volume of software each quarter.

These financial agreements create a clear conflict of interest that undermines an agency’s credibility — well, at least they should undermine their credibility, the ugly truth is that most buyers are unaware of that these sorts of financial agreements are at play when listening to the recommendations of their agency.

When an agency’s revenue is tied to the sales of a particular vendor’s product, their recommendations can no longer be considered objective.

They are, in essence, resellers masquerading as independent advisors.

The Deceptive Nature of Partner Programs

The term "partner program" itself is misleading. These programs are often little more than reseller agreements in disguise. Agencies involved in these programs are typically on the vendor's payroll, receiving commissions for each sale they facilitate. They are incentivized to push certain products regardless of whether those products are the best fit for the client​.

What’s more concerning is the lack of transparency. Rarely (Almost never) do agencies disclose the financial details of their reseller agreements. Clients are led to believe that the recommendations they receive are based on unbiased expertise, when in fact, those recommendations are heavily influenced by undisclosed financial arrangements​.

This lack of transparency is not just unethical, it is harmful. Clients make significant investments in software based on the advice they receive from these so-called “partners.” When that advice is poisoned by hidden financial motives, clients are at risk of making poor software investments that do not meet their needs. This leads to frustration, wasted resources, and ultimately, a loss of trust in both the agency and the vendor.

To restore integrity to vendor partnerships, we must demand honesty and transparency. If agencies are to be truly independent voices, they must sever financial ties that compromise their objectivity. This means eliminating sales kickbacks and quota-based compensation from partnership agreements.

With that said, if agencies do want to maintain these very lucrative financial arrangements, they must, without any question, be upfront about them.

This means that they must be very clear in all of their communications: “We are a reseller of Product A. Our reseller agreement includes a compensation structure where we receive X% of every purchase we assist in closing and Y% for every qualified lead we generate.”

This level of transparency not only needs to exist between agency and client but must also exist between agency and marketplace.

i believe that true partnerships are possible if we are able to redefine what it means to be a partner. A genuine partnership should be focused on creating knowledge, insights, and positive customer experiences without the blight of hidden financial incentives. Agencies should be compensated for their expertise and the value they bring to clients, not for the volume of software they sell.