Even the most sophisticated, global, multi-billion-dollar annual sales channel organizations make these same basic mistakes over-and-over again. Why do they keep choosing the wrong KPIs (Key Performance Indicators) to select, measure, and track their partner’s performance? They do this because they are choosing the “obvious” metrics that, with little thought, appear to be the right ones to focus on. Unfortunately, these decisions are costing channel organizations millions of dollars in missed growth opportunities and profitability. Let’s start with the top five worst KPIs to select for your channel organization:
1) Choose the Largest Partners to Recruit: Select the largest partners based on overall revenue.
- Metric: Focus on the partners with the most salespeople and largest revenue.
- Why Wrong: The largest partners are also the hardest to gain their attention and commitment and may be less profitable on average vs. smaller partners.
2) Spend More on your Largest Partners: Invest disproportionately in partners that generate the most sales for your brand.
- Metric: Focus on your largest partners in revenue for your brand.
- Why Wrong: Your largest partners today may have lower growth upside because you have tapped into much of their cross-sell potential vs. other partners.
3) Allocate Marketing based on Historical Sales: Allocate MDF / Coop based on earned accrual.
- Metric: Allocate marketing dollars based on a percentage of prior year sales growth.
- Why Wrong: No future performance is required for accessing and spending this money.
4) Use the Same Metrics for all Partner Life-Stages: Use same metrics for your brand new and long term / mature partners.
- Metric: Partner sales measured above all else.
- Why Wrong: Each stage in a partner’s lifecycle requires different resources, support and metrics.
5) Measure the Number of Partners Added to the Network: Focus on growth of the partner network vs. making the partners you have produce fast.
- Metric: The total size of the partner network.
- Why Wrong: For most channel organizations, 20 percent of partners deliver 80 percent of the revenue. Adding more partners with flawed onboarding only makes this problem worse.
On the surface, these KPIs sound like the right metrics to monitor. The problem is that none of them focus your channel organization’s highest potential areas for growth. The good news is there is an alternate set of metrics that are closely aligned with partner growth potential.
Top Five “Right” Types of KPIs for Your Channel Organization
All partners in your network are on a journey from the moment they start their relationship with your brand until they become high-performance, actively producing partners. At each partner life-stage there are a set of metrics and methods uniquely designed to support their growth.
Each step of a partner’s life-stage journey comes with a corresponding set of recommended tracking and performance metrics. These metrics help define the partners that are the best fit with your brand while also serve to track the activities that are necessary to develop capable, motivated, and revenue-producing partners.
The Five Right Categories of Metrics that VPs of Channel Sales Should Implement
Each of the following five metric categories are critical to finding the right partners for your business, developing their strategy to improve their readiness for your brand, and generating motivated and capable sales and support teams. However, not all of these metrics are critical for all your partners all the time. It is best to match the right metrics to the right partner life-stage and periodically review all the metrics for each partner.
1) Partner Fit with Brand Strategy Metrics: These are excellent for assessing new candidate partners and updating your “latent” partners that have not been active for a while.
- Philosophy: Partner philosophy alignment with your brand
- Verticals: Partner business alignment with priority vertical segments
- Openness: Partner openness to introduce your brand to their customers
- Commitment: Partner willingness to commit to investing in your brand
- Record: Partner track record with growing complementary brands in related categories
2) Partner End-Customer Business Profile Metrics: These are core partner capabilities that new and existing partners need to track and develop over time.
- Vertical Expertise: Concentration of partner business in priority brand verticals
- Functional Expertise: Depth of partner expertise in priority business functional areas
- Product Portfolio: Alignment of complementary products to your brand offered by partner
- Services Portfolio: Depth of partner-delivered services and delivery capabilities
- Key Accounts: Partner’s portfolio of accounts that represent most of their business
3) Partner Capabilities Metrics: These are key capabilities and delivery metrics that need to be monitored for all active partners.
- Pre-Sales: Partner’s market analysis, need identification, and target account analysis
- Technical Sales: Demo, Proof of concept, configuration, and needs assessment capabilities
- Deployment: Track record of successful customer deployments for other solutions
- Support: Track record and portfolio of ongoing partner-delivered support services
- Renewals: Customer satisfaction and contract renewal rates with end customers
4) Partner Activation Metrics: These are metrics that track the level of activity and effort your partners are allocating to the growth of your brand.
- Commitment: Partner business plan with time-bound, measurable targets
- Investment: Measurable partner investment in brand w/ vendor
- Co-Sell: Collaborative account planning and cross-sell targeting
- Deal Registration: Number of partner-led and vendor-led registered deals
- Deal Progression: Partner-led proposals, SOWs, POCs, and business cases
5) Partner Performance Metrics: All partners, new and old, should set targets for these metrics and track and measure their performance.
- Perf-to-Plan: Backward-looking YTD sales performance relative to an agreed upon target
- Pipeline-to-Target: Forward-looking pipeline comparison to an index (e.g., 3x) of sales target
- Ave. Deal Size: Average deal size achieved by partner vs. a target
- Training & Certs: Partner achievement of training & certification levels
- Partner Required Tasks: Completion of partner contracts & other onboard tasks
Each of these metric categories and individual metrics need to be adapted on a company-by-company basis to come up with the ideal partner performance scorecard and blueprint. If well defined, these metric scorecards will be motivating for your partners through all their partnership life-stages. Defining how to implement these partner life-stage metrics is as important as the metrics themselves. The use of a strong scorecard, business planning and QBR system is key to achieving the revenue producing outcomes of a partner life-stage management process.
The first step is to profile current and potential partners on the initial life-stage metrics. This is typically done with the use of a questionnaire that is answered by the partner directly or together with the Channel Account Manager (CAM) assigned to them. Questions can be organized by “category” and “topic” area. Each question can be scored on a 1-100 basis to profile where a partner stands with each metric.
A questionnaire helps partners quickly assess themselves vs. a vendor-defined best practice. The questionnaire can be deployed to help a partner inventory what they are and are not doing to build their success plan. Partner responses can be scored and presented in a friendly report to help identify where they stand on all key capabilities metrics.
Partner Capabilities Scorecard: Build a partner skills and capabilities plan in 5 minutes
A 1-100 scale helps partners identify, in minutes, their strengths and improvement opportunity areas. The red, yellow, and green balls help partners focus their attention on their greatest needs and plan improvements. This scorecard report can be updated in minutes, quarterly or semi-annually, to fine tune improvement planning.
Partner Performance Scorecard: Provide an instant summary of where a partner’s performance stands
The second step is to setup a “Partner Performance Scorecard” system to provide your partners with a one-page summary of exactly where they stand on all key performance metrics. The metrics included in this view are related to the business output of the partner. On the top, they can see a graphical summary of where they stand with all key program metrics. This includes sales performance, pipeline performance, and performance on other key program level (e.g., Silver, Gold, and Platinum) requirements. They can also see a quarterly review of their performance on each individual sales, pipeline, certification or other partner required tasks.
The combination of these two scorecards (i.e., Capabilities Scorecard & Partner Performance Scorecard) provide a comprehensive view of all five categories of metrics required for a high growth channel. The great news about these dashboards is that they are either created automatically for the partner (Partner Performance Scorecard) or created in minutes by / with the partner (Capabilities Scorecard).
Quarterly Business Review (QBR) Tools: Create a QBR PowerPoint presentation in minutes to review with your partners
In addition to these two scorecard tools designed to put these best practice metrics into action, there are also QBR tools designed to create a comprehensive business review in a PowerPoint presentation in minutes. These tools automatically pull in the target and performance to target data for all metrics and allow the Channel Account Manager (CAM) to edit and produce a comprehensive QBR presentation in minutes. With tools like this, CAMs can do performance-to-plan reviews with 100 percent of their assigned partners every quarter.
Channel organizations that define the right “hard working” metrics for each partner life stage generate, on average, 10-25%+ revenue growth vs. the prior year vs. those that do not. This is based on a detailed analysis of partners that complete plans and QBRs and measuring their actual sales performance vs. prior year. Setting the right metrics and implementing systems that are specifically designed to assess, track, report, plan and measure your partner’s ongoing performance are the key to realizing accelerated revenue growth gains for your channel. At the same time, providing these instant and 5-minute tools allow your CAMs to focus on delivering growth and enablement consulting to their partners vs. digging through multiple disconnected systems and shuffling Excel spreadsheets to product a fraction of this QBR on their own.
About Successful Channels: Founded in 2013, Successful Channels delivers 5-minute, cloud-based channel manager tools for building partner capabilities, commitments, pipeline and revenue growth. These tools include a 5-minute scorecard, a 5-minute business plan and profit forecast, a 5-minute marketing plan, and a 5-minute PPT quarterly business review. These tools are integrated with Salesforce, partner portals, and a range of other channel systems.
This article was written in collaboration with:
- Gary Morris, Founder & CEO, Successful Channels
- Seth Jacobsen, VP of Sales & Marketing, LogicBay
- John Panaccione, President & CEO, LogicBay
This article was originally published on LinkedIn, here.