Most channel professionals review the performance of their partners – distributors or resellers - on a semi regular basis. However, this is often a reactive response after a revenue target has been missed. This paper looks at the review process as being an integral part of a best practice partner management program, and a tool that will benefit both the vendor and the partner.
What are you reviewing or measuring, and why?
If you don’t know where you are, you can’t get where you want to go. There have been many variations on this basic premise but, while it may be well known, it is not well practiced. Many vendors (or channel account managers) do not regularly review their partners until the symptom of poor sales appears. Whereas, had there been a ongoing process of monitoring vendor/market/partner alignment, the chances of a partner missing a sales target would be minimised, and the possibility of partners considering a more compelling ROI offer from competitors could have been prevented.
Before getting down to individual partner measurement, ask yourself "What are all partners, collectively, supposed to be accomplishing for you in your target market?" Then you can break this down one step further by asking the same question for specific key partners or distributors if necessary.
It is easy to try to measure everything, and end up with “analysis paralysis”. However there are generally only a few key metrics worth monitoring regularly to give you a good indication as to the health of the channel. When considering what you should monitor, look at the basic factors that drive partner performance and commitment into your target market (i.e. skills, market focus, product range represented, resources applied, relative financial returns, etc.) If a problem or opportunity is identified then the breadth and depth of the measurement can be increased at that point. Less is generally more.
The problem with only monitoring partner sales results is they are an indication of past activities, which may have been implemented many months previously, potentially in different market conditions. It is also possible that partner resources or focus may have changed during that time, which will have had an impact on th results. While monitoring of sales results is of course important, there needs to be considerable effort in monitoring and measuring the key activities that drive the desired sales results, both at a Channel Account Manager level, as well at a partner level.
Plan for the future
As mentioned previously, continuing alignment of markets and activities are the main drivers of partner commitment and performance. Therefore it is important to focus on the activities that will drive the desired outcomes for at least the next review period, taking into account the market situation and resources available on both sides to be able to execute.
Keep the planning process simple by only selecting 3-5 critical goals or activities that will drive the requisite outcome. Ensure they are measurable for the next review by being as specific as possible. This goal should include the necessary commitments by both the vendor and the partner. For example, achieve sales results of <$x> with
Finally, remember that any major change to partner policy will have an impact on the channel momentum and sales performance, possibly for a number of consecutive or future quarter’s results. If changes are required to policy, remuneration, product range, etc, the formal partner planning and review process is the ideal vehicle for this discussion, regardless if the potential impact is positive or negative, as all of the key stakeholders will be present. These situations are much better dealt with pro-actively and collaboratively as a face to face meeting and will often result in improved depth of the partnership if managed correctly. A partners’ ongoing sales success is of course the vendors’ sales success, and this will not happen unless it is continually planned, measured and adjusted to match the market opportunity.
Best Practice Channel Review and Planning Guide
- Monitor channel sales results monthly to identify any market and product trends and if any individual partners are trending outside the overall channel results
- Review partner results and rank them monthly, to identify the top 20%. If any partner that was previously in the top 20% drops out, find out why and conversely find out why the new partner appeared
- For the largest partners, a formal review and planning session with key managers from both the vendor and partner should be held quarterly
- The focus of this planning session should be allocated as follows - Review of past sales results and analysis of the vendor/partner activities that delivered those results (25%), Analysis of current situation, define and set goals, objectives and forecasts for next period (50%), Agree on sales and marketing plans, timetables and resource allocation (25%)
- Align your channel incentive schemes both internally and externally to reward the activities committed to by the Channel Account Managers and the partners, not just the sales results
- Be prepared to revisit the entire channel design process if you suspect, or it becomes clear, that there are gaps in alignment or commitment that are causing performance issues
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