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How To Navigate The Changes To The HubSpot Partner Program And Thrive

Posted by Mike Lieberman on Mar 8, 2023 8:15:00 AM

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It’s been a while since I published any agency-directed content on the Agencies 2 Inbound website. Let’s just say the agency business at Square 2 has needed my attention more than in the past. There are a number of strategic initiatives we’re working on that are both time-consuming and exciting. 

HubSpot threw a wrench into a lot of the agency’s long-term plans with the announced changes to the Partner Program. I’ve heard from many of you, heard from HubSpot on the response from the partners, and of course have my own opinions about all the upcoming changes. 

It’s very interesting to see the wide variety of responses. Everything from thinking this makes sense for HubSpot, to taking legal action for removing lifetime commissions.

The bottom line is that HubSpot has always taken care of HubSpot. That’s not a bad thing. As agency owners, you should have been taking care of your own businesses, regardless of what HubSpot was doing. Now you’re forced to make some difficult decisions. These are decisions that probably should have been made years ago. 

Your agencies will survive. Here are some actions you should take today to make sure the next two years are spent proactively getting ready for what likely will be additional changes when it comes to HubSpot.

Start Charging More

As agencies, we don’t charge enough. I’ve been saying this since 2016 when I first spoke to all the agencies at Inbound. There have been too many agencies that sold cheap retainers to get commission and partner-tier credit. Those days are over.

You should know your own value and the value of the work you’re doing for your clients. 

Helping companies generate leads, create more sales opportunities, close those opportunities more efficiently, and helping them grow is worth much, much more than most of you are and have been charging. 

You’re going to have to start charging more. Your costs have gone up. Now you need more expensive technical team members. Also, with the commissions going away, you won’t have that source of income anymore to supplement unprofitable client engagements.

This is good, not bad for the ecosystem. 

Lean into this. Start raising prices now. Start charging more for the same amount of work. It might seem like the clients won’t be able to afford it, but when most of the respectable agencies all follow suit, clients will quickly reset their expectations. 

The $3,000 retainer should be long dead by the time the HubSpot commission stops coming in.

Rework Your Financials 

Our agencies are not money-makers. The profit margins without HubSpot commissions are slim. This means you need to rework all your financial models to ensure you make a profit WITHOUT the HubSpot commissions. 

You need to know these numbers now, not in two years. 

Raising prices is one way to deal with this, but labor and efficiency in your business is another. I’ve talked to too many agency owners who don’t know which clients are profitable and which ones are not. 

They don’t know which services are profitable and which ones are not. You need to know both and you need to redo your service delivery to make sure that the controls are in place to adjust both team costs and services costs to make sure there are no (or limited) unprofitable clients and no unprofitable services.

This is a good time to look at expenses like offices. We gave up our office back in June and the move saved us a significant amount of money. The business didn’t miss a beat. We’ve been highly distributed since 2015 and we’ve worked hard to cultivate our culture without a physical office.

You might have to look at other expenses too including labor. Like it or not, there are ways to limit your labor costs without impacting the level of service you provide your clients. 

Start looking at them now. 

Consider Any HubSpot Commissions A Bonus

This might seem obvious and some of you have already shared with me that this has been your position for a long time. If this was the case at every agency, people wouldn’t be so upset. 

The reality is many agencies use HubSpot commissions to artificially support their business. In other words, without the commissions, they would be unprofitable every month.

Start reworking your expenses now so that you make money without the HubSpot commissions. This might take time. The sooner you start the better you’ll be when the gifts stop giving.

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Diversify Your Partner Stack

This is something many of us should have done years ago, but it's not easy. The variety of technologies available to companies and agencies is massive. It’s extremely hard to support more than a handful of technologies effectively. 

It's even hard to lean into more than one to get traction with the provider and drive significant commissions. Even harder is keeping the technology partners happy when you’re selling their competitor's technologies. 

But if you are looking out for your business and not the partner's business, this might make solid business sense for you to consider.

Maybe it's complimentary instead of competitive tools. Maybe they are tools that compete on a smaller scale and don’t threaten. I’ve read some stories lately that HubSpot is open and comfortable with technical agencies who have Salesforce expertise. I would hope that’s the case. 

Regardless, having more than one technology partner makes sense today and while this makes client service and delivery more complex, it might make sense for your agency in light of these changes. 

Join Forces With Other Agencies

Let’s face it. There are too many agencies. This has nothing to do with HubSpot, there are too many generic digital agencies period. It’s too confusing for clients so they just pick the cheapest one to go with because they can’t tell us apart.

When you have large ecosystems like this, consolidation is inevitable. It happened in the Salesforce partner network. Companies were rolled up and purchased. It’s already starting to happen in the HubSpot community. 

Avidly aggressively purchased agencies outside of the US. SmartBug strategically purchased agencies to expand their practices. While there have been a handful of agency sales and combinations over the past few years, I expect this to accelerate, and I think this is very positive for all of us.

Learn Into The New HubSpot Partner Ecosystem

Finally, instead of looking at HubSpot as the bad guy (or gal), consider leaning into the opportunities these changes present. HubSpot has been very transparent about the type of partners it wants. Larger, more technical partners are the profile. 

Email, social, websites, paid ads, and traditional marketing services aren’t what HubSpot needs its partners to provide. As I mentioned above, these services are available from tens of thousands of small agencies in every local market. 

If you want to look further into the future, it’s very likely that a lot of these services will be provided by AI anyway. So why lean into these services today? 

Instead, start improving or adding the technical expertise that HubSpot needs. You can still ride the tailwinds of a very successful software company with this set of services.  Better yet, these technical services will be more profitable, you’ll be able to charge more, you’ll be able to differentiate easier and you’ll be one of 200 companies, instead of one of 5,000 agencies providing similar services. 

There is so much technical business to go around and only more coming down the road. Now is the time to create the agency HubSpot needs, instead of the agency you used to run.

I appreciate everyone who has followed me, listened to me, worked with me, or spoken with me over the years. I always encourage agency owners to reach out. I will talk to anyone at any time about anything. All you have to do is reach out via email. 

Inbound Marketing Agency Support

Start Today Tip – You should get your strategy together immediately. For some agency owners, two years isn’t a long time, especially if you’re spending a lot of your time working in your business instead of on your business. This means reworking your financials without HubSpot commissions and looking at profitability. It means starting to raise prices to make up for a lack of commissions and it means getting a tighter handle on your client and project profitability so you can plug holes or rework services so they can be profitably delivered. It might also mean looking at your team, organizational structure, and overall cost of labor. For some of you, this might seem like a lot of work for others it's just going to be business as usual. Regardless, it's an exciting time.  Let's take full advantage of it and grow our agencies profitably and aggressively. 

Topics: HubSpot, HubSpot Partner Program, HubSpot Solution Partners

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