Vendors looking to grow their channel revenue must constantly keep an eye on two critical channel productivity metrics:
- Time to revenue for new partners
- Partner contribution rate – the number of partners in the program who actively contribute channel revenue
The business impact of these is clear. Slow time to revenue costs both vendor and partner and can mean loss of market share. Poor partner contribution rate also results in insufficient coverage of the market opportunity, unhappy partners and wasted channel sales resources.
Once a reseller is signed, it’s very important to get them generating revenue as quickly as possible otherwise there’s a high risk that they will simply give-up on the relationship. The same thing happens when a previously successful partner begins to experience declining revenues. Regaining their confidence that the partnership is a viable business opportunity and they should continue to invest then becomes very difficult.
So why do some resellers never sell, or stop selling, and what can be done about this? There are two key primary areas you should consider.
In Channel Enablers ChannelPRO™ framework we look at Partner Selection Criteria. The ideal partner profile defines what kind of partner to recruit, and equally as important, what kind of partner not to recruit. Key elements include skill sets, existing customer profiles, sales cycle profiles, whether they sell applications, infrastructure or services, size and funding, their ability to complete your whole product solution, and their degree of synergy with your offerings. Failure at the Partner Profile level normally occurs because:
- the Profile was incomplete or missing important criteria;
- it was incorrect or included assumptions later found to be untrue;
- it was simply ignored when signing up the resellers; or
- the Profile has changed due to changing market dynamics.
Fortunately it’s possible to help partners who aren’t too far from the ideal profile become successful. However, for partners with significant gaps, no amount of time, money, or divine intervention will get them to produce.
It’s interesting that when a company hires a direct rep, they know it will take at least 3 months of daily learning before they’re productive. However, when the same company signs a reseller partner, they expect them to be successful after a 1 hour PowerPoint presentation! So what’s partner enablement all about?
Because the costs of delay in terms of both real cost and lost opportunity are very high, partner enablement must be a highly organized process that clearly spells out key milestones. It will include lots of steps like sales and technical training, operational and management enablement, familiarization with partner portals and other resources, etc. It also includes things like joint business planning and handholding partners through their first few sales, particularly with complex sales.
It’s important that the enablement plan be a documented process; a document you can hand to prospective partners before they sign up. Not only will having this document help you more quickly enable partners, it will be a recruiting aid as well. Partners prefer to do business with vendors who are organized to make them successful as quickly as possible. For existing partners, the current enablement plan should be a key discussion area during the annual partner planning process.
Enablement requires a commitment from all parties. Best practice is that a partner’s commitment to meet milestone dates for necessary training and investment is clearly spelled out in both the initial and annual business plans and these commitments form part of the partnership agreement. Full accreditation, margin discounts or even agreement termination can be tied to meeting these commitments.
Remember, indirect channels are about outsourcing the cost of sales; the more enabled a partner is the more they can take away from a vendor. Therefore those partners who are ‘more enabled’ should receive greater compensation than those who aren’t.
The process begins with gap analysis, when you compare the partner to your ideal partner profile. For new partners this takes place during recruitment, and for existing partners it should be part of a regular review or partner planning process.
After gap analysis come a series of readiness plans
- Management Readiness will include agreement with partner management on key issues such as investment, and milestone dates to complete the rest of the enablement process. This always has to be done first.
- Operational readiness is about being ready to process orders, access and use systems, handle stock etc.
- Sales & Marketing readiness is about being ready to generate opportunities and to become independently able to generate revenue for both parties. For complex products it almost certainly includes handholding the new partner through the first few sales.
- Product readiness is about understanding the in-and outs of the product or service; without which a reseller partner can do nothing.
Since most partner staff, particularly those in sales, are “just-in-time” learners and only absorb so much information at a time, you can’t provide everything all at once; just enough to give them confidence to engage a customer without fear of failure and initiate a sales cycle.
So what should you be doing now if you want more channel success in 2012?
- Assess your Partner Profile. If you never developed one, put one together. If you have one, dust it off and ensure it accurately reflects today’s market conditions. Once it’s solid, use it to evaluate both existing and future partners. Gaps require mutually agreed action plans to move partners closer to the Profile. Finally, dump the partners that are just too far off and save them and yourself further aggravation.
- Review your enablement programs. Are you really providing sufficient training, tools, and programs to make partners independently successful as quickly as possible? Has the market changed requiring enhancements to your enablement process? Now’s the time to have a closer look and plan your roll-out.
We all know the saying that the definition of insanity is doing the same thing over and over and expecting different results. Regularly asking yourself whether this applies to your partner profile and enablement plan is a must if you want to keep your channel sales flowing.