Measuring Partner Performance

Posted: 9/1/2012 by 11

It’s often the case that it takes more than just one strategy meeting to determine what criteria is best to measure partner performance. In fact, you’ve probably attended numerous of these and can attest there are always conflicting opinions across the attendees as to what is truly measurable and whether or not the right systems are in place to help automate the tracking process. It’s no wonder that resellers get frustrated and are unsure of vendor expectations.

This is an on-going process for vendors, and the measurement criteria usually changes annually. However, you do want some consistent criteria year over year in order to measure improvement from a baseline. In my experience, you need both quantitative and qualitative criteria and the criteria you measure should definitely be aligned with your annual goals. For example, the goals you set for your partners are likely to differ if you are trying to grow sales than if you are trying to penetrate a new market or improve customer satisfaction. Whatever the goals, be sure your expectations for your partners are realistic and measurable, and that you have the ability to communicate with your partners on a regular basis how they are tracking to those goals. If the performance metric is clear, your partners are likely to do a much better job of achieving the desired result.

Typically, all vendors track total revenue as it directly impacts top line and it is fairly easy to measure as long as you require your resellers to provide monthly Point-of-Sale (POS) reports. This is where the difficulty lies – actually getting those POS reports from your resellers. Therefore, many vendors end up tracking lead values and closure rates as well as, deal registrations. These are important leading indicators of future revenue and give you more insight into how well your operations are running.

While Revenue is undeniably important, there are many other areas that are equally important. For example, it’s great if a reseller is generating a high level of revenue, but if they are selling the wrong products to a customer account or incorrectly installing or supporting it, you as the vendor, will have to use more of your resources to support that reseller thus reducing your margins and negatively impacting customer satisfaction. Therefore, revenue should not be the only criteria. Revenue along with a combination of any of these other areas is a much better evaluation and each should be weighted so that ultimately, you can evaluate each partner in a way that values their total contribution. Here are some additional examples of how to measure a reseller’s effectiveness:

Customer Satisfaction Survey (CSAT) – send an annual survey to your resellers’ end-customers rating the partner’s customer service, process for getting issues resolved, technical competency, etc. The majority of questions should be based on a rating (quantitative) but also give the customer the ability to make comments too. You should expect your partners to perform at a high level – 7.X

Technical & Sales Skill Level – it’s important to have an education and testing path to measure both the technical and sales competencies of the resources at your resellers. Obviously, the more skilled the resources are, the better they are supporting and keeping satisfied customers.

Breadth of Products – having resellers who can sell and service across your portfolio gives end-users the ability for a one stop shop and less hassle for your end-customers. In addition, it helps to create a more consistent revenue stream where if one product is not selling as well, then the reseller has options to sell others.

Specializations – allow resellers to distinguish their value from the competition and be more sought out by customers due to their deep vendor certified knowledge in an area. This can again be measured based on passed exams and course attendance.

Measuring the overall effectiveness of your partners will help you evaluate how your partner program is operating. You have limited resources within your organization so not all partners should be treated and supported equally. You’ll want to ensure that you have the right ratio and mix of partners within each level of your program and your partner evaluation can help you determine this. You also need to evaluate whether or not your rewards provide enough value for your resellers and other partners. If the level of effort is unrealistic or it outweighs the incentive, your partners won’t be incented to meet the criteria.

Just keep in mind that a great deal of the work is in the planning and the first year or two of the initial program rollout – thereafter, it becomes a well oiled machine with minor tweaks along the way. Enjoy your program journey.

About our Guest Blogger

Lisa HeydornLisa Heydorn, Professional Services Manager at Requisite Software (http://requisite.com),  has over 15 years of experience with channel operations in high-tech, telecommunications and manufacturing industries. She is a proven leader with strong skills in project management, customer service, execution, and on-time delivery. At Requisite, Lisa is responsible for the Channel Management solution.

Responses to Measuring Partner Performance

Eric Moss
www.linkedin.com/in/ericmoss4valuethroughalliances

I agree that a balanced scorecard approach is the best way to measure partner performance and that the measures must be aligned with the relationship goals. I would take it one step further and establish weights for each goal, recognizing that all goals are not created equal.Weighting and therefore prioritizing the goals is important because priorities drive resource allocations.This brings up another facet that each partner is likely to weight the goals differently and it is important to recognize these differences up front rather than during a business review when one partner is happy and the other is not. Furthermore, different constituencies within each alliance partner will have their own priorities / weights that will be different than those of the Executive Sponsor (e.g., Product Management is likely to weight product innovation higher whereas Sales will weight revenue higher).Alliance Managers need to be able to appreciate and address the perspectives not only of their alliance partners but the different constituencies if they are to be successful change agents and advocates for their alliance.A weighting framework, as part of an overall measurement framework, helps alignment of expectations, facilitates change management, enhances communication effectiveness, and efficient resource allocation.

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