By Diane Krakora, CEO
In our most recent webinar, Tim Harmon, principal analyst at Forrester Research, joined me to discuss measuring the return on channel investments (ROCI). On a high, abstract level, Tim said it’s actually very easy to measure ROCI — there’s an input (aka, the budget) and an output (aka, channel-generated revenue). “The problems come when trying to determine all those things inside the ‘black box’ — those interdependent channel programs that ultimately drive the output. They can’t determine what the effectiveness of those initiatives are at the granular channel level. That’s where it becomes nigh impossible … for them to articulate return on channel investment. There are a lot of investments being made. It’s how those individual investments affect each other that I think is the ultimate goal that most channel chiefs look to aspire.”
So, then, what is the magic formula to extract the right data to drive those effective channel programs?
Tim suggested a portfolio approach not unlike financial investments. Have a balanced portfolio of short-term and long-term metrics from key performance indicators such as: training spend to customer satisfaction rate, marketing spend to the number of partner-driven marketing campaigns, and number of people trained to the deal-close timing. There are lots of things inside the Black Box of Channel Investment — myriad programs companies can and should invest in. The trick is to balance those investments across the channel program spectrum to align with both short-term and long-term goals for ROI.
Fortunately, much of that information can come from current programs and technologies such as PRM systems (including our own – shameless plug). But it’s as much about infrastructure as it is application. Companies must have a technology architecture that enables them to reap 50-80 percent of what they need from one vendor and look for alliances or custom-built capabilities to harvest the remaining outstanding data. In other words, you’ll be able to get almost what you need — but not all — from one source.
But here’s the kicker: Of the vendors surveyed in our annual State of Partnering report, 65 percent spend less than 5 percent of their channel budget on their partner management systems, the tools and infrastructure needed to produce this data and insight.
Being that data girl that I am, I find that statistic to be downright disheartening.
“I would like to see change. I want to see it reversed,” Tim said. “As the spotlight of accountability shifts to channel chiefs, they will have to start spending more. It’s such a big beast to manage — whether you have 500 channel partners or 50,000, it’s big and hard to manage because they lie outside your four walls. You need better systems and greater investment in technology to engage, enable and support your channel partners and to understand how they are consuming and delivering that engagement enablement and support.”
As W. Edwards Deming once famously said, “Without data, you’re just another person with an opinion.”
Diane Krakora is CEO of PartnerPath with two decades of experience defining the best practices and frameworks around how to develop and manage partnerships.
