Prove the Value of Your Channel Program Using 7 Critical Metrics
Indirect sales channels have long played second fiddle to direct sales, which hogs both the attention and budget.
Indirect sales channels have long played second fiddle to direct sales, which hogs both the attention and budget. To get C-Suite support and investment for your channel program, you must prove its impact on the bottom line.
To improve your powers of persuasion, you need to present the right metrics in the right way.
In and of themselves, metrics alone may not be enough to win over your CFO or COO. The secret is to position them in the context of your company’s goals to illustrate your channel’s impact.
Ensure you understand how your company calculates return on investment (ROI) and build your case accordingly. If your company is a startup, leadership may be focused on rapid revenue growth or breaking even.
A more mature company with cash in the bank may be more interested in long-term profitability. If you’re unsure, ask your decision-makers what and how they measure. Generally, however, you want to demonstrate high potential reward (increased channel success) and low risk (decreased direct overhead).
So, for example, if your company is looking for 10 percent revenue growth, what is the investment required? Because the channel doesn’t require as much capex as direct for hiring staff, etc., the investment will be lower. Lower investment is lower risk.
Connecting the dots between metrics and ROI
Here’s how to use seven channel metrics to demonstrate the success of your current or the potential of a new one:
Sales reach
Sales reach shows how partners can reach specific geographies, verticals, decision-makers, etc., that your team can’t access directly. Drive home how certain market areas would be unreachable – at least at an optimal cost and timeline – without your channel. Show how sales reach translates to the potential increase in market size.
Channel capacity
Channel capacity is how many customers can be served by your channel. Explain how endless channel capacity can be a force multiplier when it comes to revenue potential. Additionally, increasing channel capacity takes considerably less overhead than increasing direct capacity.
Total addressable market
Total Addressable Market (TAM) is the total demand for your products or services. Combining this metric with the channel’s reach and capacity can illustrate the transformative revenue growth potential of capturing more of your prospective customers. In other words, if your sales reach and capacity doesn’t match your TAM, you’re leaving money on the table.
Partner engagement
Partner engagement is the tools and tactics you use to keep channel partners active in your program. When a CFO or decision-maker considers partner engagement, they want to know how well you’re capitalizing on current sales reach and channel capacity. When possible, link channel investments back to sales data to show impact.
Incentives and market development funds (MDF) effectiveness
This metric shows the return on investment in incentives and MDF. Decision-makers want you to connect the dots between their investments and the results. Connect channel incentives to revenue increases by analyzing specific time periods or SPIFF achievements.
If your tracking is good and shows significantly positive outcomes, it will be a no-brainer for your CFO to continue this investment.
Partner net promoter score (NPS)
Partner NPS is how likely your partner base is to recommend you to other partners. Granted, partner NPS is a softer metric, but it can be compared to employee NPS in a direct-selling world in that it is a leading indicator of customer NPS and retention.
Segmentation analytics
Segmentation analytics compare and contrast various segments of your channel, e.g., time periods, geographies, level of engagement, partner type, tenure, etc.
These analytics gain significance with the maturity of your channel program because they provide direction on what initiatives to stop, start and continue. Even when the results aren’t all positive, sharing analytics helps build trust among company leaders that you’re doing due diligence to ensure the effectiveness of the channel.
Focus on lowering risk and boosting reward
Presenting positive channel metrics can create excitement about indirect sales momentum and potential, but looking at how they impact business metrics is more powerful to financial and operational decision-makers.
The more you can demonstrate higher potential and lower risk, the more likely you will earn increased support and continued investment in your channel program.
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