Cracking the Black Box: Identifying ROI for Indirect Channel Support

“In God we trust. All others must bring data.” – W. Edwards Deming

Cracking The Black BoxThere’s a growing focus on chief channel officers today, which indicates that companies are putting a greater strategic emphasis on channels as well, with good reason: According to Accenture, indirect channel revenue is approaching 80% of all tech revenue for 2015. Channel incentives are one of the biggest expenditures, with companies typically investing 3-5% of revenue on incentives to support indirect sales.

For channel-based tech (and also for non-tech ventures), where should you invest your time and incentives? Answers vary, but this growing dynamic is making the portal that runs these partnerships increasingly important, not only as the interface to the partner relationship (and by extension your customer relationship) but also as the source of new data that can inform ROI decisions for prioritizing and supporting your various channel partners as well.

According to The Forrester Wave™: Partner Relationship Management (PRM) Platforms, Q4 2013 report, the following imperatives are key for optimal channel performance:

  1. First, map your partners’ performance behaviors to your program investments. In other words, know which actions lead to what outputs.
  2. Next, develop metrics that are right for your business and use BI to manage by exception. This saves valuable time and resources and ensures that you are dealing with the issues that matter to your partners the most.
  3. Finally, aggregate the siloed data from both directions within the channel you serve. This is easiest when you transition from management by spreadsheet to a Partner Relationship Management (PRM) system whose database gives you access to all of your data in a meaningful way.

What this means

There’s a new era of partner performance management emerging, according to the Forrester data. The days of incentivizing and rewarding partners’ performance solely on revenue contribution are past. Instead, manufacturers are taking a Balanced Scorecard approach to partner performance.

This methodology retains classic backward-looking financial metrics, but also reflects future-value metrics for customer relationships, learning and growth, and business processes. It enables channel organizations to measure full performance and fully assess where to be making the highest investments in incentives and time.

"Better intelligence will help partners to increase win rates by improving marketing performance and lead follow up," says Denis Pombriant, managing principal and chief analyst for Beagle Research Group, LLC. "At the same time, channel managers will be better able to develop, manage and measure business plans for individual partners by tracking performance by partner, product and other meaningful measures."

At the end of the day, all companies want to scale their partner networks, but the key is to be sure you invest in the right partners. Channel management is a specialized process, just like supply chain management, human capital management and customer relationship management (CRM) have historically been. Each of these disciplines requires data collection and analysis (and application of the information discovered to new best practices). Finding and nurturing the strongest partners is quickly becoming a #1 priority for savvy channel organizations. But organizations and partners who don’t (or can’t) adjust may find their options progressively reduced over time.

Impartner delivers the industry's most advanced SaaS-based Partner Relationship Management solution, helping companies worldwide manage their partner relationships and accelerate revenue and profitability through indirect sales channels. Impartner PRM is the industry's only turnkey solution that can deploy a world-class Partner Portal in as few as 30 days, using the company's highly engineered, three-step Velocity™ onboarding process. Watch Impartner's interactive demo here.

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