Types of Channel Partners
- Value-added reseller (VAR) / Systems Integrator (SI): Partner typically sells, implements, and services. End customer contracts with reseller; reseller ‘buys’ from vendor.
- Referral/affiliate/marketplace: Partner sends you leads. End customer transacts with vendor (though marketplace would be with marketplace); vendor pays commission to affiliate. Vendor implements and services.
- Sample referral partner agreement
- The benchmark for referral fees is 10% to 15% of the initial closed deal value. There is no fee on renewals. To keep things simple, tiers are not common.
- Original equipment manufacturer (OEM): Partner sells the vendor’s (OEM’s) solution as their own.
Partner KPIs
- ARR (total; net new – split by new accounts & expansion; NDR & GDR)
- Account Funnel (leads, registrations –> opps, pipeline –> win rate, ACV, sales cycle)
- Cost (overall & per partner; CAC incl. MDF & internal staffing to support partner program)
- Partner Funnel (signed up/enrolled; activated/authorized; actively selling – $x in last y mos; # partner reps who have registered deal, closed deals)
- % Exclusively
- Engagement: Partner portal logins / usage
- Partner NPS
- Account NPS/CSAT on deals sold/services by partners
- Time to first sale (for first x sales or $y of sales)
- Completion/certification rates
AE:Channel Personnel Staffing Ratios
| # AEs (incl. mgmt) | AE:Channel (median) |
|---|---|
| 1 to 10 | 4.5 |
| 11 to 25 | 11.0 |
| 26 to 50 | 13.9 |
| 51 to 100 | 15.2 |
| Over 100 | 31.8 |
Queries for reference:
- AE: (“account executive” OR “account manager” OR “account representative” OR “sales executive” OR “sales manager” OR “sales representative” OR “sales associate” OR “territory manager” OR “strategic account” OR “strategic accounts” OR “partner sales” OR “channel sales” OR “major account” OR “major accounts” OR “account director” OR “sales director” OR “business development” OR “enterprise AE” OR “mid market AE” OR “strategic AE” OR “SMB AE” OR “senior AE” OR “senior AE” OR “AE Team Lead”) AND (NOT(“business development representative” OR “business development associate” OR “business development specialist” OR enablement OR operations OR technical OR “sales development”))
- CAM: alliance OR channel OR partnership
Business Development Partners (aka Strategic Advisors)
- Compensation: If selling to SMB or lower MM, then the arrangement is usually a referral fee per completed introduction meeting or, better, as a commission on closed deals (5% to 10% of year 1 ACV). For upper MM and ENT, advisors will expect a retainer ($2K-$5K per month) instead of or in addition to the aforementioned referral fees. Only grant equity to proven advisors; more on this in my next bullet.
- Keep agreements short, preferably in 6-month increments. One company I evaluated paid a retainer (no fees) and had a internal expectation of how much business each strategic advisor needed to source. Advisors who failed to source the target amount were moved to ‘advisor emeritus’ status. Grant equity only if needed and only to those who have proven themselves to reliable referrers. Vest equity over 2 years.
- Vet advisors carefully since many talk a big game. Ask them to name 5 to 10 specific contacts that they will introduce you to in the first 90 days. Also ensure their network maps directly to your ICP and persona.
- Don’t hire an advisory until they have made a least one high-value introduction for you.
- Advisors who retired more than 5 years are rarely valuable since networks decay quickly. Look for advisors who have successfully advised other startups; check those references.
- Strategic advisors should provide introductions but not sell for you.
- Onboard them like you would a senior hire so they can clearly express your core messaging and value proposition. And, they need a good understanding of your ICP.
- Where possible, align on a target account list (10-20 accounts).
- Put in place a formal or informal system for deal registration so advisors don’t simply claim credit for in-flight deals. That being said, advisors can be very helpful in getting you to power in those deals when your team is stuck.
- Set up regular check-ins (every 2 weeks or monthly) to source new referrals and to discuss the status of existing referrals.
- Start small. Better to have a smaller number of strong advisors than a bigger network of mediocre ones.
Partner Relationship Management (PRM) Evaluation Criteria
- Campaign Management
- CRM Integration
- Customizable Collateral
- Deal Registration
- Enablement
- Language Capability
- Lead Management
- LMS Integration
- Market Development Fund (MDF) Management
- Onboarding
- Partner Visibility of Activity Analytics
- Through Channel Marketing Automation (TCMA)
Cloud Marketplace Software & Services
(*) Recommended
Partner Relationship Management (PRM) Vendors
G2 grid for Partner Management
(*) = recommended
- Affise
- (*) Allbound
- Channeltivity
- Crossbeam
- Everflow
- Impact
- (*) Impartner
- Magentrix
- PartnerLinQ
- PartnerStack
- Reveal
- Vartopia
- Zift Solutions
- Zinfi
Resources
- The State of Partner Ops and Programs 2022 (Hubspot; gated – requires contact info)
Footnotes
1 This is an Insight Partners portfolio company. The editor of this page is employed by Insight Partners.