We need a new channel!
This is a favorite refrain of many sales executives. When faced with revenue challenges, eroding margins and changing business models, the channel becomes the scapegoat for lagging performance. The belief is that there is a hidden, underground network of better partners out there that have eluded the supplier thus far. These partners generate a lot of revenue without consuming a lot of resources, they are loyal to the supplier, self-sufficient, sell predominantly to new customers and new markets, don’t cause conflict and never need a price exception.
These partners don’t exist. While there is always an opportunity for targeted recruitment, the best partners may be hiding in plain sight. Start by looking at what you have before focusing on what you don’t. Stack ranking current partners on straight revenue contribution highlights the volume producers but provides limited visibility into other key areas of channel performance. Use these three metrics to uncover opportunities in the channel you already have:
- Growth. Are your partners growing their businesses? Are they also growing yours? Channel partners that are growing sales of your portfolio at a higher rate than your corporate growth rate should be identified and nurtured. While volume partners tend to contribute to the core business in the annual channel revenue plan, growth partners drive incremental dollars. These partners may not be producing high revenue volumes yet, but they may have the potential to move up the revenue stack. Does your channel program reward this kind of partner performance? If not, it may be time to redefine which partner objectives are important to you and how you compensate partners for meeting them.
- Sales frequency. Identifying partners that drive consistent revenue is just as important as understanding partners that drive volume. Depending on the offer and sales cycle, start by looking at partners that are closing a predictable number of deals and dollar volume every quarter or every other quarter. If these partners are not already in the volume group, they may be able to move up the stack as they are already doing something that is driving repeatable business. Some of these partners may benefit from additional enablement to help increase their average deal size. They may also benefit from additional marketing support for demand generation activities that can increase the number of sales opportunities. If the partner also has the organizational capacity to support accelerated demand, this momentum may help to move them into growth or volume categories over time.
- Focus on the new. Selling new offers, finding new customers and opening new markets are important requirements for a healthy supplier business. However, all three of these are time consuming and costly for the partner. While your largest partners may put some effort into this, many prefer to focus on nurturing and protecting their installed base. Identifying and rewarding partners who drive the new is very important to meet ongoing channel revenue targets. Deal registration programs are one way to reward partners for new customer engagements. Incentives can also be aligned to new offers to reward sales efforts. Is your channel program ready to support this?
While the temptation to switch to a different channel may be strong, hitting the pause button can ensure longer-term success. Identifying the high-potential partners who are already in your channel can help you focus your resources and programs to drive better sales motions. It can also help you understand what you need from new partners to fill the gaps. If you would like more information on how to align your channel program, development and recruitment efforts, contact SiriusDecisions.