Who are your best partners? A tool to help you work it out.
Working out who your best partners are is something that many channel managers don't spend a lot of time on. Typically, revenue will be the only measure used, but that doesn't answer the question of who your BEST partners are; only who your LARGEST partners are. Here's a test: Ask ten people in your organisation who your best partners are. If you don't get the same answer, then you may find this article interesting.
Working out who your best partners are is one of the cornerstones of Channel Management. If done correctly, it removes all subjectivity and emotion, and provides clarity on how your partners are performing, and importantly, where you should focus your attention. I have seen many channel managers over the years who simply turn up at each of their partners and do the same thing: Talk about their products, maybe discuss sales opportunities and then leave. That isn't channel management, that's "show up and throw up", and adds no value to your partners or your company.
When most channel management teams are asked to rank their partners from best to worst, one of two things happens. The first is they produce a list of partners ranked on revenue. The second, and most worrying, is there is a general look of confusion and a contradictory view, with a general consensus of "Actually, we don't know". The bottom line is if you can't work this out then you can't even attempt to drive a strategy with your partners.
Developing a method of ranking partners is a must, yet it must be based on what is important to your company, not the partners. This is very important as the measurement is by your company. Effective channel managers always look for mutually beneficial outcomes, but this is one place where that consideration is left behind.
The first part of working out your best partners is to determine what a "best" partner looks like. Sounds simple, but it's actually difficult to achieve consensus across your channel team, and this is what needs to happen first. This first part is the most critical piece, so it is best done with everyone in your channel team workshopping it. What you need to come up with are NINE attributes of a successful partner, through the eyes of your company. As a starting point, if you have KPI's you should include these. For example, if you are measured on a mix of revenue, profit and Year on Year growth, then your company is already telling you that these are the three most important things to the company as it works towards achieving it's overall goals.
After incorporating your KPI's, have a look what else makes a great partner. In your workshop with your peers, have a whiteboard to record everyone's ideas. Don't dismiss any - that will come later. Simply get as many ideas as to what goes into making the best partner.
The key to measuring partner performance and who are your best is to be able to measure everything. If any of the ideas on the whiteboard can't be measured, cross them out. For example, a "Good to work with" is subjective and can't be measured. You need to agree on nine attributes that can be measured with no subjectivity.
Some examples may include number of joint customer-facing visits per quarter, percentage of their sales team that are certified in particular product sets. Think what can be measured outside the channel team. Your finance, accounts, operations, marketing and certifications teams will also have ideas and things that can be measured. Other good ones may include do they pay their invoices within terms? What is the overall profitability percentage for all sales to each partner? What is their achievement compared to an agreed target?
The more you think about it, the more attributes you will come up with. Remember though, you need to come up with nine, and they must all be measurable.
As an example, here are nine that may or may not be a good starting point for your company:
2. Joint Customer Sales Visits
3. Achievement of Sales Target
5. Supplied Sales Pipeline
6. Invoices paid within terms
7. % Sales Staff Certified
8. Approved Marketing Campaigns
9. Growth, Period on Period
Once you have collective agreement on the nine attributes that define a great partner, it's time to prioritise them. Like any large list, some will be more important that others. You now need to break up your list of nine into three groups, with three in each. This is based on Highest Priority, Medium priority and Lower Priority. A suggestion would be to have your KPI's matching your highest priority attributes that you want to measure.
Taking the nine above, your priority groups may start to look like:
HIGHEST PRIORITY (KPI's?)
Achievement of Sales Target
Invoices paid within terms
Growth, Period on Period
% Sales Staff Certified
LOWER PRIORITY (but still important!)
Approved Marketing Campaigns
Joint Customer Sales Visits
Supplied Sales Pipeline
We're starting to get a structure here! But there's still more work to be done in your workshop! You now need to establish the measurement criteria for each of these, and where the information is going to come from. Each of these items needs to have three bands of measurement and achievement defined, into Low, Medium and High Achievement. In addition, who is going to supply the data for the measuring?
Once again, here is a suggestion:
The cut-off levels you define for the LOW column should reflect the minimum expectation for a partner to either have a partnership, or a channel manager assigned. Partners falling in this area should be viewed as "unsatisfactory". After all, channel managers are expensive and resources need to be allocated accordingly.
You now have a matrix of what is important to your company and how you are going to measure it. This is the hardest part done! The Channel Team now needs to agree how often this will be measured. My suggestion would be quarterly. Within the first week of each new quarter, have all the information collated and score every partner against the matrix for the quarter that has just finished. Do it as soon as possible. For example, a partner who achieved $750k of revenue would have the H1 line scored as a medium (500-1m) and the source of the data would be from Operations. It is important that everyone in the team understands WHAT is being measured, and who is responsible for providing the information.
Now comes the fun part, and at the end of this blog we have provided a template that you can download that turns this information into actual scores and rankings. So don't panic if it starts looking a bit hard; we're explaining the theory behind the tool you can download that does all this for you. To explain how it works though is useful. Each grid in the matrix has a score, or points attached to it according to the following:
The points are weighted to reflect priority and achievement.
From the points table, you can see that a partner who scores HIGH in all nine categories, would be by your own definition, a "Best" partner. This would lead to a score of 54 points, which is the maximum. The template tool at the end of this blog does all the calculations for you and presents a percentage score for each partner. You now have a totally metrics driven scoring system to determine the performance of your partners that everyone understands and is not subject to emotion, gut feel or any other subjective forces.
The template provides a scorecard for each quarter and then provides a median score for each partner for a full year. This is a fantastic way to work out "Partner of the Year" awards as it is totally transparent. It is important that the template uses a median calculation for a full year, rather than an average; if any of your partners have bluebirds during the year, their score will be normalised across the full year.
As a Channel Manager, this tool also allows you to drill down and understand what each of your partners need to focus on to be successful with your company. Any time one of you partners scores a LOW in the High Priority area (ie, top left) then you have a plank to drive a particular strategy. Using this tool in each quarter will point you where you need to focus with each of your partners. They are all different and as long as you are measuring what matters to your company, the tool provides not only an effective ranking mechanism, but also a roadmap of where you need to focus on each partner to achieve your company's objectives.
Turning this tool around, it can also show you who your worst partners are. If your channel program is mature you may already have a way of identifying non-performing partners, but if not, taking the bottom 10% of your partners and having a "are we right for each other" discussion is something that has to be done. In another Perspectives post we'll have a look at how to manage a partner up, or cull them.
Download the tool, convene an internal workshop, and make this part of your quarterly hygiene.
I hope you have found this useful :)
Excel Spreadsheets Available:
For Mac, Office 11: Excel Spreadsheet - 83 KB - Updated 16/7/13
For PC, Excel 97-2004: Excel Spreadsheet - 126 KB - Updated 17/7/13
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