To say that 2020 was a year of disruption for the channel would be the understatement of the year. The delta between B2C and B2B buying behavior has almost completely collapsed during the pandemic. Whether your customer is buying a Tonal Fitness Machine or an enterprise software product, it’s all about speed, convenience, and remote access. In fact, according to a recent TSIA study, we’ve seen product vs. services shift from 64%P vs. 36%S to 37%P vs. 63%S in 10 years.
Although the “build, sell, and service” model may align with managed service providers (MSPs) and telco agents, it is difficult for many other traditional partners. This shift in behavior and pressure from stakeholders has forced several major vendors, including Cisco, Dell, and IBM, to shift to a 100% subscription/consumption business. This blog will focus on six best practices to get your partners on board with this model to boost your sales (and revenue) through the channel.
1. What’s Most Important to Your Channel and What is Considered Success?
This question may seem like an obvious statement, but many vendors have specific goals for their channel partners. It is crucial to make sure you and your channel partners clearly understand what you want to get out of your relationship. This is especially true if you have a small managed service, customer success, or professional services team.
Here are a few examples of what’s essential for our customer’s partner channels:
- Maximize sales revenue through upsell/cross-sell opportunities
- Outsource professional services altogether (marketing, sales, legal)
- Improve renewal rates (X% improvement of both on-time and total renewals)
- Provide additional coverage for customer engagement (customer support, inside sales, customer success motions)
In a recent webinar by TSIA, Cisco’s SVP of Renewals, John Wunder, stated that one of their main initiatives for their partner channels in 2021 is to have a straightforward program (and messaging) and stick to it. Define a strategy and where/how to pivot to quickly respond to the rapidly changing market. Additionally, make sure your program (especially your incentive program) is as streamlined and straightforward to follow as possible.
Equally important is determining what is important to your VAR (value-added resellers), MSPs, and other partners by selling your product/services through the channel, which leads us to our next best practice.
2. Offer a Fresh Incentive Program to Drive Outcomes
Your incentive program will be vital to achieving the outcomes you want out of your channel. Sure, you can train and provide all the marketing materials needed to sell your product. But your partners are not selling your product/service out of the kindness of their hearts.
You may have partner types for specific campaigns/products, so you should offer various incentives to push partners to reach the goals you set out for them. If a partner can hit the “easy” button to renew a customer on a service you provide, they’re going to do that – every time. If you want your partners to consistently grow your key accounts, provide new and fresh incentives to ensure they’re continuously selling new services or specific campaigns you’re trying to promote.
These incentive types can include:
- Referrals: Partners get a commission percentage on any sale that referral traffic produces.
- SPIFFs (Sales Performance Index Funding Formula): Individual reps are rewarded based on a percentage of the sale.
- Rebates: a percentage of each sale to increase deal margin as more products are sold.
- Fees and Activity-Based Incentives: Partners receive payment for completing specific strategic goals, such as managing client relationships or driving more revenue across smaller markets.
- Enablement and Training: Providing incentives for taking online quizzes, gaining certifications, or attending tradeshows and conferences, can pay enormous dividends for vendors.
Ensure that you create a clear and straightforward path for partners to reach their goals and a seamless payout method as soon as they achieve their goals. If you have a monthly or quarterly payout, your partners will probably forget why they’re being paid and lose the incentive to keep you top-of-mind. This brings us to our next best practice:
3. Establishing KPIs and Creating a Unified View Around Performance, Customer Engagement, and Sales Opportunities
With businesses pivoting from a focus on selling products to selling value, there are more customer touchpoints to ensure customer retention and growth. It is critically important to have well-established KPIs to measure your channel partner’s success.
Some of the KPIs our customers typically track include:
- Customer NPS/Improvements
- In-Quarter Retention Rates
- Conversion Rate
- Close Rate
- Resolution Rate
- Account Growth %
- Customer Sentiment
It’s one thing to understand objectives, KPIs, etc. Still, unless you have a unified view of the data, it is difficult for you and your partners to track performance and engagement.
Integrating your channel partners into a unified CRM (customer relationship manager) system will help everyone keep track of performance, engagement, and payouts for accomplished goals. In addition to gaining insights into goal progress and sales opportunities, a unified CRM system will enable you to implement a centralized repository for your sales and marketing content. This repository will empower your partners to have all the digital assets readily available to make sure they’re driving the customer journey.
4. Clearly Define Service Level Agreements (SLAs) and Expectations Around Customer Interactions
Depending on your unique program, your team may be providing your partners with plenty of marketing-qualified leads (MQLs). But if your partners are not reaching out in a timely fashion to capitalize on the lead, none of your efforts matter. Having timely responses is also critical for customer support questions and renewal timelines. Clearly defining expectations around response times will help to hold your partners accountable.
For example, many channel partners have tiered programs to certify vendors as platinum, gold, silver, or bronze partners. These programs dictate the response times to inquiries and the corresponding commission rates you and your partner expect.
Clearly define your days-in-advance notification timelines to drive higher on-time renewal rates.
In terms of renewals, clearly defining expectations around notification timelines will help to improve on-time renewal rates for your company. It’s best to reach out to a customer 90 days before contract renewal.
5. Create a Standard Set of Codes That Reflect Customer Decision-Making
Reason codes provide essential insights into customer intention. These codes reveal why customers chose to renew, failed to renew, or outright canceled a subscription.
We typically break this down into two categories to track:
- Conversion Reason Code: By tracking why customers converted, you can evaluate how effectively your sales team is selling value. It also helps you better understand customer buying habits. Your company can then use this data to make informed decisions to better structure, market, and sell your offerings.
- Cancellation Reason Code: This code will help you learn the “why” behind a customer failing to cancel. You will understand where competitors are making inroads, why customers are leaving, and how to improve your company’s long-term product and selling strategy.
6. Establish and Prioritize a Customer Success Strategy
Establishing a strong customer success strategy will help you cover every aspect of the Customer Journey Experience. Creating a consistent and engaging customer relationship will keep them on a growth path, help you identify when they are at risk, and provide insights into how to mitigate quickly.
A pivotal step to consistent communication is establishing quarterly (or bi-annual) health checks with key customers in your channel partners. These constant health checks will help you and your partners correctly measure the voice of the customer. Understanding your customer’s pain points, accomplishments, and sentiment is key to driving a more data-led, consultative conversation that will tee up your partners to capitalize on upselling/cross-selling opportunities.
Outsource Your Channel Management
Don’t have the capacity or resources to establish a customer success program that drives better performance through your channel? Concentrix has over 20 years of successful experience working with industry-leading network providers. Schedule a call with our experts to see how we can help.