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Assessing Channel Partner Productivity

Virtual CMO Marketing ServicesStrategy | Execution | Impact

Dave Zwicker, Virtual CMOJuly 17, 2013

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Channel Partner Productivity

• Market dynamics are affecting channel partner productivity– Many partners are managing a business transformation:

• From one-time revenue (e.g., VAR) to recurring revenue (e.g., MSP or CSP)

• From premise-based technology to cloud-based technology

– Many vendors are changing their business and technology focus:

• Less hardware, more software, everything going to the cloud

• Vendors typically need more partners with the right profile:– Company size, market focus, staffing, skills and vendor commitment

– An appropriate business model (VAR, MSP, CSP, IT Consulting or hybrid)

• And Partners always struggle with sales and marketing …

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The Key Questions to Ask

• What is the average partner productivity?• How much revenue generated per month, quarter, year?

• What is the average rate of customer acquisition?

• It’s not the top performers & it’s not the non-performers

• Average performers determine the productivity baseline

• How can average partner productivity be improved?– By assessing five key channel productivity factors

– Small improvements in each area will combine to drive major growth in total channel revenue

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Five Productivity Factors

• Average Contract Value– Often a function of revenue per user

– And the average number of users per customer

• Customer Acquisition Rate– The number of new deals a partner closes each month

– A function of the size of the pipeline and the efficiency the partners’ sales function

• One-Time Revenue vs. Monthly Recurring Revenue– OTR has greater short-term value but requires higher deal volume for consistency

– MRR has a lower short-term value but predictable, long-term value to the business

• The Total Number of Productive Partners– How can more productive partners be developed and/or recruited?

– How can partner productivity be increased from average to ideal?

• The Revenue Sharing Strategy– How can partners be incented to sell more?

– Do all partners earn their share of the revenue?

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Existing vs. Ideal Productivity

Increase the average customer

size by 5 users

Increase OTR and MRR by $10/user

This adds $500 to the average deal value

Grow the number of productive partners

from 75 to 150

Increase the customer acquisition rate from 1

deal/month to 1.5 deals/month

No change in the revenue sharing

percentage

No change in the mix of OTR to MRR

Sample Inputs:

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Projecting the Revenue Impact

These models show the 3-year vendor and partner revenue streams based on existing & ideal productivity assumptions

They provide a detailed view of the improvements resulting from each of the five productivity factors

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Evaluating the Results

Here is a quarterly revenue summary based on existing partner productivity data

Here is a quarterly revenue summary based on ideal partner productivity targets

The improvements modeled on slide #5 will drive a 350% increase in channel revenue!

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Accelerating Revenue Growth

Here is a graphical view of the existing and ideal revenue results

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A Partner Productivity Plan

1. Establish a partner productivity baseline– Gather historical performance data

– Conduct partner interviews and analyze findings

2. Set achievable productivity improvement targets– Identify areas of productivity improvement from partner assessment

– Gauge the revenue impact from the five productivity factors

3. Determine the required programs and actions– Design partner-focused lead generation programs

– Launch a targeted partner recruitment program

– Create upsell/cross-sell/pricing/bundling programs

– Develop partner resources and training programs

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Thank You

Email: dave@vcmo.netWebsite: www.vcmo.net

Copyright © 2013 Virtual CMO

Read the blog post: http://virtual-cmo.net/?p=987 To request the model, just drop me an email …