10 KPIs Every Channel Chief Should Use
Channel chiefs should define the key performance indicators that measure operational effectiveness and success factors before someone else does it for them.
By Larry Walsh
Channel chiefs are under assault to prove their value to their companies. The C-suite wants more than the usual channel platitudes of partner importance to market coverage and sales generation. They want hard, data-based evidence to support their return on channel investment.
Here’s the rub: Too many channel chiefs are either relying on old standby key performance indicators (KPIs) or trying to synthesize data points to validate their organization’s position in the company.
Everyone wants to assume the best of the channel, as partners are often instrumental in scaling market coverage, capturing new business, and decreasing the cost of sales. But none of that matters when you have to answer the tough question: What is the channel doing for us?
From a C-suite perspective, the channel is a cost center as much as a profit center. The average complex technology sale involves as many as five commission-eligible actors, including the channel chief, the channel sales rep, the territory rep, the executive sales assistant, and the sales engineer. Capping that string of costs is the partner.
For that reason, channel chiefs can’t afford to simply regurgitate the same old numbers on recruitment, training, certifications, and gross sales through partners. Instead, channel chiefs need to think about how they’re contributing to the success of the business, and to define their success factors and metrics. Here are the indicators and performance measures channel chiefs should consider:
1. New Logos
Channel value increases if partners can uncover and capture new accounts previously unknown to a vendor. Tracking the number of new logos through partner-led sales is a powerful KPI.
2. Average Discount
In many instances, the average discount on sales is lower when the channel sells a product than when the direct-sales team makes the deal. Tracking direct and indirect discounts can show how partners help maintain price integrity and profitability.
3. Attached Sales
The best sales are multi-product sales. Showing how partners drive multi-product sales engagements, particularly when contrasted with direct sales, underscores the productivity of partners.
4. Customer Retention Rates
Retention – or the converse, attrition – rates are especially important to vendors with recurring revenue models. Partners help vendors by excelling at keeping customers engaged and spending.
5. Sales Resource Utilization
Partner training and certifications are good only if they enable partners to act independently. Not every partner can act without vendor support, and not every sales opportunity is appropriate for independent partner action. But channel chiefs can demonstrate partner value by correlating training with decreases in resource utilization because that equates to lower costs.
6. Technical Resource Utilization
Similar to the idea behind sales resource utilization, technical resource utilization includes measuring everything from help-desk calls to engagement of post-sales engineering support. Training should equate to lower partner dependence on a vendor’s technical resources.
7. Partner-Initiated Opportunities
Tracking how much business partners are bringing to a vendor goes beyond sales. The tracking of partner-initiated opportunities should include deal registration applications (not just approvals) and proposals issued. The goal is measuring partner sales activity, not just the revenue.
8. Sales Conversion Rates
A follow-on to partner-initiated opportunities is sales conversion rates, in which a vendor measures the percentage of sales opportunities that close to demonstrate partner sales proficiency.
9. Partner Satisfaction Rates
A widely used metric is customer satisfaction rates. In this context, though, channel chiefs should seek to measure partner satisfaction with the vendor, its products, and its channel program. Also, channel chiefs should evaluate partners’ propensity to increase business with the vendor.
10. Channel Impact
Ultimately, channel chiefs should use metrics, such as those noted above, to create a channel impact index that demonstrates how partners and the reseller program are contributing to their companies’ success – on a quarterly and annual basis. The channel chief’s goal is to give the company something to report to its investors or market analysts.
Channel chiefs and vendors can define their own KPIs, and there are many more performance metrics than those listed here. The point is this: Channel chiefs should define the data points that reflect the value of their organization and partners before someone else does. History shows that channel chiefs that don’t define their success factors usually struggle to demonstrate channel value to those who set terms for them.
The 2112 Group helps vendors and channel chiefs define and measure success factors and channel performance. For more information on how 2112 can help, e-mail us at [email protected].