Why are only 20% of partners driving 80% of your channel revenue?

Most businesses that work with channel partners enter the relationship to grow revenue. The desire is that each partner will generate leads and deals from their current clients and connections. The hope is that partners will actively market to grow the number of deals beyond their current connections. In reality, not every partner is able to achieve these expectations. In fact, only 20% of partners generate 80% of channel revenue. 

There’s a reason for this — The Pareto Principle. It says 80% of results come from 20% of the effort. This rule applies to partnerships, too. 

Most companies will sit back and accept this as their reality. In our experience, we see underlying problems that keep partnerships from breaking through this barrier.

  • Most partners lack a clear sales process to be able to sell your product or service. 
  • Your product or service needs to fit into the partner’s marketing capabilities.
  • You have limited bandwidth to support partners equally.

What makes a successful partnership

Partnerships are successful when they align with both companies’ goals. In most businesses, success is measured by revenue. When you’re looking to create successful partnerships, consider these factors:

  • Trust levels: First, you must trust the business with which you’re partnering to do the right thing for you and themselves. 
  • Willingness to communicate: Partnerships require easy, consistent communication to keep teams apprised of the latest company developments and direction. Treating partners as an extension of your team is a great way to think about the level of communication needed.
  • Follow-through: Any company can say they’ll do what you need. Look for those who can demonstrate their effectiveness at coming through for their partners. Partners will focus on the companies that are giving them mind share. 

That seems easy. Why can’t more than 20% of partners contribute more revenue again?

If you follow the success factors from the previous section, then every partnership can be successful. If your company is small with a handful of partners, then you can easily manage. If you have hundreds or thousands of partners, on the other hand, execution is really hard. 

  • As mentioned earlier, companies with partner or channel marketing and sales teams have more requests from partners than they can ideally manage. You end up focusing on the top-performing partners and making sure they have a clear understanding of sales and market development processes.  
  • Partners do not sell your product or service exclusively. They tend to focus on what is easiest to sell. If they don’t get the right information or collateral at the right time, they will move on to the next company.
  • Partners need to know how to sell to their current customers, and they also need help to fill their pipeline. The companies that can fill their pipeline become invaluable because it helps them grow. This can be challenging. 

How do we overcome this and engage all our partners?

To overcome the Pareto Principle and engage more than 20% of your partners the right way, you need to make sales enablement and marketing programs scalable across all partners. Here are a few things to keep in mind while you develop or revamp your partner program:

  • Make life simple for partners. Use a PRM to communicate and share information. Ideally, choose one that uses automation to co-brand marketing collateral and make things easy for them to share.
  • Fill your partner’s pipeline. Provide complete lead generation marketing programs they can implement easily. Provide funding to support their marketing programs. 
  • Help them close. Share leads so they feel you have a vested interest in their success and enable their sales team to close deals and sales efforts. Measure everything: Data will give you insights on which partners need more help. It also shows you which marketing collateral and campaigns are working and which need addressing. Get attribution to make sure you reward partners correctly for generating leads and deals.
  • Make it easy for yourself. Use a platform to scale these items for each partner. Otherwise, you’ll be stuck with the 80/20 rule. 

xAmplify replaces friction with automation to help partnerships scale marketing automation and sales enablement across all your partners — not just 20% of the most active. To see how xAmplify can improve and amplify all your partner relationships, request a demo.

Forrester Channel Software Tech Stack 2021 Highlights the Rapid Shift in Channel Marketing: Here’s How xAmplify Fits the Landscape

Channel software tech solutions are used by companies to engage and grow partnerships as well as enable them to generate revenue. This tech stack helps companies attract, onboard, develop, enable, incent, co-sell with, manage, and measure partners. Forrester has released its Channel Software Tech Stack for 2021, and the message is clear: channel solutions are evolving rapidly.

As Forrester noted, the worldwide health crisis of 2020 inspired innovation in nearly every part of doing business, including how channel marketing works in a distributed, high-touch environment. Forrester’s research can be found here. Gone are the days when spreadsheets and person-to-person knowledge transfer were sound practices. Many tech companies capitalized on this digital transformation. 

xAmplify’s suite of products already fits this model using “through-channel marketing automation” (TCMA). However, TCMA is just one way xAmplify works for you. 

Channel marketers can enjoy the benefits of xAmplify for any aspect of their partner channel:

  • Partner Relationship Management
  • Partner Growth
  • Partner Sales Enablement and Demand Generation
  • Tech Alliance and Ecosystem Marketing

xAmplify Purposely Designed

xAmplify’s solution is purposely designed to take the friction out of how companies and partners work together. With decades of experience as channel partners and value-added resellers, we bring unique insights into the problems experienced with many PRMs and partner portals. xAmplify was built from the ground up to eliminate common co-marketing challenges and facilitate the main goal for both companies and partners, revenue growth. 

xAmplify Cloud & API Based Integration

xAmplify’s cloud and API-based integrated solution is what drives customer success. We focus on adding value for both businesses and partners. Faster setup with native integrations for channel programs means easier, scalable solutions. From the native Salesforce deal registration to 3-click campaign launch for partners, here are just a few ways xAmplify continues to stand out among the growing marketplace:

  • Fast setup: xAmplify gets your account and integrations set up in a matter of hours instead of weeks.
  • Native integrations: Deal registration connects to Salesforce without any custom development.
  • 3-click campaign launch with automatic co-branding: Partners easily launch co-branded campaigns without much effort.
  • Integrated SPAM, GDPR, and CCPA Compliance: xAmplify maintains the latest privacy and data handling compliance as well as SPAM check to ensure your brand reputation is maintained.

Partner Experience

Even with a growing ecosystem, a fundamental aspect of successful partnerships is providing an excellent experience with companies. xAmplify was designed with this in mind. xAmplify lets you provide your partners with access to a host of digital campaign marketing tools all in one place. From emails to videos, landing pages to online events – partners can co-brand and redistribute campaigns with a mere 3 clicks.   

Build Your Ecosystem Today

Ready to take your partner channel to the next level? Consider a consultation with our growth experts so we can understand the current state of your channel program. Let us show you how you can customize the xAmplify platform to fit your unique channel needs and deliver the best partner experience to grow revenue.

Why Your Company Needs Channel Marketing Now

I’ll tell you the answer straight away: channel marketing creates a revenue opportunity three times larger than whatever you’re doing now. When you think of sales, channel marketing probably doesn’t enter the logic tree in your mind. You probably think any given Company has a Product or Service that they market directly to their Customers. Their Customers buy from said Company and use their Product or Service. 

And it looks something like this:

direct-sales-flow

What’s shocking is that this type of sales (direct sales) accounts for only 25% of global commerce, as estimated by the World Trade Organization. The whopping majority — 75% — of sales happen an entirely different way. 

What is Channel Sales?

This 75% share of the global marketplace is selling to customers indirectly, in what’s called channel sales. This means they sell through channel partners, such as resellers, value-added resellers, distributors, referral partners, independent software vendors, and a few other types. Generally, these partners have a large, established customer base and a trust relationship with end-users that a manufacturer can leverage to their advantage. And it’s a two-way street for resellers—the retailer needs the product because otherwise they’d have nothing to sell!

For instance, a manufacturer like Honda doesn’t sell cars directly to consumers. Instead, independent dealerships open up shop and ship in Hondas from Tokyo to sell to the end customer. In another example, a company like TOMS shoes uses both direct and indirect sales to get their product into consumers’ hands (and onto their feet). You can find TOMS at several retailers and department stores along with a variety of other indirect offerings. But you can also go to the TOMS flagship store in Venice Beach California, and other TOMS stores, to buy directly from the maker.

Not all companies are oriented to channel sales and thus are not in need of channel marketing. For instance, a nail salon, a restaurant, or a tattoo shop wouldn’t sell through channel partners. These types of companies will always sell directly to the consumer.

However, many companies that can sell indirectly just aren’t doing it. They may not understand that channel sales opens up an entirely new revenue stream with far more potential customers than can be reached through direct sales. 

And that looks something like this:

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Channel marketing is to indirect sales as marketing is to direct sales

I repeat, channel marketing is to indirect sales as marketing is to direct sales. Think about that. In today’s inundated marketplace, no company can reach its customer base without a solid marketing effort. 

And when it comes to direct sales (again, only 25% of the worldwide sales pie), there are billions of marketing dollars allocated, and thousands of software solutions adopted, agencies hired, and advertisements placed. There are CMOs and SVPs and DOMs running huge teams of marketers, from your content managers to your email experts, plus your social media leads, an array of copywriters for long-form and short-form content, not to mention the team of designers responsible for your visual brand identity. And this doesn’t even include the people working at those software companies and agencies who help run this well-oiled direct marketing machine.

When it comes to indirect sales (again, the far larger 75% majority), most companies don’t even know where to begin. Perhaps this is why so many companies that can sell indirectly aren’t doing it. They don’t have the bandwidth or the knowledge base. 

There’s not nearly the breadth of agencies and software solutions available for indirect sales as for direct, and advertising through channel partners is a mystery. Thus, companies allocate far fewer resources and money to channel; it’s like a can of worms most brands are afraid to open. Instead, they try a half-baked, low-risk, manual approach bound for failure or just stick to what they know: direct sales. Rather than really trying to understand channel marketing, rather than devoting some R&D budget to figuring it out, they mostly avoid it…and they continue missing out on that 75% of the marketplace. 

Channel marketing software versus direct marketing software 

Reflecting the comparable ease of direct sales is the high number of resources the industry has produced to generate direct sales leads, automate direct communications, and track that customer data. There are hundreds of thriving CRMS and marketing automation tools to serve this purpose. Why is this so? Because data is the key to selling and automation is the key to delivery at scale. We can follow this same logic for channel marketing, and just add ease of use as the key to getting partners to participate in a co-marketing effort with your brand.

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Fortunately, there are through-channel marketing automation (TCMA) solutions on the rise to fulfill these keys to success, but not all are created equal. If you’re ready to dive into channel sales, it’s important to know what you should be looking for when choosing a TCMA platform. Take the time to watch a number of demos and make sure you ask the right questions during those meetings.

If adopting a software solution still sounds overwhelming, try checking out a full service offering like xAmplify Sail. With this offering, we at xAmplify leverage our cutting edge software to act as your full service channel marketing team. So if you don’t find a product that’s right for your company, perhaps try a service to do it all for you. In any case, with the right resources in place, channel sales is likely to be a massive revenue driver for your brand. 

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Choosing a TCMA Platform: How to Know Who, When, Why, and Which

A surprising number of indirect sales companies still function manually when it comes to co-marketing with their resellers, and have yet to adopt a TCMA platform (through-channel marketing automation platform). This seems to be most common among SMB and mid-levels unable to allocate budget to a solution and not quite foreseeing how a solution will actually enable them to rapidly scale. Lack of knowledge about evolving tech creates a huge missed opportunity.

These companies are blind as to:

  • The “who” (who needs TCMA?)
  • The “when” (is it time for my company to adopt a solution?)
  • The “why” (why do I really need this?)
  • And the “which” (which platform do I choose?)

Sound familiar? Then let’s fill in those blanks with an overview of the who, when, why, and which of channel marketing tools.

Who needs a channel marketing automation solution?

If you sell through indirect channels via resellers, distributors, ISVs, or VARs, you fit the “who” profile of a company in need of channel marketing automation. Doesn’t matter if you’re an SMB, mid-level, or enterprise. You fit the profile because these solutions are designed to help companies like yours scale your channel sales program, increase partner participation, extend your reach, and bring in more revenue via indirect pipelines.

When not executed through a TCMA platform, channel sales is an excruciating, overwhelming endeavor. If this overwhelm also sounds familiar, you’re not alone. In fact, many SMB and mid-level companies don’t have a structured partner program in place because they’re limited by time and headcount. Things operate on a fly-by-the-seat-of-your-pants, day-to-day basis dealing with partners, and long term growth hasn’t made it into the business plan yet.

For companies that live on both direct and indirect sales, many of them just say “forget it” to channel strategy altogether. It’s too labor-intensive and tedious to build. So they focus on direct sales instead.

When should I adopt a TCMA platform?

For those who are trying to maintain a partner program, but have yet to adopt a technology solution, channel sales is a daily struggle, with looming pressure to close deals fast rather than nurture the pipeline, and a scramble to put out fires as they constantly catch. If this—yet again—is familiar, if channel sales is a cumbersome process you’re thinking about giving up on, then your answer to “when” is NOW.

The pain and struggle you’re suffering is totally avoidable and a solution would be incredibly low cost compared to the return on investment. Let’s put it this way… A day in the life of a channel sales organization that hasn’t yet embraced through-channel marketing automation might go something like this:

You blast an email with a new asset to every partner. You don’t have analytics in place to see who opened it, much less who’s leveraging it for redistribution. You cross your fingers and hope a sale comes in through a partner. When few or none do, you reach out over the phone… One. Partner. At a time… to find out how it’s going. Did you get my email? Did you download the asset? Did your designers add your logo? Our designer left a whitespace for your logo. Are you going to redistribute the asset? The sale ends Friday, so we need you to redistribute no later than tomorrow. How many prospects will you send it to—is there any way you can track opens and report back to me?

Gasp! (Coming up for air).

Talk about exhausting. No wonder most SMBs and mid-levels have given up! Imagine having that conversation twenty times a day. Your partners would start avoiding your calls, stoking a whole new bunch of fires.

Besides being an exhausting and off-putting channel marketing strategy, the manual way is inefficient. Hours of time have been wasted in this instance, and likely with little yield. A TCMA platform would have deployed that initial asset, had the metrics to track it to and through partners to show who’s redistributing and to reveal the desired open rate downstream. And it would have taken a fraction of the time for both the vendor and the partner.

If a day in this life sounds like a day in your life… it’s time to stop struggling.

Why do I need automation for channel sales?

If you’re in channel sales and don’t have a through-channel marketing automation tool in place, why you need one should be implicit by now. But if you’re still not convinced, let’s look at some numbers.

  • 75% of global sales are made through indirect channels. Your marketplace opportunity is massive. But…
  • Only 20% of partners typically deliver 80% of channel sales for their vendor source.
  • That means 80% of channel partners aren’t doing much, because they need more than a phone call from you hounding them about redistribution. They need more than an email with a single asset and a whitespace for their logo. They need their hands held.
budget-for-channel-marketing-automation-is-necessary
Allocating budget to a channel marketing automation tool is critical for channel sales growth.

If you hold their hands, or use the right automation tool to hold their hands for you, you tap into that inactive 80% of partners. Get those guys and gals pushing your message to their customers, and your sales will start to skyrocket.

Ultimately, a new TCMA platform in the marketing tech stack will not only pay for itself, it will save you time, scale your partner program, and drive revenue. That’s why.

…But only if you nail the “which” part….

Which solution does TCMA the best?

There are a dozen or more platforms out there claiming to be TCMA tools. Many of them are portals and/or PRMs (partner relationship managers) that have been around for several years, and have retrofitted their platforms to “automate” co-branded messaging.

If your main need is real automation, through and through, then be extremely judicious when you come across companies like this. Until very recently the standard channel marketing practice was to hire one of these portals or PRMs as a common ground for vendors to store content—from whitepapers, to logos, to price sheets, to design assets. These platforms would deploy an email to partners letting them know when the vendor added something new, so partners were aware they could come collect.

And that was about as far as the automation went. From there, it was up to partners to log in to the portal (a single space shared with the vendor and other partners), download the content, add their own logos, upload and configure the campaign in whatever emailing software they were using, and redistribute.

There was still a ton of work required on the part of the partner. And there were still no metrics for the vendor. Not entirely helpful.

As this problem became more and more evident and technology evolved, new solutions started to emerge. Some are cohesive tools with end-to-end content storage, automatic co-branding, same-platform email functionality, and metrics included. This type of platform provides each partner with their own individual user instance, login, and dashboard so that list uploading and segmentation are secure and unlimited—which renders metrics and redistribution more accessible than they’ve ever been.

However, for PRMs and portals that existed previously and have now retro-fitted outbound automation (the email delivery and metrics aspect of co-marketing) the fact that they still simultaneously function in their old capacities makes them largely faulty; partner list uploading and same-platform email deployment are not compulsory, meaning metrics are non-comprehensive and unreliable.

If simple, end-to-end automation is what you’re looking for, schedule a demo with xAmplify, which was created at the turn of the TCMA revolution and designed specifically for through-channel marketing automation, not to function as a portal.

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