High-tech vendors that want to make partnering a core competency have moved beyond revenue for measuring success of their partnering activities.  In fact, companies with the fastest-growing, partner-dependent revenue streams are measuring 8 to 10 different activities, all designed to predict future sales success and identify potential weaknesses in the current program.  Moreover, they are communicating these goals and objectives widely (up and down their value chain) in an effort to signal their intentions and build trust among their channel partners.  This fosters predictability and encourages channel investment in the success of these farsighted suppliers.  Less successful vendors measure far fewer things, with many looking only at revenue.

Success demands the linking of complex objectives assigned at different levels in order to provide executives with a realistic view of the “big picture” of partner activities.  Objectives must be set at the corporate level, and then linked to metrics assigned to internal partner managers (and other partner stakeholders in the company), who in turn must measure performance down to the end of the chain.

Corporate Partnering Objectives

Companies have corporate objectives that are communicated to employees, analysts, stockholders, suppliers, and other stakeholders.  These corporate objectives are important early indicators of partnering success.  They inform any reseller or channel manager about where partners fit into the hierarchy of importance.

One level below corporate objectives are specific corporate partnering goals.  The most common are revenue or market share based.  For example, "resellers will be responsible for 50% of the corporation's revenue by 2004" is mentioned as a corporate goal by about half of all high-tech vendors.  (This kind of target is especially common among vendors trying to move from a direct only to a more balanced sales model.)  The best corporate partnering goals, however, rise above simple revenue measurements.  For example, the following actual corporate objectives speak volumes about a commitment to resellers:

1. When a customer asks a reseller which products they sell, they will name our product first

2. We will treat resellers better than our end-user customers in all situations

3. We will have the best reseller program in the market, as acknowledged by successful partners

Seldom do we see companies that have specific goals to create partnerships that provide market differentiation, competitive advantage, or cost reduction – although all are important in any partnership.

Marketing and Sales Objectives

Sales and marketing measurements dominate most partner programs.  Revenue is universal, although metrics like leads, training days, market development campaigns, new resellers signed, new customers, and reseller report cards (measuring their cooperation with the direct sales force) are becoming more common.  Attainment of these kinds of goals is often estimated – a big change from quantitative accountability and still something that is hard for traditional managers to accept.

When it comes to compensation for partner sales managers, far fewer measurements are in place.  The industry focus is on revenue and, while some vendors compensate on additional MBO activities, the majority do not.  Many companies have begun moving to a graduated revenue model – where metrics are set for the attainment of different kinds of revenue (actual revenue, partner-influenced vendor revenue, vendor-influenced partner revenue, quarter-to-quarter revenue growth, etc.).  Unfortunately, a single-minded focus on revenue fosters damaging channel conflict and short-term decision-making.  (Moreover, at some points of the market life cycle curve, revenue attainment goals can actually become an anti-metric for longer-term partner sales success and market share growth.)

Partner Objectives

Most companies assign either purchase objectives or sales objectives to their resellers.  Other partner objectives, like new account penetration, deals in the pipeline, and marketing spending are relatively uncommon, even though these types of activities are more accurate early indicators of success.  Even so, partners are not always held accountable for achieving their revenue objectives, which effectively conditions partners to ignore their vendors and act independently.

Examples of measurements for partners in the high-tech marketplace include:

With partners, you don’t always get what you “expect” – but you often get what you “inspect.”  Goal setting is a critical process when it comes to successfully managing partnerships – and it often takes years of trial and error before the best set of objectives becomes obvious.  For that reason, only a few vendors have the patience and discipline required to get to that level.  However, it is these vendors who emerge as the best channel partners and who realize the best return on their partnering investments over the long term.