An effective channel partner program brings increased revenue along with many other benefits to your business. But what KPIs can you track to accurately monitor channel partner performance, and what strategies can you employ to manage underperformance?
In this blog, we explore channel partner performance and the key metrics to track that offer you a rounded view and the opportunity to make improvements.
Defining Channel Partner Performance
You can break down the performance of your partners into four main areas – revenue opportunities, strategic advantage, operational performance, and relationship health.
Revenue opportunities – Your partners should be producing enough revenue to be worth your investment in their training and onboarding. The direct sales they make as well as the potential value of new leads they secure should be considered to assess the partnership’s financial viability.
Strategic advantage – Your partners should not just be additional salespeople, they should open up new opportunities for you, such as by helping you to break into new markets or ensure customer loyalty.
Operational performance – The number of staff within your channel partner’s business who have been trained and certified for both sales positioning and implementation can be tracked to assess whether operational milestones are being met.
Relationship health – It is difficult to put a quantifiable metric on the health of your relationship with your channel partners, but it is an important factor nonetheless. The stronger your relationship is with your partners, the easier it will be to ensure engagement with training materials, maintain open communication, and work together towards mutual goals, even when these change.
How to Measure Channel Partner Performance
The KPIs by which you monitor your channel partner performance should be unique to you and your partners, the goals you set out at the beginning of the partnership and the reasons for that partnership. For example, increased revenue is usually a primary goal of channel sales. But, if you are particularly focused on growing your network or entering new markets, your KPIs should reflect this.
How you define success should also be reflective of your partner’s level of experience, the length of the partnership and the level of support and training they have received. It is a good idea to monitor a range of KPIs encompassing all partner activity, not just a single area such as sales, as this will give you a better insight into their performance. For example, underperformance in training engagement could result in sales underperformance.
Here are some of the performance metrics that you can monitor to assess your channel partners’ effectiveness:
Profitability
One of the most-used ways to monitor the performance of your channel partners is by assessing profitability. Profitability can be challenging to measure accurately in a single metric, so it is best to look at a range of criteria, such as:
Customer Acquisition Cost (CAC)
In the case of most channel businesses, you and your partners will both be responsible for bringing in new customers. Tracking this metric will allow you to see how much the extra leads being brought in by your partners are costing you compared to the ones you attract yourself.
Customer Retention Rates
The way you do business with your customers may be different to the way your channel partners do business. While partners may bring in extra leads and provide access to new markets, the value of these leads is lessened if they are only short-term or one-off customers.
Compare the customer retention rates for your direct sales against the retention rate of your channel partner sales. If your partners struggle to retain customers,this could indicate a need for further or more specific training.
Cross-Selling and Upselling Rates
Your partners are not just additional sales staff, they should be ambassadors for your brand, and that role should include an active effort to upsell and cross-sell your products.
If your partners are not doing this effectively, they may need further product training to help them better understand customers’ needs and suggest the best products to target those pain points. The average value of a partner deal can expose valuable opportunities for upselling or cross-selling, even if they are already hitting monthly or quarterly sales targets.
Training Engagement
The training your partners receive (and engage with) can significantly impact performance. Without thoughtful and well-structured training on your brand and products, even the best salespeople won’t reach their potential. The same can be said for all partners, including installers, designers and specifiers.
Tracking partner engagement with your training materials should include the following metrics:
Number of Partners Using the Provided Training, Sales or Marketing Materials
Channel partners who do not engage with your training materials, such as online courses, will not be able to sell, install or specify your brand and products as effectively as they would otherwise.
This could be measured by tracking the number of LMS (learning management system) or portal logins or downloads of training materials. If a high percentage of your channel partners are not engaging with training materials, ask why this may be the case. Are your training materials easily accessible? Are there any incentives in place for them to complete the training?
Training Course Completion Rate
If a high percentage of your channel partners are beginning your training courses but not finishing them, or if channel partners are engaging with your training materials but still underperforming in other areas, this could indicate a need to reassess and update the training you offer.
Your channel partners should be encouraged and even incentivised to finish your training. However, you need to hold up your end of the bargain by making that training engaging, accessible and valuable. Having a training program that is available 24/7 can help with this, so training can fit into your partner’s schedule at a time that suits them.
Number of Partners Attending Optional Training Opportunities
If you offer optional training opportunities such as events, you can track how many partners are participating to indicate their interest in and engagement with your brand. Partners shouldn’t be penalised for not attending optional events – but you should ensure the events you are organising are worth their time and your investment.
If attendance is low, but you know the experience would be beneficial to your partners, it is worth investigating how you can make these events more enticing, either by moving them to a better time or offering an incentive, accreditation or certification for attendance.
Success Rates
As with profitability, success is difficult to measure as a single metric. While revenue is usually the primary indicator of success, there are more KPIs to consider. Success will look different depending on your partner program goals, agreed targets, experience level and geographical location. Some of the KPIs you can consider are:
The Number of Registered Deals from Partners
One of the most straightforward metrics for success is the number of deals your partners have registered. You can compare these figures across your partner network to identify patterns.
For example, if sales are below expectations in certain regions but good in others, you may have to consider how that market is being approached. Is different training required for your current partners, or do new partners with an existing reputation within that region need to be recruited?
Percentage of Partners Who Have Registered a Lead
If bringing in new potential business is one of the main objectives of your partner program, then you need to monitor how many of your partners are registering leads. If this percentage is low, you may need to consider whether your partners are being given the tools they need to do so.
As well as the number of partners who have registered a lead, you should consider how many leads, in total, each partner has registered. You may find new business opportunities are depleting in certain regions or industries, but there is untapped potential in others.
Required Task Completion
Alongside sales targets, you should have outlined the other tasks you expect your partners to regularly complete. These could encompass a range of activities, such as entering data in CRM systems or carrying out product demonstrations for customers.
Whatever these activities are, your partners’ engagement with them (or lack of) can indicate how they prioritise them alongside their sales targets and how committed they are to being valuable, long-term channel partners.
Related resource: Developing Incentive Programs for Channel Partners To Maximise Performance
Customer Success
Your end users can provide valuable insight into the performance of your channel partners in a way that other KPIs might not be able to. The quality of the interaction and engagement between your partners and the end user reflects on your brand, even if you are not directly involved in the transaction.
End-User Satisfaction
Customer satisfaction surveys can be a valuable way to identify partner skills gaps and strengths. While customers usually need to be offered some kind of incentive to complete a satisfaction survey, the insight you will receive is often worth the investment.
The overall experience, how informative and helpful the staff were, satisfaction with the product, what aftercare has been provided, and how likely the customer is to purchase from that partner again are all useful questions to include on a customer satisfaction survey.
Customer Churn Rate
By tracking the number of customers who stopped using your channel partners’ services during a set time frame, you can identify patterns and opportunities for improvement.
It could be that once a certain product or service has been purchased, there is little reason to buy additional related products or there could be other products on the market that are better meeting customer needs. It could also be that your channel partners have changed the way they operate or are not providing a satisfactory after-sales experience.
Whatever the reason, tracking the churn rate can help to identify and rectify these issues to encourage more repeat business.
Partner Churn Rate
Similarly, you should be tracking the churn rate of your partners to see which partners cease their collaboration with you over a set timeframe. If you are seeing a high churn rate of partners then this likely indicates that your partners are dissatisfied or not seeing the ROI of the partnership.
Channel partnerships won’t produce significant ROI straight away, but your partners need to see the potential benefits of their continued commitment. Assess your partner program and ensure that it is delivering in all areas if you notice a high churn rate.
How to Manage Channel Partner Underperformance
The KPIs you monitor can reveal much about your channel partners and their performance in multiple areas, not just their sales figures. It’s worth noting that it is more effective to try and improve the performance of existing channel partners than trying to replace them. Addressing underperformance in the right way helps to get your channel partners back on track.
Start by analysing the areas where your partners are underperforming and the reasons why. If your partners are struggling to upsell your products, it could indicate a lack of product knowledge and a need for additional training.
If they are not engaging with training materials, it could be because the training delivery method does not fit into their schedule or the training content is not seen as valuable. Bear in mind that there may also be external factors at play that need to be worked around.
Communicating your expectations with your channel partners is essential when they are underperforming as they might not even be aware of the problem. Discuss the specific areas in which they are underperforming and the challenges they are facing in that area. Then provide constructive feedback, setting clear but realistic expectations for improvement with specific goals and timelines.
Ask your partners what resources they need to make the improvements happen and be open to critique of your own training and onboarding processes.
Identifying the specific ‘why’ is essential to create a solution. Simply demanding an increase or improvement in any area of underperformance without providing the necessary tools will not yield the best results.
Once your plan is in place, closely monitor performance in the underperforming area and provide feedback and coaching as and when required. Assess progress by the improvement plan rather than your initial KPIs, as improvements may be gradual. Provide your partners with the opportunity for regular reviews during this time rather than an ultimatum.
You should aim to reinforce your relationship throughout this process, demonstrating that you are invested in your partner’s improvement and are committed to working towards mutual success. Reward improvements or achievements as necessary to start laying the foundations of continuing growth once the underperformance has been resolved.
If your channel partner still fails to meet their improvement targets, you may need to assess whether their partnership is worth your continued investment.
Before deciding to terminate a partnership, it is important to honestly assess whether your processes, such as onboarding and training, are as effective as they can be, or whether they can account in any way for the underperformance. It is also worth considering whether alternative strategies or reassigning resources may be better than termination for underperforming partners.
Monitoring channel partner performance allows you to understand what aspects of your channel program are working well and where improvements need to be made. You might find that you need to invest more resources into training or even your partner selection process, but the benefits of making data-backed improvements will far outweigh the initial costs.
One of the best ways to improve your partner’s performance is through training. Providing channel partners with a bespoke training program is the best way to help them reach their targets while deepening their knowledge of your products and brand. Our Learning Management System has built-in tools that allow you to monitor partner engagement with the training materials so you can understand in real time what is working, and what isn’t.
If you are interested in learning more, then you can read this case study about how we helped one of our clients propel their initial partnerships from 700 to over 6000 global partners by implementing a cutting-edge training program.
