Why are 80 per cent of your partners underperforming?

Typical partner programs see the lions share of revenue come from a fifth of their partners - why?

clock • 6 min read
Why are 80 per cent of your partners underperforming?

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

This is the first in a series of blogs explaining some of the biggest challenges facing Channel leaders in 2023 that we will be working with Technology Vendors to overcome. 

Have you ever heard of the Pareto principle? I bet you have. It holds that 80 per cent of your outcomes come from 20 per cent of your inputs.

The channel is no exception. On average, 80 per cent of all channel-sourced revenue comes from just 20 per cent of partners, and only 11 per cent of partners will reach the financial goals required to obtain significant incentives on offer.

This wouldn't be an issue if it costs nothing to recruit those partners; but from running demos to brand investments, to those PRMs and partner events to manage their (non-existent) progress, every partner costs time and money to acquire and support.

How do you improve this rate? Invest more heavily in brand projects to up mindshare? Tighten your incentive structure? Simply cull the dead weight and focus on what is already reaping revenue?

The issue is too complex and dynamic for an answer this simple. Partners are constantly evolving and changing, so it's unwise to rely on what has worked before, and there are more considerations than just mindshare or money when it comes to a partner's decision.

Each partnership has different strengths and weaknesses, requiring different solutions. But you probably have too many partners to give each one bespoke treatment.

Instead, your partners can be broadly categorised, to help you understand how to derive the most value from your channel efforts.

Here is a rundown of the various kinds of partner relationships in your network, and what you can do about them.

Untapped potential

These partners are technically competent and capable of delivering your solutions to customers, and have you in mind as they look to generate business with prospects or existing customers. So, what's the problem?

They lack the sales and marketing skills and/or resources to drive that new business, particularly in smaller, up-and-coming partners. These partners should not be ignored, however, as their ability makes them viable candidates to grow into great partners in the future.

So, what can vendors do to make this relationship a fruitful one? Simply, support them in the sales and marketing areas that constitute their weakness. This is often in digital marketing, where modern vendors are typically strong. This weakness could be in the shape of skills and extra human resources, supplying proxy-marketing managers to work on their behalf.

It could also be as simple as financial support for marketing efforts. We know that on average, 60 per cent of market development funds (MDF) made available at the start of the financial year go unclaimed by partners. So, make it easier for the right partners to get their hands on it and put it to good use.

This may be a more urgent task than you realise: if you don't invest to help grow their business, another tech vendor will. If this money comes from a competitor, you may find that loyalty hard to breach in future.

Unconvinced partners

There will be a swath of partners that, on paper, look a good match for your business. Their customer base, geography and expertise tick all the boxes. But they're not bringing in any business, and you only hear the occasional murmur of an opportunity from them. Why?

Simply, you're not a priority for them. Having your logo on their sales decks is good for their clout and allows them to appear vendor-agnostic. But they have other vendors they'd prefer to use.

Some of these will be impossible to overcome, and that's ok. But many less-than-committed partners are willing to work with you if you take the steering wheel and make it happen. One step is to improve your mindshare with them by investing in marketing to partners, either digitally or at channel events.

Another tactic is to take the first steps to drive business: create co-marketing campaigns to deliver them sales-ready leads and show that you are a great vendor to work with, with faith that they'll see this and work harder for themselves to find business with you in future.

Signed on, but not onboarded

You've done all the hard work to meet a new potential partner, taken them through a demo, discussed commercial structures and work processes needed to convince them that you'll be a great supplier for them to deliver to their customers. After months, they signed on the dotted line and added your company logo to their website to show that they now implement your solutions to their customers. Now just wait for the deal sheets to roll in…

If only it were that easy. Instead, four out of five new partners will leave that programme without selling anything for that vendor.

The truth is that just because your partners are signed onto your network, doesn't mean they're activated to do anything about it yet.

A good first step is to look at your onboarding process and assess how exactly you work in the first 18 months of a new partner relationship, to evaluate what more needs to be done to improve the odds of a fruitful relationship.

The perfect matches

These are your current golden egg-laying geese, and we love them so much. We don't want to change them; we wish we had ten times more of them!

Which is exactly what you should be doing. By understanding your current partners and what it is about their competencies and attributes that makes each one such an effective partner for you, you give yourself a better opportunity to identify the partners out there you're not working with right now, but really should be.

Flying blind

Everything written here is all well and good - but it's one thing to know the types of partners in your ecosystem, and another to identify which category each partner falls into, which is vital if you're to offer the right sort of helping hand in each instance.

Which is why we at The Channel Company have put together an end-to-end solution designed to provide you with a data-driven view of your ecosystem, with the guidance you need to become a reliable driver for growth in your business.

If you'd like to have a clearer, market-driven view of the partner ecosystem and how it can work for you, learn more about how we can help.

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