Discovering which metrics to use for partnerships is integral to success in this domain. It involves monitoring channel growth, identifying effective strategies, and determining where to focus your efforts. Even if your superior doesn’t request data, examining it can significantly enhance your perspective. You may uncover insights previously overlooked, innovate new approaches to collaboration, and, most crucially, pinpoint where to direct your attention. However, not all metrics prove useful, and misinterpretations can arise without a thorough understanding. Let's navigate through the intricate realm of partnership Key Performance Indicators (KPIs).
Useless Data
Have you heard of the concept of "survivorship bias"? This type of error occurs when only parts of data are considered, leading to erroneous conclusions. An illustrative instance comes from researchers at Columbia University during World War II, studying bullet hole patterns in returning airplanes. While it may seem logical to reinforce areas hit by bullets, statistician Abraham Wald proposed reinforcing the undamaged spots. Why? Because he realized they were analysing planes that returned safely, which meant the bullet holes marked the areas in which the aircraft could take the most damage.
The reason why I am mentioning this is that often we look at data and don’t even consider what we are trying to achieve. I believe that before you analyze any KPIs, you should first define the goals that you are trying to achieve with your partnerships. Only then can you define KPIs that help you measure that goal.
To give you an example:
If your goal is to increase the revenue generated by the partner network, you might think growing the number of partners might do the trick. But what use are inactive partners? How will they grow revenue if they are not onboarded and don’t believe in your product?
Start with a goal. Figure out measurements that will help you track it and implement them.
Key Performance Indicators for Partnerships
The KPIs you choose will be different for everyone. I recently came across an analysis from Crossbeam where they measured which data is relevant to companies of which size. You were able to see clearly that smaller companies are more interested in the number of partners (how has their network increased), while larger companies were focused on deals sold and indirect revenue. Below you will find a list of commonly used measurements for partnerships:
Sales-related KPIs
Pipeline value (and growth)
Whenever a partner adds leads, even if they don’t end up as deals, it shows they are active and boosts your chances of success. You can assume that the partner adding leads is consistently trying and thinking of your partnership. Not only that, but with enough data, you can estimate how many deals will be available for you in the future.
If you look at it from the sales process perspective:
You have a lead. This lead gets qualified and moves through the different lead stages, until a Sales Manager takes it and hopefully closes it (wins). Think of it like a funnel. In an ideal world, each step is a smaller percentage of the previous one. Because of this, you can easily monitor if your business is safe in the future months.
The same goes for partnerships. If the pipeline is growing, this means that there will be more deals in the future - thus you should monitor the pipeline’s value and check if it is growing month to month, or slowly depleting.
Number of days to close a lead
Even though it might not be the most relevant metric, it can give you a few pieces of important information:
- You will be able to tell your partners when to expect results when they ask;
- You will be able to estimate better how many final sales you will have and when;
- You will be able to better tell when a lead is getting cold;
Leads older than 3 months
Partners have a tendency to add leads but never take them out. Because of this, your pipeline can become corrupted by old data that should not be there. Monitoring older leads and deleting them is key to data cleanliness. This affects everything: from your aforementioned pipeline to reports.
Avg. number of leads per partner
With this number, you can easily say which partners are performing better/worse than others. Not only that - if you look close enough, you can find out that certain partner types/tiers are performing worse and use that to modify the approach to these partners.
Avg. deal size
This value is interesting because of 2 things. First - it will allow you to understand better what kinds of projects your partners are interested in. Second - if you see this value is steady or slowly getting smaller, it is a signal that something is wrong. Naturally, it should go up, as companies get more experience, get better at selling such projects, have more case studies to back up their claims, and the cost of your solution increases. If it doesn’t change in plus on a yearly basis, it might mean that partners are having a hard time selling your solution - talk to them about it and figure out why.
Operations-related KPIs
Total number of partners (and how it changes)
I will be honest and say I don’t really like this metric. I strongly believe you can achieve more with a smaller but active partner network, than with a big and inactive one. Having said that - for smaller companies (of less than 50 employees), this is still a key metric to use. It basically tells you if your partner network is growing and by extension - so should the revenue. For larger companies, I would prefer to use the total number of active partners (meaning partners that delivered leads within a certain timeframe).
Partner onboarding completion
You can have a large network of partners and still have only a handful that truly know your solution. Because of this, you should monitor the partner onboarding completion - basically, a metric that tells you what percentage of partners have finished the onboarding process.
If you want to go even more granular, you could measure the completion of each step of the onboarding, which will tell you where partners are getting lost.
Activation rate
Similar to partner onboarding completion, this metric tells you how many of your partners have actually become active partners. By active, you can mean different things, but typically an active partner means one that has delivered a first sale, lead, or referral.
Partner satisfaction
This is a very important metric that should be measured at least every year (I would suggest doing it more often). Think of it as an NPS score for partners - how happy are they working with you. You can also ask specific questions: How happy are they with the product? How useful is the documentation or sales materials?
What % of revenue does the partner program bring
You will need data from outside your PRM software to measure this, but if you compare the revenue sourced by the partners to the revenue sourced internally, you should be able to tell how important the partner program is for the company. This might give you more internal negotiation power.
If you want even more data, you can also collect info on the revenue directly sourced (deals that happened because of a partner) and indirectly sourced (deals that happened because a partner helped). If you want the full details, you can also compare the expenses of the sales/marketing teams to the expenses the partnership generates.
How are different resources used?
If you have a repository of files available for your partners, you can try and figure out which ones have been downloaded by which company - this tells you both which files are most useful, but also which partners are more invested in learning.
Channel Churn rate
Partners dropping from the partnership is nothing surprising. Priorities change, people change, strategies change. Sometimes the partner does not see the benefit, sometimes they just don’t have time. Still - measuring what percentage of partners are leaving can give you insights into how happy they are. Seeing a substantial increase in churn can be a sign that they do not agree with your company’s strategy or are not seeing the value. This is something you can work on.
Marketing-related KPIs
MDF ROI
When you are providing your partners with co-marketing opportunities, you need to watch very closely how they are spending the money (or how much are you getting in return). Defining expected results with the partner and later measuring them is key to knowing which co-marketing practices work best. Once you begin to see some patterns, you can promote them to other partners.
Traffic coming from the partner
Your partners might have an affiliate link to direct traffic to your website. They might also create a Landing Page informing the world about your partnership. Knowing how much traffic reached you from a specific partner can help you prioritize your efforts and again (as in the previous point), figure out which actions are working well.
Reach
Similarly to the point above, reach refers to the number of people who have seen social media posts about your company that were added by the partner. This will help you to figure out what branding impact your partnerships have and which partners have a higher influence in a certain market.
I know it can sound daunting to keep track of all these metrics, but remember: you don’t need all of them - you need to decide which one is valuable to you. Many PRM systems (Partnerplace included) will provide you with a lot of insights/reports which you can easily analyze on a monthly or quarterly basis. Then you can start seeing patterns and noticing insights, which will help you grow your partnership business.
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