I was speaking with a Chief Revenue Officer of a mid-market, mar-tech, SaaS company who was earning about $15 million in Annual Recurring Revenue (ARR) and surprisingly enough, despite having the word “Revenue” in his title, he was shockingly disinterested in measuring the ROI from his channel team.
What’s worse? I’ve had this same conversation with plenty of individuals at various levels of leadership, at organizations of various shapes and sizes, and in a variety of verticals. It seems the only thing they have in common is that they are all trying to build a channel program to help accomplish (in theory) a couple key goals:
- Decrease Cost Per Lead (CAC)
- Reduce churn potential
- Increase service revenue opportunity
First Thing’s First
What is the first thing any company needs to get their partner program started? People. To achieve success, you’re going to need some key players to help guide your partner program. People aren’t free, according to Glassdoor:
- A Channel Sales Manager on average earns about $80k a year.
- A Channel Marketing Manager on average earns anywhere from $75k to $90k a year.
In headcount alone, with two key channel managers, an organization can be $150k+ in the red. With such a large impact on your overall revenue, wouldn’t it be wise to know if the investment you’re making into your channel is worth it?
Treat Your Partners as an Extension of Your Internal Team
An Inside Sales team is measured on revenue and has tools like SalesForce, InsideSales, Gong, etc. to help them measure their KPIs. Marketers are measured on leads generated and have tools like Hubspot, Marketo, Terminus, etc. to help them measure and stay on track with their goals.
I agree it’s vital to empower internal teams and provide them with tools to be successful, but it begs the question, why are organizations not more concerned about giving channel teams the tools they need to measure success?
Let’s look at the potential success of the channel:
- According to OpenView, mid-market SaaS pricing falls somewhere between $5k ARR to $40k ARR.
- Our customers here at Allbound have roughly 5 to 1,500 channel partners.
- From my days working at Act-On, I know that most partners have anywhere from 500 to 3,500 contacts in their respective databases.
- According to Marketo, leads from partners or referrals convert anywhere from at about 4.5% to 11% on average.
On the low end, if you have 5 partners, marketing to 500 people, (under the assumption that there is a 5% conversion rate to opportunity), that is 5 net new opportunities with a value anywhere from $12.5k ARR to $85.5k ARR. Think about the potential of ARR when you have more partners and your partners have more potential customers. When utilized correctly, the ARR growth from channel partners is exponentially higher than if you were to stick to only selling through your internal sales team. If a channel partner can make that much of an impact to your annual revenue potential, why wouldn’t you want to measure the data associated with revenue growth from the channel?
How Can You Measure Success?
Let us look at some of the key data points associated (and capable of being measured) in channel programs:
- Channel Velocity Rate: What is the acceleration of sales cycle originated from channel compared to direct sales?
- Content Engagement by Rep: Of the reps with pipeline/revenue contribution, what is the correlation between that growth and the amount of content they consume?
- Percentage of learning track completion tied to pipeline/revenue: Does a correlation exist between partners who have successfully consumed training content and the amount of revenue they drive?