KPIs for Channel Execution
- Justin Endres
- Jan 6, 2024
- 5 min read
Updated: Jun 20, 2024
Industry analyst firm Gartner says global IT spending in 2023 will top $4.8 trillion — an increase of 5.1% over 2022. To ensure that they compete effectively for their share of this bounty, technology vendors pay close attention to key performance indicators (KPIs) that play a crucial role in assessing the effectiveness of channel partner programs and go-to-market (GTM) strategies. KPIs for Channel Execution are essential to channel growth.
Key Performance Indicators (KPIs) for channel partners play a crucial role in evaluating the success and growth of a startup or scale-up business. Let's just get this out of the way before we go an inch forward ~
Vanity metrics are a nonstarter. A lot of channel/channel marketing metrics are only good for making you look good—that’s why they’re called vanity metrics, and they only serve to fool you and your teams as to the progress (or lack thereof) doesn't help.
--- Vanity metrics don’t give you the insight you need to make good marketing decisions, leading you to pour resources into things that don’t matter to your business.
It’s better to pick a small set of meaningful numbers for any channel you work on and tie them to overall revenue goals. Measure what matters when considering KPIs
The specific KPIs may vary depending on the nature of the business and its goals, but here are some critical channel partner KPIs to consider:
General KPI Metrics
Revenue growth by Channel (Reseller vs. MSP/MSSP)
Revenue growth is the difference between two revenue numbers. For example: before and after a marketing campaign.
Revenue Growth (%) = ((Revenue at end - Revenue at start) / Revenue at start) × 100
Revenue Growth by Region (Channel Led)
Revenue Growth by Partner Type (Reseller vs. MSP vs. MSSP)
Number of Deals Registered
Deals Registered by Partner, Territory/Region, Partner Type
Cost of Partner Sourced Acquisition Cost (PAC) & Customer Acquisition Cost (CAC)
CAC is the dollar amount it takes your business to acquire a customer (or partners). The lower the number, the better.
CAC = Total amount spent on marketing / Number of new customers acquired
CAC = Total amount spent on marketing / Number of new partners acquired
Return on Investment (ROI) on Program
ROI is a measure of the impact a campaign or channel had on the revenue of the business.
ROI = (Revenue attributed to marketing spend - Marketing spend) / Marketing spend
Activation rate
Recruiting new partners isn’t enough to make a program a success — you have to get them active in your program to start seeing revenue. Your program’s activation rate is the percentage of partners that sign up for your program that show actual activity after signing up. If you want to get away from spending money on partners that aren't delivering -- this is a great metric to track.
Ration of Non-ICP vs. ICP Deal Registrations
Understanding this by partner is significant as it identifies future issues that might arise in either low close rates or higher churn/contraction. The sooner you understand where registrations might be getting off track, the sooner you can develop enablement strategies to improve the partners performance. Keeping them over the ICP target is a win for everyone.
Number of Leads Closed vs. Leads Generated (Conversion Rate)
This is typically a metric that is done at a aggregate level. While that's interesting, it's not insight. Insight is when your program starts tracking conversion rate by partner. The insight will show you whether you simply have the wrong partner or further enablement is needed.
Time to Act on a Deal Registration
Time kills deals and it's equally fatal when it comes to speed of engaging with a partner. Channel partners are anxious creatures. Showing timeliness to their registrations is a critical component to overall partner satisfaction. More than 80% of vendors don't respond to Deal Registrations within a week.
Time to Convert a Deal Registration into a Sale
Examining how your channel partners compare to your direct or fulfillment opportunities offers insight to where enablement might be in order.
Time to first sale (TFS) and Time to second Sale (TSS)
Decreasing the average time to first sale goes hand in hand with activation. The faster you can help partners make their first sale, the more likely they are to stick around and drive long-term revenue. This metric is great for illustrating the scalability of a program to the executive leadership team. Great programs will track this metric AND second sale. The first sale can sometimes be misleading given partners at times will bring the first deal with them. The second deal typically shows repeatability/predictability; the holy grail of channel programs.
Partner Discounts & Margins: Channel Sourced Deals
Weighted/Unweighted Discounts by Partner Type, Region,
Margins by Partner Type, Region/Country
The total commission distributed to partners gives you a better understanding of partner profitability–that is, whether the margins are good enough to keep them active and interested in the program. Maintaining reasonable margins where all parties are thriving is important.
Average deal size
Tracking the average deal size your partners drive helps you understand the differences between the customers your partners reach versus those that come from direct channels you own. You can help partners increase their average deal size by giving them resources that help them market to higher-value customers, or working with them to market additional services to their prospects.
Partner-Sourced Retention Metrics
The channel isn’t only about attracting new customers but also retaining existing customers. The longer you keep a customer, the more profit you’ll make from them. Understanding which channels, regions, and partners are improving or negatively impacting those rates is essential.
Churn Rate
Churn is the rate at which customers stop paying you. It’s prevalent in software as a service (SaaS) businesses that rely on recurring revenue to grow.
Churn rate = (Revenue lost during period / Revenue at start of period) x 100
Lifetime Value (LTV)
LTV shows how much on average a customer pays you across their whole relationship with your business.
LTV = Avg. Monthly Revenue Per Customer / Avg. Monthly Churn Rate
LTV:CAC
LTV to CAC ratio tells you how much you can reasonably spend to acquire a new customer.
Backlink Growth
Backlinks are one of the most overlooked metrics in the channel. Backlinks to your web page from a partner's website. A good backlink profile will help you rank better in search and drive relevant referral traffic. Ranking for keywords that your target customers are searching for will help you acquire users at decreasing cost over time.
You can check the growth in referring domains to any site
Partner Rep (Subscriber) growth rate
Subscriber growth rate is the percentage difference between subscribers at the start and end of a period (month/year/all-time).
Subscriber Growth Rate (%) = ((Subscribers at end of period - Subscribers at start of period) / Subscribers at start of period) x 100
The famous Peter Drucker quote goes: “What gets measured, gets managed.” Regularly tracking and analyzing these KPIs can provide insights into the effectiveness of your channel partner program and help optimize strategies for sustainable growth. Adjust the KPIs based on the specific goals and priorities of your startup or scale-up business. As your program grows/matures, it's the more sophisticated KPIs like revenue generation, lead generation, the number of closed deals, and the value of an active sales pipeline that begin to take center stage. These metrics reflect the culmination of your partnership efforts, showcasing tangible outcomes that not only bolster your program but also contribute significantly to your organization's bottom line. In essence, KPIs metamorphose from simple growth indicators into multifaceted barometers of success.
Have questions about KPIs for Channel Execution? Engage with us at info@channelsales.ai
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