Increase your IT channel revenue by 400% or more!

Posted by Todd Hussey

Dec 19, 2018 11:44:02 AM

Does 20% of your IT channel drive 80% of your cloud services revenue? If so, then you have a partner productivity problem that is holding back the growth of your business. Because that means that 80% of your channel is under-performing. If your success is tied to the success of your channel, then you need to address the situation with a strategy to make more channel partners more productive. I am going to show you how to increase your IT channel revenue by 400%, or more - a huge gain in productivity resulting from small changes in deal size and flow.20drives80Reasons for Low Channel Productivity
There are many reasons why your IT channel partners are not as productive as they could or should be. Your channel partners may …

  • Lack resources to generate new business
  • Have little or no experience in sales & marketing
  • Be reluctant to invest money in marketing programs
  • Have saturated their installed customer base
  • Or, simply lack the motivation to grow their business

You can remove all of these obstacles, except of course, the last one.

Sales leads for channel partners are the missing ingredient in most channel partner programs. Many IT service providers know how to close deals, but most of them don’t know how to find them in the first place. Marketing resources that enable partners to generate their own leads are marginally effective. When you boil it down, there is simply no substitute for generating qualified sales leads for channel partners who are ready, willing and able to close them - it's the shortest path to growth for them and for you.

The problem is that not all ITSP sales leads are created equal. Lead quality makes all the difference in the world. But if your sales leads are targeted at the right kind of customer and represent sales-ready opportunities in the "buyer zone", then your partners can exploit them to drive higher & sustained revenue growth. Ready for some numbers to prove the case? Ok, I'm happy to provide them.

Partner Productivity - One Scenario
What if your channel partners were slightly more productive and more than 20% of your partners contributed to the growth of your business? All we need are small improvements in productivity to create massive gains in channel revenue for you and for them.

Let's assume that a for a partner base of 50 channel partners, we were to model the following improvements:
  • Average deal size increases from 15 to 20 users
  • One-time revenue increases from $40 to $50 per user
  • Monthly recurring revenue increases from $40 to $50 per user
  • Deal acquisition rate increases from 0.5 to 1 deal per month

And and let's also assume that you can recruit another 25 partners to perform at this level. These are not outrageous goals for any channel program, are they? Here's an intriguing fact: If you achieve these goals, you will see a 400% increase in your channel revenue because the combination of all of these modest improvements work together to create impressive results. How do I know this? I created a modeling tool for just this purpose. Here is a graphical plot for the scenario described above (click to enlarge the image):


In the chart, the blue color represents your existing partner productivity and green represents your ideal partner productivity (based on the assumptions described above). The light blue and green columns are the existing and ideal channel partner revenues (assumed to be a 25% revenue share in this model). The dark blue and green columns represent the existing and ideal cloud vendor revenues (assumed to be 75% in the model). The heavy blue and green lines are total existing and ideal revenues.

As you can see from the chart, modest productivity improvement improvements have an enormous impact on revenue growth for both partner and vendor - 400% growth in both cases. Imagine the impact if your productivity improvements were even greater? You can model your own assumptions - download the partner productivity model and plug in your own values.

So now the question becomes HOW do we achieve these improvements? The answer is with managed inbound marketing.

Generate quality leads with inbound marketing to:

  • Nurture more leads into buyers
  • Target more high-value customers
  • Deliver more sales-ready leads
  • Generate leads with more consistency
  • Reduce the cost of customer acquisition

Use inbound marketing to recruit new partners. This approach will allow you to:

  • Define and target your ideal partner profile
  • Attract prospective partners with online content
  • Nurture, qualify and convert the best-fit partners
  • Onboard new partners with an end-customer-focused inbound marketing program to build their funnel

If you are investing channel marketing funds in ways that do not directly result in revenue growth or the recruitment of quality partners, you are not spending wisely. Think about managed inbound marketing as a cost-effective way to improve IT channel productivity and bring new high performance cloud partners into your channel partner community. The returns will be well worth the investment.

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