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Channel enablement: Setting KPIs that count

Kirsty Gilchrist, MD at Twogether, talks KPIs and which are most useful for your channel partners

What are key performance indicators (KPIs) for? The simple answer? Because you can’t manage what you can’t measure. There’s a more complicated answer, too, and we’ll come to that in a moment. In the meantime, KPIs can be straightforward numbers, progress towards a goal, or a change in a percentage. As you’ll have guessed from these examples, KPIs have to be quantifiable to be measured.

So what sort of KPIs might you set for your channel partners?

No two organisations work in exactly the same way. But as a starting point, these KPIs are pretty sound:

Sales growth: Is revenue rising or falling, and at what rate?

Sales per partner: How much are they selling, and at what price?

Sales bookings: An increase or decrease in uncompleted sales can provide insight into potential problems or opportunities.

Average sales order price: What’s the average value of each purchase order processed by a channel partner? Use the outcomes to help quantify end-customer opportunities. 

Qualified leads: Growth or decline in the number of active opportunities per partner helps identify top performing partners, or points to problems you need to address.

Lead to shipped order: How long does it take? Is it just a lengthy sales cycle, or inefficiency?

Fulfilment by units and dollars sold: How quickly, accurately, and completely orders are processed impacts revenue and customer satisfaction.

Cancelled orders: A fall-off in demand or a problem with product quality? Either way, you need to investigate.

A note of caution. The numbers will tell you one story (sales are up, hurrah!) But what’s behind the numbers? Sales may be up, but what about margin? Is this a one-off spike, or an emerging trend? Always look at cause as well as effect. The more complicated reasons for setting KPIs are mostly to do with relationships.

Just because you wooed the partner, it doesn’t mean they can behave as they please

You don’t own your partners (or we’d be talking about direct sales force KPIs). As independent businesses, they will always put their own interests first. And, while they may depend on you for a large chunk of their income, you’re just one of the vendors they deal with. So, make clear right from the start what you expect from them. If they don’t meet the goals you agreed, they have to shape up or ship out. And, although it would be more convenient for you to measure the same KPIs in the same way, every partner relationship is different – avoid a one-size-fits-all approach.

That’s why KPIs should be set based on the partner’s stage of development

For instance, in complex markets with long sales cycles, it might be six months before a new partner brings in their first revenues. A successful and established partner will have goals geared to revenues. Whereas a new partner’s time would be best spent completing the enablement checklist (training, product knowledge, certification and so on). Those in the middle ground (your top 40-50 per cent), want to succeed, but lack some of the skills/knowledge/experience. Work with them to develop targets that are achievable, and fit into their business plans.

So what are the key do’s and don’ts about KPIs?

  • Don’t just concentrate on KPIs for top performers.
  • Don’t just focus on revenue goals.
  • Don’t impose blanket KPIs on all your partners.

But…

  • Do have on-boarding KPIs in place.
  • Do remember that you’ll get better results when KPIs are agreed, not imposed.
  • Do remember that any ‘indicator’ has a back story – beware of viewing results in isolation.

As ever, your feedback is welcomed. And watch out for the next post in this series.