So far I have been sharing the best practices to empower your partners. This relationship is not a one-way street. Your partners should also hold up their end of the bargain. But what it is? Many indirect channels fail precisely because vendors forget to articulate their expectations in clear terms. There are two issues: 1) what to measure, and 2) what to expect. This section will address it.
Partner Scorecard
Since different partners may be employed to play different roles in a sales cycle, it is important to assess their performance based on the role that they are playing. If a partner is playing multiple roles, its performance should be measured independently within each role. This methodology provides a consistent framework that you can use to compare different partners in a channel. The table below documents some of the key measurements for each role in the sales cycle. This should be the starting point for developing your own measurement system.
|
Task |
Metrics |
Comments |
|
Lead generation and qualification |
|
More leads are, of course, better than fewer leads. However, these leads should be good leads. The second metric is the measure of the effectiveness of the lead generation process. Whereas, the last metric ensures the quality of overall process. |
|
Bidding and Proposing |
|
The primary measure of the success of bidding-and-proposing channel is the percentage of proposal that they win. Adding average deal size in the mix ensures that channel is effective at putting together winning proposals for larger, more desirable transactions. |
|
Negotiation and sale closure |
|
Sales revenue is the ultimate measure of this task, however adding average deal size or average discount ensure that channels are ‘holding its price’ |
|
Fulfillment |
|
Metric to measure the effectiveness of channel responsible for fulfillment varies from industry to industry. Given metrics are common among world class companies. |
|
Customer care and support |
|
Channels tasked with long-term customer care and support must be measured on how effectively they build and sustain long-term relationships. Customer Satisfaction Rating is good but not practical, measure like loss rate (i.e. percentage of customer defecting to competitors and therefore lost after an initial sale), and Customer Retention rate, as a measure of sales to existing customers versus new customers, are more accurate. |
When properly conceived, partner scorecards can help you simplify key business decisions such as: where to invest, what programs to keep or create, where to recruit, where to “disengage” from unprofitable partners, and how and where to staff. A more comprehensive approach in building the partner scorecard is to use the Balance Scorecard methodology.
Developed in early 1990 by Robert S. Kaplan and David Norton, the Balance Scorecard provides a strategic tool for converting strategy into actionable elements. It is a holistic approach that measures results in a cause-and-effect relationship from different perspectives. For partner programs these perspectives could be:
- Sales Performance: with respect to sales process
- Partner Reach: Which markets and customers a partner can reach and how effectively
- Selling and Marketing Capabilities: How well is the partner’s organization able to perform sales and marketing tasks. This is slightly different from sales performance data. Sales performance measures like revenue numbers which is a lagging indicator. Whereas, capabilities are leading indicators.
- Selling and Marketing Capacity: A partner may have good selling capabilities but they could be short-staffed. This means they are already performing at their full capacity and wouldn’t have time to push your products.
- Partner Financial Conditions: One solution to the capacity issue is to increase it buy hiring more resources. Do your partners have enough financial grounds to do that? Similarly, if you require your partners to stock minimum level of inventories, this perspective give an insight into their credit worthiness and realistic estimate of how much product they can move.
- Commitment Level: It doesn’t matter, how financially strong a partner is, or how strong and capable their sale force is, if there is no commitment from a partner to sell your products. This is one perspective that should always be on top of the list.
This whole encompassing, holistic approach of scorecarding partners’ performance provides the basic framework to monitor and manage partners’. If you have many partners, this tool could also be used for segmenting partners in high performing, mediocre, and low performing categories. This segmentation allows businesses to prioritize their resources for maximum performance.
Okay, now you have a scorecard to track the performance of your partners. But it is useless, unless you share with your partners your expectation and field data, so that they can improve. The last step "Communicate and Manage" explain this process in detail.