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How to Determine if Your Channel Partners are Actually Working

Brock Benefiel - January 18, 2017

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When your startup hits growth stage, scaling the number of sales from channel partners is a no-brainer. For one, the customer acquisition costs are lower. A 2014 survey showed that companies spent about $0.53 for every $1 it attracted in new annual contract value (ACV)—almost half of what is spent on field sales: $1.02. Sales from channel partners also allow you to secure deals without scaling staff.

Furthermore, your partners are likely hitting different customer and geographies. As Tomasz Tunguz notes, new channels diversify acquisition efforts “insulating the bookings number from the episodic underperformance typical of a single channel go-to-market.” That produces more predictable revenue and a greater multiple when you’re ready to raise money or sell the company.

At first look, growing partner sales seems like the closest thing to a magic bullet. But your channel partners will not simply provide passive income. In order to achieve efficient and effective growth, start by interrogating your reselling efforts with the following questions:

Are you actually securing more deals each quarter?

It’s a simple question but one that needs to be quantified and shown to investors each quarter. Your partners need to produce and make reselling an indispensable part of your growth strategy. But if you’re just starting to create your first partnerships, this won’t come easy. Channel sales for partnerships require a lot of work upfront to get going. Be clear with investors when you embark on a reselling program that you need time to train your new partners.

Nevertheless, after a few quarters, it’ll be time to show the program is working. Jim Somers at Openview has a great list of metrics for judging your partners. Here are some numbers he recommends for founders to record:

  • How many partner deals are currently registered?
  • What is the deal registration value?
  • How many deals have been accepted/denied?
  • How many deals have been won and lost?
  • What is the value of the deals won?
  • What is the deal velocity?

Are you training partners properly?

You can’t ignore your partners and expect the deal cash to flow. Channel partners may have experience in your industry or even share a similar business model, but will still need as much training like any account executives.  “Developing reseller channels do require building a dedicated internal team to cultivate relationships, educate resellers, align internal and external incentives, and ensure success,” Tomasz Tunguz wrote.

David Skok recommends creating marketing materials and programs specifically for channel partners to use. Sometimes, your staff will even have to convince your partners to help out with webinars and events to share these marketing efforts. Two things Somers recommends keeping tracking of is the number of courses your partners have attended and the number of training courses your partners have actually completed.

Are your partners improving?

Your partners have different priorities and, if the company is at a later stage, a different pace of business. It’s your job to prove the value in their participation and create a reason for them to be a better partner.

You also need to figure out how to hold them accountable. “Establish partner quotas,” Jim Somers writes. “Both the supplier and the partner to agree to revenue goals and the required investment each must bring forward to be successful.”

Assess your sales and training partner metrics and determine how you can improve each partner. Are they attending enough training sessions? What’s there close rate? Could their attempts be improved with more customized marketing materials? Working closely with your partners that are slumping will require a time investment but can pay off huge dividends in the long run. Moving a second-rate partner to a first-rate reseller can be as easy as looking at what’s worked for your top performer and figuring out to replicate the process. If a couple strategies don’t pay off, it’s worth both your time to end the partnership and move on.

Are you adding partners?

Treat your referral channels are an extension of your product. With new partners you have to test, measure and determine which fail and which scale. Provide incentives for your internal team to research new partners and develop leads. Measure the amount of leads generated, meetings set and deals made just like you would for your field sales squad. Scaling your sales from new partners protects you against saturation from other partner’s markets or a lackluster few quarters from otherwise reliable resellers.

By going through this exercise each quarter and answering these questions, you’ve provided a framework for growing your partner channel, improving results with consistent focus on training and measuring any potential weak points that can be fixed or abandoned. If reselling is one of the most efficient ways to scale, evaluating the results and adjusting for future performance is one of the best ways to spend your time.

 

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