9 channel metrics that matter

This latest blog looks at nine of the key metrics that channel leaders should be tracking, why they and important and how to calculate them

The Channel Company vendor services

The Channel Company, which incudes CRN, Computing, Channel Partner Insight and bChannels, has come together to create an end-to-end vendor service to provide more transparent and reliable returns from the IT Channel.

This latest blog looks at nine of the key metrics that channel leaders should be tracking, why they and important and how to calculate them, both to assess the health of their overall channel and the effectiveness of through marketing efforts.

Knowing these numbers can be the key to success or failure in today's competitive economy

Whatever your revenue goals are for the year, you can't afford to be without the best KPIs and data to make transparent sales and marketing decisions. In this blog, we've put together a top 9 list of key metrics that any progressive channel marketing leader should be tracking today.

Use this as a checklist to track your business more effectively. Doing so will empower you to make data-driven decisions that accelerate revenue, increase ROI, and put you well ahead of the competition.

Part one: The health of your ecosystem

While measuring the health of your channel partner ecosystem can sometimes feel like looking into a crystal ball, there are a number of KPIs that every technology vendor today should be tracking to evaluate if their channel efforts are paying off or not.

Time to onboard a partner

Effective channel partner onboarding can help you develop positive partner engagement, increase revenue, decrease attrition, and utilise resources efficiently. From service quality and order fulfillment to operational efficiency and selling products - your channel partners can help you succeed while allowing businesses to control costs and improve ROI.

A full onboarding methodology covers the period of time until a channel partner is fully proficient and successful within your program - which could be as long as one year or 18 months depending on your product and program. However, the exact metrics you use to measure time to onboard are typically determined through steps on a partner journey, which will differ by vendor.

For example, a global ERP software vendor typically takes 18months to onboard with substantial financial commitments on the way - but you may generally expect to see attendance at certain training modules or webinars to achieve a certain degree of technical ability, signing T&C's, filing a business and marketing plan, or carrying out some form of joint lead generation.

Since onboarding is a process that builds upon itself over time, the first 90 days are critical to the success of onboarding a channel partner. Towards the beginning, the vendor will spend most of the effort in getting a partner enabled, but over time the effort should level out, and by the end of the onboarding process, the partner will be self-sufficient enough to handle most of the workload themselves.

Time to revenue

How long is the gap between a partner joining your partner program and that partner delivering a customer? This is what's called Time to Revenue (TTR). It's a metric that tracks their journey from the moment they first discover your program to when they deliver your goods and services to their customers.

Having the ability to measure TTR gives you better insight into what moves the needle in your partner program - and understanding where that demand comes from is pivotal to growth and spend. Because TTR an evolving KPI, it may be difficult to measure. New data points can make your TTR model "alive," so to speak - so getting the right tracking, data collection, and data models in place can help you assess more thoroughly.

Partner attrition rates

Similar to the HR term, "churn" - the same can be experienced with organisations selling through channel partners. These vendors experience "partner churn" - the number of channel partners who diverge and resell with other vendors over a given period, as a percentage of total channel partners.

Channel partner attrition rates are a critical KPI to measure in order to make the correct strategic decisions. For instance, many businesses invest substantially in partner acquisition resources - so if partners don't engage or stay long enough, you could be seeing an increase in overspending and/or unbalanced processes.

On the other hand, if channel partner attrition rates are too high, it may represent a fundamental problem with your company's offering or indicate failure in customer experience aspects. Distinguishing between active and passive attrition can be tricky. Active attrition refers to a partner who cancels a service, subscription, etc. Passive attrition means when the partner simply stops engaging with you.

Partner lifetime value

You've probably heard the term "Customer Lifetime Value." Well, Partner Lifetime Value (PLV) isn't too far off. PLV is a measurement of the value one channel partner will bring across the lifetime of their relationship. PLV measures the success of channel partnerships by evaluating:

• Allegiance, engagement, and collaboration
• Commitment and loyalty
• Training and education
• Velocity and resource expansion

How do I know if my channel partners are the right ones for my business? What can I be doing to help strengthen loyalty and engagement with my channel partners that result in revenue growth and end-customer satisfaction? What ways can I improve technical resource sharing with my channel partners so that we're in alignment?

Here are three important metrics to keep track of that'll help you measure PLV:

• Recency - how recent partners are spending
• Frequency - how often partners are spending
• Monetary value - how much partners are spending

Keeping track of and understanding PLV allows you to determine how much cost and effort you should spend on recruiting new channel partners versus looking after the ones you already have. RFM metrics can help measure and analyse spending habits to improve low-scoring partners and maintain high-scoring ones.

Part two: campaign and marketing health

Your channel partner marketing initiatives are as effective as your data about partner performance. Measuring the right KPIs can mean the difference between smooth operations and internal chaos. And, of course, you can't grow effectively if you don't know what to measure.

Unique partner activity: content and programme engagement

Tracking channel partners' material engagement, unique partner activity, or program engagement can answer a lot of questions. Are there program obstacles that discourage participants? Are my partner programs/content engaging enough to impact revenue generation?

By measuring the percentage of content engaged as a channel performance KPI, you can determine which of your dedicated partners are taking the time to understand your brand. Furthermore, it can help you to improve your partnerships by enticing partners to use the content and how to improve it in order to meet the needs of your partners and their customers.

Here are a few metrics to keep an eye on that'll ultimately help you measure unique channel partner activity:

• Training and related quiz engagement
• Partner communication and event preparation
• Overall partner response to content
• Marketing and promotional activities
• Content downloads, emails opened, landing pages created, etc.

Trends in channel partner engagement can create a sort of ‘roadmap' on how to improve your partner programs. Keep an eye on these patterns to recognise new opportunities:

• Engagement drop-off within the lifecycle of a partner
• Engagement data such as geography, title, industry, and company size
• Content value and incentives

Sales acceptance leads through channel partners

1. Sales acceptance is one of the most overlooked steps in the lead management process, which results in missed opportunities for many channel leaders.
2. Sales acceptance leads (SALs) are marketing qualified leads (MQL) that have been formally accepted by your sales team. Typically, a SAL is a ‘warm' lead that often triggers the beginning of the sales process. SALs are usually qualified based on criteria such as the lead's job function, company size, industry classification, and the presence/accuracy of information about the lead.
3. SALs are an important KPI to keep track of because they represent credible sales leads - ones whose behavior your actions can influence. Here are a few benefits that can be achieved by tracking, nurturing, and developing of SALs:
   • Aligns the sales and marketing teams
   • Assurance for timely follow-up
   • Eliminate the risk of losing the potential leads
   • Strengthen the follow-up effort
   • Quick identification and address the problems

Funnel advancement tracking and/or partner pipeline growth

4. Funnel advancement tracks user actions throughout the funnel and tells you how many visitors make it through each step of the funnel, highlighting problems or areas for improvement in the customer journey with the goal of increasing conversion rates and revenue.
5. Partner pipeline growth provides insight into two things:
   1. What stage of the sales process your prospects are in
   2. How many of them are likely to close deals
6. With these insights, you can forecast revenue with the highest possible accuracy. It can also give you actionable data on how prospects behave at each stage of the pipeline. How many of them skip one or more stages? What is the average they spend at each? How many opportunities do you need at each stage to hit your target?
7. It's critical to understand all of the players working for you and how their actions affect your bottom line. When measured against what you're investing in the partner program, this KPI reveals how much value it offers.

MDF capacity utilisation rate

8. Marketing development funds (MDF) are an integral part of an organisation's channel marketing strategy. MDF are a resource that a vendor grants to its sales channel partners to help with sales and marketing programs. MDF utilisation rate is probably one of the most important metrics for channel leader.
9. How do you calculate MDF utilisation rates? MDF utilisation rates are measured on how much of the initial MDF allocation was successfully distributed to partners and spent on marketing activity:
10. MDF capacity utilisation rate is:
11. Total MDF Funds Distributed to Partners
12. ________________________________
13. Total MDF Budget Allocation
14. This is calculated over a pre-set time period - typically either a quarter or a year.

MDF return on investment

This partner marketing KPI can guide decisions about which campaigns to replicate and which to abandon. Here's the simplest way to calculate MDF ROI:

Sales growth resulting from MDF investment - MDF cost

______________________________________________

MDF cost

An example would be:

Say a partner needs to increase the amount of MQLs coming into its funnel in order to hit a $20,000 opportunity in one quarter. You and the partner determine that in order to hit this goal, you need to achieve 300 MQLs in one quarter — either MQLs that the partner generates through joint marketing efforts or ones that you generate and pass on to the partner. Either way, you'll have a cost per lead.

This partner identifies that in order to drive this number of MQLs, it needs digital content in the form of webinars, whitepapers, and case studies, which you may develop in-house at your own cost and share with the partner. As your MDF program gains steam, you'll be able to estimate the partner cost more accurately per lead, per marketing activity.

By keeping track of the KPIs listed above, you'll be empowered to make data-driven decisions that increase ROI, accelerate value, and put you well ahead of the competition.

If you'd like to discuss how you can improve the returns from your Channel Investments, then get in touch with us to talk to our strategic consulting team.