Find out the key scoring metrics every vendor needs to know before evaluating partner investment prioritization.
To vendors, sales generated metric signifies everything they need to know. It substantiates that Partner Investment Prioritization (PIP) is, and will always be, a condition of how much money a channel partner is capable of netting.
It’s a simple equation: If “said channel partner” registers deals, produces sales and creates profitable opportunities, one should invest more into them. Right?
And why shouldn’t they? After all, the bottom line is why we are all here in the first place
(well, at least most of us).
However, if partners truly are your top priority, then the philosophy of “sales over everything” could cause you to leave thousands or even millions of dollars on the table.
How?
The problem here is , which is a common industry practice that focuses on “bucketing” channel partners into the haves and the have-nots.
Many of us don’t mean to do this intentionally, but in the ultra-competitive and chaotic environment that is the distribution channel, we simply don’t have the time nor resources to formulate comprehensive partner scorecards.
Here are what channel-intensive vendors tend to focus most on without comprehensive scorecards:
- Company size (e.g., less than $8M)
- Certifications (e.g., The Sales Association, NASP)
- Sales efficiency
- Profitability
- Partner type (e.g., ISV, VAR)
Although these areas are great places to start (when evaluating PIP), they do not tell the whole story.
When companies’ focus gravitates towards the “glory” and not the “story,” profitability-potential takes a hit. It forgoes the strategic aspect of partner relationship building in replace of transaction-based, order taking that significantly lessen opportunities.
So ask yourself, what type of relationships do you want to build with channel partners: Strategic or transaction-based?
If you’ve answered the latter, keep doing what you’re doing; after all, you are making money, right? However, if you want to build strategic, two-way partnerships that leverage each other’s assets and work collaboratively to eliminate weakness areas, it’s time to stop the one-dimensional partner scorecarding routine and start diving deeper.
How Vendors and Channel Partners Classify Each Other
Too often, vendors and partners pre-package each other before a fully finalized understanding is made between the two entities.
On one hand, vendors need to be more diligent in their scorecarding process, which although time-consuming, unleashes the potential for a more lucrative, long-term relationship. Partners, meanwhile, must be more proactive with whom they choose to associate with. This means looking past incentive programs and market position as the only reasons to pursue business together.
Here, will explore various action-steps vendors can apply to their recruitment, , and during PIP evaluation. In particular, the key metrics to consider when formulating your channel partner scorecards, and examples of what those metrics might look like.
Why Partner Investment Prioritization is Bias
At the end of the day, vendors and partners want to earn each other’s attention, endorsement, time and resources.
Usually, the “big” channel partners have more leeway in terms of choosing whom they want to do business with. Consequently, vendors are pressured to sell themselves in the best light possible. This responsibility largely depends on the channel account manager’s (CAM’s) ability to stimulate engagement and activation with the big partners.
In the process of influencing a partner to carry a vendor’s product, there is, at times, a fair amount of romanticizing involved. As so, vendors tend to go heavy on what partners want to hear: Incentive plan, market position, MDF/Co-op budget, etc.
Partners, on the other hand, adopt a similar approach. They rely on the three-headed monster of PIP to counter any stigma or bias vendors might have towards smaller channel partners:
- Sales
- Profitability
- ROI
The result is a superficial analysis of each company’s potential. Both parties do themselves a disservice by focusing on what they think they want to hear, instead of what they need to hear. And due to time-constraints and competitive pressures to formulate partnerships, vendors and partners skip the details in replace of the “sexy” qualifications.
Nobody wins when we position ourselves as something we are not. Like any positive relationship, truth and realistic expectations are imperative for success.
How Should Vendors Score Partners?
It’s understandable why many vendors go for the home run; after all, attracting and activating the “big channel partners” is what leads to a successful channel network. However, it’s not only difficult to get time from these partner’s teams (to conduct scorecards), it’s also expensive.
In the attempt to gain attention from these partners, you are likely to put less effort into acquiring information from your smaller to mid-size level partners. If this is the case, don’t put all your eggs in one basket (by purely focusing on the “big guys”). Allocate a balanced approach throughout your scorecard process. Although investing time, money and energy into scoring smaller to mid-sized partners can be tediously painful, it’s well worth the trouble because it has a higher potential to lead to growth strategy and a larger percentage of revenue contributing partners.
Partner Investment Prioritization – Score Metrics
Post PIP Screening Questions Response
After your evaluation, your partners should have a comprehensive and well thought-out response to your questions. The higher level of detail they go into justifying the validity and goal of your questions directly supports their potential as a business partner and the opportunity to be profitable.
Look carefully at their post PIP response. Their response acts as a delayed scoring metric as it demonstrates their business approach and further reveals their goal.
Ask yourself, ‘how active are they to reach out to their CAM? How likely are they to find a two-way strategy that supports both vendor and internal objectives?’
Final Thoughts on Partner Investment Prioritization
Ultimately, developing a channel is not rocket science. It’s important not to overcomplicate something that is already muddled in confusion. It takes time to develop a relationship that is built on trust, is mutually beneficial, possesses synergy and works to improve the bottom line for all parties.
Clear skills and capability analysis, segment priorities, differentiate account planning and tailor will all help lead to a more positive, profitable relationship. The way you manage partners and build relationships is how you separate yourself from the competition. This will allow you to gain a disproportionate slice of market growth and partner mindshare.