Salesforce.com Plans New Referral Fees For Driving Partner Business

The belated fulfillment functionality, due out at the end of next year, is an example of AppExchange's technology gap. Although Salesforce.com CEO Marc Benioff has referred to AppExchange as an iTunes- or eBay-like market, it has been an eBay without a checkout -- more like a billboard than a transactional sales site. Customers can click "Get It Now" and download partner applications, but partners must set up their own systems for charging customers. Several partners said they found that surprising and had expected AppExchange to already have those functions.

Still, with more than 230 partners selling a diverse assortment of applications on AppExchange, opinions run the gamut. VerticalResponse's Popick loves the service and said her company saw an instant boost in sales volume when AppExchange launched.

"It used to be that we were at the mercy of a Salesforce.com employee knowing about us so they could pitch us as a solution," Popick said, adding that she's eager to investigate the new referral programs and is likely to sign up.

QuestionPro COO Kevin Battey said his company will consider joining the referral program. "We think AppExchange is excellent," he said. "The leads we get are very solid leads."

While the new referral program will be voluntary, participation in Salesforce.com's marketing events will be limited to those who enroll. The program's first tier, Standard Referral, will launch Feb. 1. In exchange for a 10 percent cut of first-year revenue from partner application sales driven by Salesforce.com, the company will offer premium AppExchange placement and eligibility for its incubator program and marketing campaigns.

A second tier, Premium, is slated to go live in August. For a 25 percent referral fee, Salesforce.com will offer partners seminars with its direct sales staff to pitch their wares, along with other demand-generation programs. Even though Salesforce.com's referral programs are linked to AppExchange and carry the AppStore brand, Kelman said the fees will apply to all Salesforce.com-driven partner sales, including those generated outside AppExchange.

Until Salesforce.com launches AppStore Checkout and begins actually processing sales for partners that opt in, it will rely on partners to report their sales, Kelman said.

While Salesforce.com readies its mid-January Winter '07 release, it's scheduling a temporary hiatus on listing new products in AppExchange. The site will freeze from Jan. 5 to Jan. 12. It will function normally for customers, who will still be able to download applications already listed.

As Salesforce.com shapes its new referral programs, its challenge will be convincing partners that the steep prices are worth paying. One AppExchange vendor who's happy with the partnership overall said the proposed referral and checkout fees are unseemingly high. Still, he said his company might have little choice but to fork over the cash.

"They're the largest of the SFA [sales force automation] players," he said. "We have to play along."