ZINFI Technologies, Inc.

If an Information Technology (IT) solution provider doesn’t manage a few key technology trends effectively (please read our previous article "3 Macro Trends That Could Put Your IT Channel Partners Out of Business"), the significant opportunities they create may be dwarfed by the seven major risks associated with these changes, and could result in the partner’s going out of business. These seven risks barriers remain pretty much the same as they were during previous business cycle changes in the channel in reference to Channel Marketing Automation. This time round, the big difference, is that it’s getting much harder for a solution provider to fight this current wave of changes because complexity and specialization in the channel is driving a more permanent and far-reaching alteration in business models.

* Loss of Existing Clients - Let’s start with a simple example of Office365. If you are a 150-person organization - like ZINFI - you’ll be familiar with the scenario. We needed IT support to make sure our Microsoft enterprise license could be deployed and supported globally with our IT staff. From time to time, our IT team reached out to our Microsoft reseller for support. However, as we made the migration to an Office365 infrastructure, the need for external support for this core productivity tool dropped to zero.Today, this has happened across most business applications like voice, video, or collaboration software. However, we have also added new applications like CRM, and as a channel marketing automation company, of course also make extensive use of our own SaaS-based marketing automation software.

Now if you take our example and apply to all 100-500 employee organizations where a significant proportion of IT support is outsourced, it becomes evident that the need for support is decreasing rapidly for traditional applications, but is growing for business process automation solutions. The CRM/ERP market continues to accelerate, but most solutions are SaaS based. In most cases, horizontal applications are moving to the cloud at a fast pace. It follows that what you sell through the channel and the capabilities of those who resell your product will have a profound impact on your channel partner’s ongoing ability to succeed in business.

* Loss of Key Personnel – Let’s continue with our example of Office365. When customers stop buying a fully managed services offering from a provider and get it directly from their IT vendor, the first thing that happens is the channel partner lets its specialist technical staff (e.g. Microsoft Exchange technician) go, because there is no longer enough work to support that position. This changes the profitability dynamics of the channel partner. They are forced to make choices, such as whether to continue to support Exchange or move on to other things. While low-level tech support work like forgotten passwords or laptop crashes may remain available, the amount of revenue and profitability for such service tasks continues to shrink. And most importantly, the channel partner who was completely focused on providing services not only experiences shrinking opportunities, but sees no incentive to sell hardware or applications to organizations that have their own IT resources. The pace of this shift is accelerating.

* Excessive Optimism - When a channel partner is caught between a rock and a hard place and beginning on a downward spiral, the most important thing for a partner is to recognize the signs that a business is in difficulties and that something needs to change radically. Most partners who have ten employees or fewer have basically just two choices: shut down or sell/merge with a bigger solution provider. Yes,

Whether you are selling through the channel to end businesses or consumers, chances are you may be grappling with one or more of the following challenges: too much churn in your partner base, lack of partner marketing and sales competencies; poor marketing ROI from co-marketing activities; loss of sales velocity due to increasing channel management costs. While the success of a channel program depends on a multiplicity of factors like end user value proposition (product and solutions), partner business proposition (predictable profitable growth) and overall market growth opportunity, it takes an integrated partner relationship management (PRM) framework to successfully realize the true revenue potential of any organization selling through the channel.

In this overview, we will address multiple aspects of the partner relationship management framework, starting with partner recruitment and also covering partner training, partner engagement, multi-partner demand generation and performance management. Needless to say, at the epicenter of this partner relationship management framework is a very strong business proposition for the partner. (Please refer to our previous article on How to Stay Relevant To Your Partner Base to learn more about the core elements of a successful channel program.) Here are some guidelines on how you can build a partner relationship management framework step by step:

* Partner Portal - The first step in launching a partner relationship management framework is setting up a dynamic partner portal that can be used for partner recruitment, training, performance management and demand generation activities. Most companies today have some sort of a partner portal. However, lacking a dynamic content management system that can not only make content mobile-responsive, but also visitor-specific to reduce the time needed to find the right content, most partner portals fall short of meeting the objective of engaging and communicating channel programs and content to the target audience. It is vitally important that the partner portal not only incorporates a dynamic content management system but also provides a set of secure web services communication interface so that it can connect to other tools for functions like partner training and incentive management.

* Partner Recruitment - Whether you are an organization with a large channel network trying to engage existing partners into a specific set of channel programs, or an emerging start-up trying to build your channel, partner recruitment is always the first process step that to initiate a structured approach towards partner relationship management. Without a proper partner recruitment framework and the appropriate onboarding steps, the entire relationship can get off on the wrong foot. But if your organization follows a logical 30-60-90 day onboarding approach, it can increase partner satisfaction in these early stages of engagement, but also build partner engagement, resulting in substantial revenue acceleration.

* Partner Training - After recruitment, the next most important step is to provide a structured approach towards training the partner organization effectively with your channel programs. If you are recruiting a new partner, you could base your partner relationship management program on a combination of face-to-face training events ...

Whether you are selling through the channel to end businesses or consumers, chances are you may be grappling with one or more of the following challenges: too much churn in your partner base, lack of partner marketing and sales competencies; poor marketing ROI from co-marketing activities; loss of sales velocity due to increasing channel management costs. While the success of a channel program depends on a multiplicity of factors like end user value proposition (product and solutions), partner business proposition (predictable profitable growth) and overall market growth opportunity, it takes an integrated partner relationship management (PRM) framework to successfully realize the true revenue potential of any organization selling through the channel.

In this overview, we will address multiple aspects of the partner relationship management framework, starting with partner recruitment and also covering partner training, partner engagement, multi-partner demand generation and performance management. Needless to say, at the epicenter of this partner relationship management framework is a very strong business proposition for the partner. (Please refer to our previous article on How to Stay Relevant To Your Partner Base to learn more about the core elements of a successful channel program.) Here are some guidelines on how you can build a partner relationship management framework step by step:

Partner Portal - The first step in launching a partner relationship management framework is setting up a dynamic partner portal that can be used for partner recruitment, training, performance management and demand generation activities. Most companies today have some sort of a partner portal. However, lacking a dynamic content management system that can not only make content mobile-responsive, but also visitor-specific to reduce the time needed to find the right content, most partner portals fall short of meeting the objective of engaging and communicating channel programs and content to the target audience. It is vitally important that the partner portal not only incorporates a dynamic content management system but also provides a set of secure web services communication interface so that it can connect to other tools for functions like partner training and incentive management.

Partner Recruitment - Whether you are an organization with a large channel network trying to engage existing partners into a specific set of channel programs, or an emerging start-up trying to build your channel, partner recruitment is always the first process step that to initiate a structured approach towards partner relationship management. Without a proper partner recruitment framework and the appropriate onboarding steps, the entire relationship can get off on the wrong foot. But if your organization follows a logical 30-60-90 day onboarding approach, it can increase partner satisfaction in these early stages of engagement, but also build partner engagement, resulting in substantial revenue acceleration.

Partner Training - After recruitment, the next most important step is to provide a structured approach towards training the partner organization effectively with your channel programs. If you are recruiting a new partner, you could base your partner relationship management program on a combination of face-to-face training events plus online learning management systems (LMS). There are several reputable online LMS tools available, if you don’t have one already.

Partner Engagement - Your partner relationship management platform must have effective engagement tools which should include a mobile-responsive dynamic partner portal, role-based content delivery, social marketing connectors, partner community, multi-touch email marketing, event marketing and microsite marketing and more. You need all these to effectively promote the various aspects of your channel programs. Partners are too busy for irrelevant content, so the more you can make your content and communication speak to their needs, the more engagement you will create with your partner base. Mindshare is everything. Having the right tools in your partner relationship management platform can make all the difference to how connected your partners feel to you.

Partner Performance Management - The effectiveness of your channel program doesn’t just come from your ability to target the right partner and engage them into your channel initiatives, but from your ability to drive more demand. Sales are a competitive sport, highly driven by performance rewards and recognition. Your partner relationship management platform must include a set of integrated tools to manage market development funds, sales rewards, performance incentives and rebates.

Multi-Partner Demand Generation - What’s the most effective way to drive demand? The very purpose of your channel is to sell more of your products and solutions. So, in the end all roads lead to this specific activity, the multi-partner demand generation program. Your partner relationship management platform again needs to have all of the strategic integrated marketing tools for Partner Marketing Management (PMM) that your partners are might want to use to run co-branded campaigns. The other side of the equation is that the platform should also provide you with the tools to track what campaigns are going well, what needs changing, and why partners are succeeding or not, using the campaigns and tools you have provided them. One of the core requirements for a best-in-class partner relationship management is its ability to provide dynamic reports and analysis.

Deal Registration - If your channel program offers deal protection and registration, then your partner relationship management platform must provide dynamic deal registration and approval processes. Some CRM systems provide this capability, but if your traditional CRM platform is not purpose built for the channel then you may end up needing to invest a lot of time and money to make it work for your partner deal registration and protection activities. You need to weigh up whether you’d be better off switching to a purpose-built partner relationship management platform to reduce upfront investment and ongoing operations costs.

Having formulated your strategy for integrated partner relationship management, the next step is a complete assessment of your existing partner relationship management approach. This could very well start with an evaluation of the tools and technologies you are using, but it should definitely include the channel programs and other sales and marketing resources that you have deployed. The more successful organizations tend to prioritize profiling their existing partner base, and our article on How Partner Profiling Can Increase Your Channel Sales provides some useful detail. Once you have figured out which partners to focus on and how to engage them, then pulling together the right channel programs - from training to certification to market development activities - can be aligned within each country in which you operate. (Most companies have different levels of channel and channel management maturity from country to country. Your partner relationship management framework must be capable of adapting to the current conditions in each country and lay out a roadmap for channel maturity development.

With all that behind you, now is when it’s crucial to perform a full audit of your partner relationship management technology infrastructure. It needs to be state-of-the-art in order to deliver the necessary flexibility, customization power and performance visibility but the fact is that most organizations are usually getting by with a mishmash of patched-together tools and technologies –that are not genuine partner relationship management platforms. Yes, they might be used as partner portals connected to their existing CRM infrastructure, or as a marketing mechanism. Without a cutting edge partner relationship management platform that can streamline and automate all necessary channel activities, provide complete visibility, and deliver continual performance metrics, most channel management programs remain out of date and far from delivering on the true potential of partner relationship management.

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The Information Technology Channel Partners has gone through three profound changes over the four decades or so of its existence. The first was the channel’s transition from being largely white box resellers to a more organized computer retail model. During this first phase, anyone with some cash and a lot of enthusiasm could build a personal computer. Remember the days of Computer Shopper?

The next wave arrived with the advent of networking and the Internet in the late Eighties/early Nineties. This change drove several white box resellers out of business, propelled by the emergence of worldwide vendors like Dell, Compaq, HP, Toshiba, etc.

The third and the last wave primarily started in the mid 2000s when a set of network management and monitoring tools burst out onto the market, allowing resellers to evolve into service providers and ultimately created a new breed, managed service providers. The recession of 2008 sparked further change for many channel partners. Large numbers of service providers closed their doors in the face of the increasing complexity of the technology. This required higher levels of competence, and exposed a severe shortage of technical talent. Difficulties in recruitment, development and retention became a major issue for the channel, while business remained choppy largely due to lack of sales and marketing skills.

We at ZINFI have heard this story so many times that for the past year or so we have been talking to channel partners in an attempt to identify what and when will be the next wave. We have also undertaken a worldwide survey on this topic with about five thousand channel partners of various large vendors.  The big picture answer is that we are now in the middle of another major channel shift. And the shift is, as we’d expect, as a direct result of the rapid evolution of cloud and cloud-based offerings. This shift towards the cloud has three profound implications for the channel:

Where end-users work- In most countries the numbers of remote workers are growing, though of course at varied rates. The widespread adoption of Bring Your Own Device (BYOD) policies is now integrated with ‘work from anywhere, anytime’ culture. Setting aside highly sensitive assets (like manufacturing, security, or healthcare), most general-purpose infrastructure is now accessed by business users remotely. This trend has clearly been driven by three underlying technology factors: an abundance of bandwidth (both land and cellular), an exponential reduction in data storage costs, and the rapid evolution of web-based applications.

What and how the infrastructure is changing - Fundamental changes in data center architecture, the emergence of software defined networking, and proliferation of triple play (voice-video-data) convergence at end points have radically changed the way the overall network topology looks today. This doesn’t even address the profound shift that is being driven by web services infrastructure offerings from organizations like Amazon Web Services, HP Services, Microsoft Azure, Salesforce Developer Platform, and plethora of smaller data centers powered by cloud services platforms from Red Hat, Citrix, VMware, and others.

How they are supported - With the proliferation of hacking and major security breaches – a surprising number of which are initiated by government agencies with deep pockets trying to break into the networks of companies, organizations and other governments - the need for a robust infrastructure is even greater, and the skill levels required not only to support remote workers, but also to protect network assets, are almost impossibly high. This is leading towards intense vertical specialization in the channel, because solutions are increasingly domain-specific: think healthcare, retail, hospitality, insurance, or finance. A lot of what used to be outsourced to external providers is now insourced due to availability of various network monitoring management capabilities from vendors like HP, Dell, SolarWinds, Splunk, etc. *

These three macro drivers have significant survivability implications for IT solutions providers today, and have already started to drive deep changes in the channel.

With that said, there are ways to push back against these challenges and help reverse what might otherwise be an inevitable decline for many of your partners. If you want to help your partners stay in business and be profitable, you should certainly provide the right channel marketing automation infrastructure and concierge support, but staying relevant to your partner base takes more than just channel automation software and services. You need to understand the risks they face and how to guide them through on a path to mutually successful conclusions.

* Note: The reference to other vendor platforms is not an intent to promote one vs. the other but to illustrate with a few real examples. We are very fortunate to have many of these clients as our customers and sincerely thankful to them for allowing us to be part of such an incredible change that they are driving on a worldwide basis to create opportunities for many.

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The Information Technology channel has gone through three profound changes over the four decades or so of its existence. The first was the channel’s transition from being largely white box resellers to a more organized computer retail model. During this first phase, anyone with some cash and a lot of enthusiasm could build a personal computer. Remember the days of Computer Shopper?The next wave arrived with the advent of networking and the Internet in the late Eighties/early Nineties. This change drove several white box resellers out of business, propelled by the emergence of worldwide vendors like Dell, Compaq, HP, Toshiba, etc.The third and the last wave primarily started in the mid 2000s when a set of network management and monitoring tools burst out onto the market, allowing resellers to evolve into service providers and ultimately created a new breed, managed service providers. The recession of 2008 sparked further change for many channel partners. Large numbers of service providers closed their doors in the face of the increasing complexity of the technology. This required higher levels of competence, and exposed a severe shortage of technical talent. Difficulties in recruitment, development and retention became a major issue for the channel, while business remained choppy largely due to lack of sales and marketing skills.We at ZINFI have heard this story so many times that for the past year or so we have been talking to channel partners in an attempt to identify what and when will be the next wave. We have also undertaken a worldwide survey on this topic with about five thousand channel partners of various large vendors.  The big picture answer is that we are now in the middle of another major channel shift. And the shift is, as we’d expect, as a direct result of the rapid evolution of cloud and cloud-based offerings. This shift towards the cloud has three profound implications for the channel:* Where end-users work– In most countries the numbers of remote workers are growing, though of course at varied rates. The widespread adoption of Bring Your Own Device (BYOD) policies is now integrated with ‘work from anywhere, anytime’ culture. Setting aside highly sensitive assets (like manufacturing, security, or healthcare), most general-purpose infrastructure is now accessed by business users remotely. This trend has clearly been driven by three underlying technology factors: an abundance of bandwidth (both land and cellular), an exponential reduction in data storage costs, and the rapid evolution of web-based applications.* What and how the infrastructure is changing – Fundamental changes in data center architecture, the emergence of software defined networking, and proliferation of triple play (voice-video-data) convergence at end points have radically changed the way the overall network topology looks today. This doesn’t even address the profound shift that is being driven by web services infrastructure offerings from organizations like Amazon Web Services, HP Services, Microsoft Azure, Salesforce Developer Platform, and plethora of smaller data centers powered by cloud services platforms from Red Hat, Citrix, VMware, and others.* How they are supported – With the proliferation of hacking and major security breaches – a surprising number of which are initiated by government agencies with deep pockets trying to break into the networks of companies, organizations and other governments – the need for a robust infrastructure is even greater, and the skill levels required not only to support remote workers, but also to protect network assets, are almost impossibly high. This is leading towards intense vertical specialization in the channel,

The Information Technology channel has gone through three profound changes over the four decades or so of its existence. The first was the channel’s transition from being largely white box resellers to a more organized computer retail model. During this first phase, anyone with some cash and a lot of enthusiasm could build a personal computer. Remember the days of Computer Shopper?

The next wave arrived with the advent of networking and the Internet in the late Eighties/early Nineties. This change drove several white box resellers out of business, propelled by the emergence of worldwide vendors like Dell, Compaq, HP, Toshiba, etc.

The third and the last wave primarily started in the mid 2000s when a set of network management and monitoring tools burst out onto the market, allowing resellers to evolve into service providers and ultimately created a new breed, managed service providers. The recession of 2008 sparked further change for many channel partners. Large numbers of service providers closed their doors in the face of the increasing complexity of the technology. This required higher levels of competence, and exposed a severe shortage of technical talent. Difficulties in recruitment, development and retention became a major issue for the channel, while business remained choppy largely due to lack of sales and marketing skills.

We at ZINFI have heard this story so many times that for the past year or so we have been talking to channel partners in an attempt to identify what and when will be the next wave. We have also undertaken a worldwide survey on this topic with about five thousand channel partners of various large vendors.  The big picture answer is that we are now in the middle of another major channel shift. And the shift is, as we’d expect, as a direct result of the rapid evolution of cloud and cloud-based offerings. This shift towards the cloud has three profound implications for the channel:

* Where end-users work- In most countries the numbers of remote workers are growing, though of course at varied rates. The widespread adoption of Bring Your Own Device (BYOD) policies is now integrated with ‘work from anywhere, anytime’ culture. Setting aside highly sensitive assets (like manufacturing, security, or healthcare), most general-purpose infrastructure is now accessed by business users remotely. This trend has clearly been driven by three underlying technology factors: an abundance of bandwidth (both land and cellular), an exponential reduction in data storage costs, and the rapid evolution of web-based applications.

* What and how the infrastructure is changing - Fundamental changes in data center architecture, the emergence of software defined networking, and proliferation of triple play (voice-video-data) convergence at end points have radically changed the way the overall network topology looks today. This doesn’t even address the profound shift that is being driven by web services infrastructure offerings from organizations like Amazon Web Services, HP Services, Microsoft Azure, Salesforce Developer Platform, and plethora of smaller data centers powered by cloud services platforms from Red Hat, Citrix, VMware, and others.

* How they are supported - With the proliferation of hacking and major security breaches – a surprising number of which are initiated by government agencies with deep pockets trying to break into the networks of companies, organizations and other governments - the need for a robust infrastructure is even greater, and the skill levels required not only to support remote workers, but also to protect network assets, are almost impossibly high. This is leading towards intense vertical specialization in the channel,

“What you measure is what you get” is a great business mantra. And when it comes to sales, it becomes much more than that: it’s a practice that drives the future sustainability and growth of a company. To make an impact, metrics need to be applied across multiple business areas by deploying channel marketing automation, of course. For example, if you are managing sales operations through a channel partner network, you need to look beyond simple sales out. Failing to track critical channel sales metrics listed below could lead you down a blind alley where you end up not knowing what’s going to hit you next.

Channel success comes as a result of setting up realistic, if ambitious expectations with your channel sales force and partner network, but these mean nothing without the ability to monitor a core set of performance metrics. Output metrics are driven by a set of processes, programs and people directly linked to their related input metrics. These will provide you with essential insights into what is actually happening in your channel; however, you need to correlate input metrics to output metrics in order to understand the impact of each of these metrics on overall results. A best of breed channel marketing automation platform should enable you to track the metrics described below, as well as to use dynamic dashboard capabilities to run multiple analytics that will enable you to fine-tune your channel program for optimum results.

Here is a brief overview of the 15 core input and output metrics, and how you can use the data to drive profitable sales growth.

Total and Average Revenue Per Partner – This is almost equivalent to the commonly used revenue-per-employee metric. When you perform this analysis, you will see that productivity varies greatly across the top, medium and entry level partner tiers. Tracking revenues on a dynamic basis is a critical first step towards improving sales engagement.

Revenue Mix Analysis – This is predominantly undertaken by product line, geography and territory. Most companies use this data primarily for market share analysis, but if you directly correlate the data with other partner input and output metrics you can draw a more complete analysis of partner engagement and potential.

Percent of Revenue Growth Rate of Partner Tiers – This is a high priority output metric that you need to track in order to see how your channel sales partners are growing across your different product lines. The variables include partner level, product type and geographical location. The resulting data enables you to make strategic resource changes to drive better results.

Gross Profit Per Tier - At the end of the day it is about more than revenue alone: the key lies in the absolute profit that you are able to generate via the channel sales force. Calculations of partner profitability vary greatly depending on how you are able to track your internal costs. These might include technical support, channel sales, channel marketing, programs, special events and more. You also need clarity about the relative levels of profit generated by the different partner tiers, e.g. how much is generated by your top 10%, 11-25%, 26-50% and so on, and what your relative level of investment was for each tier.

Percent of Year over Year Increase In Channel Revenue and Productivity – This is your ultimate measure of progress on a year over year basis. In order to do this you will need to be able to calculate your revenue growth, which all companies do, but beyond this you will need to factor in the detailed cost infrastructure required to support your channel - which at times is a bit harder to achieve due to product and process complexities. However, efforts spent in this area are critical to drive a much more finely tuned approach towards metrics-driven channel sales management.

Percent of Active Resellers - Most companies, whether they have a broad or a narrowly focused channel sales model, have to deal with wide variations in sales per partner. It is important to be able to identify what portion of your channel partners are selling consistently quarter over quarter, for the past four quarters, as this will drive the next stages of program activity as you figure out how to increase sales out from the lower-performing partners.

Channel Attrition Rate (% Drop Out Rate of Active Resellers) - If you have a channel partner network of a few hundred or more, the chances are that on an annual basis a portion of your network will stop selling your products and services. Tracking this attrition rate actively and analyzing who is leaving and why is critical to make sure keep a handle on the situation.

Percentage of Reseller Base Generating Largest Percentage of Revenue - Why is this important? Well, simply when you are selling through a broad channel, as most companies do, no matter how big your company is, the chances are you have limited resources and bandwidth. You will need to maximize return on channel sales resources, so knowing where it will be most profitable to focus is critical.

Percent of Renewal Rate on Maintenance and Service Contracts - Most companies selling through the channel today derive substantial revenues from add-on and renewal sales. While the channel remains a the primary way of fulfilling existing demand, partners tend to lack resources to monitor systematic contract renewals like subscription contracts, warranties or services. Therefore, your ability to track renewals and drive actions based on detailed data has the potential to greatly improve your top and bottom line. It is always easier to grow existing customers rather than establish new ones.

End User Satisfaction With Your Reseller Base - As the level of complexity of technology products and deployments rises, it has become even more essential to ensure your partner network is fully trained and certified. At the end of the day it is the quality of technical engagement between your resellers and their end-users that drives customer satisfaction. It follows that measuring end user satisfaction on a regular basis is critical to understanding where you need to invest to overcome partner skills gaps and grow your channel’s strengths.

Partner Satisfaction - Along with end-user satisfaction analysis, you also need to know where your partners stand in relation to your products, services and support. Your competitors are always on the move, so it’s never safe to assume your partner base will feel the same from one quarter to the next. This understanding is essential to your ability to focus channel marketing and sales resources efficiently in order to drive optimum results. Even a simple integrated survey tool will help you capture your partners’ experiences in a systematic way.

Partner Certification Rate - This is a critical metric that allows you to measure the depth and breadth of your channel’s capabilities. Organizations that use a Learning Management System (LMS) tend to have a more systematic, and therefore easier way to track progress in this area, but even without a fully functional LMS you should be able to monitor certification rates using your Partner Relationship Management platform.

Return on Market Development Funds- This is a critical metric allowing you not only to eliminate wasted investment and focus on high-producing programs, but also to strategically align your marketing activities to and through the channel. Most companies that have a Partner Relationship Management platform combined with Market Development Funds (MDF) tracking functionality can easily monitor expenditure versus results, and drive improvements both globally and locally.

Graduation Rates (from bottom tier to mid tier, mid tier to top tier, etc.) - The channel is a dynamic environment. All the time, new partners are joining and a few partners are leaving, but you also have partners moving up from entry level to mid-tier to the top tier of your channel program. Making sure you know how and why this is happening, and remaining engaged in managing this movement proactively – as opposed to being a passive observer - is critical to maintaining a profitable channel growth model.

Total Channel Marketing and Sales Cost to Channel Revenue Ratio - This is primarily a measurement of efficiency and return on investment. In most organizations, the total cost of sales - including channel marketing and other investments - need to be less than 25-30% of revenue for a run rate business to create a profitable growth model. However, if you are trying to build out your channel, this ratio is likely to be substantially higher during the earlier stages.

If you are using a basic CRM platform you may very well be able to track some of these metrics, but CRM systems do not provide the same essential functionality as a purpose built Partner Relationship Management (PRM) platform, which is are designed to give you the end-to-end visibility necessary to track and manage all aspects of a channel management program. As part of your forward planning to build out a metrics-based high performing channel, it is advisable take a look at the rapidly evolving PRM tools that are now available in the market.

When it comes to channel sales metrics, we see various levels of maturity across our customer base worldwide. One constant however is, those organizations that spend more time understanding channel sales metrics are more focused, probably undertake fewer initiatives, but generally drive more growth per initiative. This is a qualitative observation across more than fifty of ZINFI’s global clients. We would love to hear from you about what metrics you are tracking and how they are driving profitable growth for you.

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“What you measure is what you get” is a great business mantra. And when it comes to sales, it becomes much more than that: it’s a practice that drives the future sustainability and growth of a company. To make an impact, metrics need to be applied across multiple business areas by deploying channel marketing automation, of course. For example, if you are managing sales operations through a channel partner network, you need to look beyond simple sales out. Failing to track critical channel sales metrics listed below could lead you down a blind alley where you end up not knowing what’s going to hit you next.Channel success comes as a result of setting up realistic, if ambitious expectations with your channel sales force and partner network, but these mean nothing without the ability to monitor a core set of performance metrics. Output metrics are driven by a set of processes, programs and people directly linked to their related input metrics. These will provide you with essential insights into what is actually happening in your channel; however, you need to correlate input metrics to output metrics in order to understand the impact of each of these metrics on overall results. A best of breed channel marketing automation platform should enable you to track the metrics described below, as well as to use dynamic dashboard capabilities to run multiple analytics that will enable you to fine-tune your channel program for optimum results.Here is a brief overview of the 15 core input and output metrics, and how you can use the data to drive profitable sales growth.* Total and Average Revenue Per Partner – This is almost equivalent to the commonly used revenue-per-employee metric. When you perform this analysis, you will see that productivity varies greatly across the top, medium and entry level partner tiers. Tracking revenues on a dynamic basis is a critical first step towards improving sales engagement.* Revenue Mix Analysis – This is predominantly undertaken by product line, geography and territory. Most companies use this data primarily for market share analysis, but if you directly correlate the data with other partner input and output metrics you can draw a more complete analysis of partner engagement and potential.* Percent of Revenue Growth Rate of Partner Tiers – This is a high priority output metric that you need to track in order to see how your channel sales partners are growing across your different product lines. The variables include partner level, product type and geographical location. The resulting data enables you to make strategic resource changes to drive better results.* Gross Profit Per Tier – At the end of the day it is about more than revenue alone: the key lies in the absolute profit that you are able to generate via the channel sales force. Calculations of partner profitability vary greatly depending on how you are able to track your internal costs. These might include technical support, channel sales, channel marketing, programs, special events and more. You also need clarity about the relative levels of profit generated by the different partner tiers, e.g. how much is generated by your top 10%, 11-25%, 26-50% and so on, and what your relative level of investment was for each tier.* Percent of Year over Year Increase In Channel Revenue and Productivity – This is your ultimate measure of progress on a year over year basis. In order to do this you will need to be able to calculate your revenue growth, which all companies do, but beyond this you will need to factor in the detailed cost infrastructure required to support your channel – which at times is a bit harder to achieve due to product and process complexities. However, efforts spent in this area are critical to drive a much more finely tuned approach towards metrics-driven channel sales management.* Percent of Active Resellers – Most comp...

“What you measure is what you get” is a great business mantra. And when it comes to sales, it becomes much more than that: it’s a practice that drives the future sustainability and growth of a company. To make an impact, metrics need to be applied across multiple business areas by deploying channel marketing automation, of course. For example, if you are managing sales operations through a channel partner network, you need to look beyond simple sales out. Failing to track critical channel sales metrics listed below could lead you down a blind alley where you end up not knowing what’s going to hit you next.

Channel success comes as a result of setting up realistic, if ambitious expectations with your channel sales force and partner network, but these mean nothing without the ability to monitor a core set of performance metrics. Output metrics are driven by a set of processes, programs and people directly linked to their related input metrics. These will provide you with essential insights into what is actually happening in your channel; however, you need to correlate input metrics to output metrics in order to understand the impact of each of these metrics on overall results. A best of breed channel marketing automation platform should enable you to track the metrics described below, as well as to use dynamic dashboard capabilities to run multiple analytics that will enable you to fine-tune your channel program for optimum results.

Here is a brief overview of the 15 core input and output metrics, and how you can use the data to drive profitable sales growth.

* Total and Average Revenue Per Partner – This is almost equivalent to the commonly used revenue-per-employee metric. When you perform this analysis, you will see that productivity varies greatly across the top, medium and entry level partner tiers. Tracking revenues on a dynamic basis is a critical first step towards improving sales engagement.

* Revenue Mix Analysis – This is predominantly undertaken by product line, geography and territory. Most companies use this data primarily for market share analysis, but if you directly correlate the data with other partner input and output metrics you can draw a more complete analysis of partner engagement and potential.

* Percent of Revenue Growth Rate of Partner Tiers – This is a high priority output metric that you need to track in order to see how your channel sales partners are growing across your different product lines. The variables include partner level, product type and geographical location. The resulting data enables you to make strategic resource changes to drive better results.

* Gross Profit Per Tier - At the end of the day it is about more than revenue alone: the key lies in the absolute profit that you are able to generate via the channel sales force. Calculations of partner profitability vary greatly depending on how you are able to track your internal costs. These might include technical support, channel sales, channel marketing, programs, special events and more. You also need clarity about the relative levels of profit generated by the different partner tiers, e.g. how much is generated by your top 10%, 11-25%, 26-50% and so on, and what your relative level of investment was for each tier.

* Percent of Year over Year Increase In Channel Revenue and Productivity – This is your ultimate measure of progress on a year over year basis. In order to do this you will need to be able to calculate your revenue growth, which all companies do, but beyond this you will need to factor in the detailed cost infrastructure required to support your channel - which at times is a bit harder to achieve due to product and process complexities. However, efforts spent in this area are critical to drive a much more finely tuned approach towards metrics-driven channel sales management.

It’s hard to get a true picture of how your channel partners feels about you as a vendor just by sending out a survey. As we discussed in a previous post, most requests for feedback yield responses from only the top-performing channel partners. But the ones you really need to know most about are those who are selling little or nothing at all of what you have to offer. The upside of converting just a few of these into high performance partners will be huge. The path to breakthrough lies in understanding what prevents channel partners from committing to a relationship with a vendor, starting with those who have dropped your solutions completely.

Getting to these channel partners takes time-intensive, though high ROI work. On behalf of many large companies, we have reached out personally thousands of channel partners world wide to ask the most important question: Why did you stop reselling for us? The results of our research showed that the top reasons for dropping a vendor were, in order of importance, poor technical support, lack of lead flow, and inadequate sales assistance. Fixing these problems will go a long way towards building bridges with disaffected channel partners, but paying attention to the following five areas will secure your position as a highly relevant vendor with a loyal and engaged channel.

Special Pricing - One of the biggest hurdles for channel partners worldwide is special pricing. The larger the deal, the more resellers need to be able to offer special pricing because the buyer wants to know and show to management that the price was unbeatable. We have often seen channel partners lose deals to competitors because of overly complex special pricing processes. Delay and uncertainty about pricing will drive the end customer – who after too long a sales process is usually feeling that their requests are not being heard – to dump the original vendor and go with someone else. It is critical to make sure you have put in place a complete and transparent process for special pricing, beyond the list price. This is less the case with SMB transactions, but is critical for complex and large deployments.

Marketing Funds & Programs – Once you have convinced the partner base that you are there for them through world-class technical support, lead distribution, sales assistance and special pricing, the next essential is helping the channel partners to drive leads on their own - although don’t expect them to become digital marketers overnight!

We have repeatedly seen that the vendors who are most successful in encouraging channel partners to market on their own are those who take a pragmatic, multi-quarter approach to building out their demand generation programs across horizontal products that sell in the highest volumes across all market segments, and then (only then) add specific, targeted vertical campaigns. This approach also calls for a state-of-the-art partner relationship management platform, which not only include a set of tools to train the partner on various aspects of the solutions, but also a set of do-it-yourself marketing campaigns running on a fully integrated marketing automation platform.

Ease of Doing Business - We hear this again and again from channel partners. Most partners feel there are too many hoops and obstacles to go through to be able to sell a vendor’s products. Challenges ranging from technical certification, demo purchase requirements, license key issues, availability of technical and sales support and accessibility of sales tools all make it far from easy for a partner to form a relationship with and stay on board with vendors.

While vendors may want to try to remove all these hurdles at once, the more realistic way forward for a successful channel programs is to take a pragmatic approach. Start by determining what the partner is actually going to sell. If it is a transactional product, there is no place for complexity. Drop as many of the hurdles as possible, make it simple for the partner to find pricing and product specifications, and let them go sell. On the other hand, if they are aiming to deploy complex, large data center solutions for high profile enterprise customers, yes, make sure channel partners are willing to go through the necessary steps to learn and deploy the solution properly. Just bear in mind that separating the channel requirements for different types of sales goes a long way towards making sure your channel programs are easy to understand and will be adopted by partners.

Human Touch - Why do banks have human tellers as well as ATMs? Apart from the fact that some people don’t trust machines with anything sensitive, the more complex the transaction the more variables are involved, and the more likely it is that we will have special requests that a machine cannot answer. At heart, we all want to talk to a human.

In the same way, channel marketing automation certainly has a place in driving productivity and growth, but it is not a replacement for the entire channel organization. Deploying a state-of-the-art partner relationship management platform should free up your channel organization from day-to-day, tactical tasks like tracking forms via emails, managing Excel spreadsheets and manual reporting, so that they can actually engage with channel partners, listen talk to them, and help them and grow their businesses.

Rewards and Recognition - Last but not least, celebration is a key way to excite your partner base, spark healthy competition and share best practices. It is essential for you to recognize your high performing channel partners on a consistent basis across all countries. While many companies have sales rewards and rebates as core programs, together with annual awards at partner events, the best way to build momentum is to make awards an ongoing activity, recognizing partners on a quarterly basis on the various aspects of your channel programs. With so many easy-to-use video conferencing software options to choose from (like WebEx, Go To Meeting, Blue Jeans and others), it is easy to set up quarterly virtual award ceremonies where senior channel management members reward channel partners for their latest achievements.

In today’s hyper-competitive channel environment, loyalty is hard to come by without significant thought and effort, but a relationship can be earned, provided a vendor is sincerely focused on what the partners care most about. While channel marketing automation platforms comprising partner relationship management and partner marketing management are critical for scalability and success, not everything can be automated: the other critical components of channel programs such as technical support, sales assistance, lead distribution, relationship building and rewards remain cornerstones for becoming a truly relevant partner to the channel.

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