3 Common Goals
It’s important to align goals across the businesses in your ecosystem so everyone knows what they’re striving to achieve and can then be held accountable. As we mentioned above, each constituent will have their own goals and definitions of success. So, we’ve put together three overarching goals that will contribute to ecosystem health while remaining broad enough to supplement the individual goals set by each party in your Channel. In each relationship, the parties want to achieve their business’ revenue goals, maximize their return on investment, and establish a foundation for predictable and sustainable growth. If Vendors and Partners operate with these goals in mind, they’ll experience individual and ecosystem-wide success.
Goal 1: Achieve Your Revenue Goals
"By 2020, customer experience will overtake price and product as the key brand differentiator."
Drive revenue by focusing on the Customer
The growing popularity of the subscription-based business model has put terms like
churn, Customer Success, and customer experience into the spotlight. In order to achieve their revenue goals, Vendor and Partner organizations must adopt these new disciplines. Businesses that rely on recurring revenue give Customers the freedom to decide where they want to spend their money. Once a customer’s contract is up, they can resign for another contract term or take their money elsewhere. Their decision relies heavily upon the ROI and experience they’ve had during the length of their contract. Companies who lag behind in adopting
customer experience and Customer Success best principles
can experience lower revenue.
Enforcing a customer-centric strategy can be the answer for most organizations, but in order for it to be your ace in the hole, Vendors and Partners need to be aligned, cooperative, and transparent. This can get complicated for Partners working with multiple Vendors. In these cases, Partners can either adopt programs from their most strategic Vendors or implement their own Customer Success strategies.
Align your portfolio with revenue initiatives
Partners will need to embrace the shift to recurring revenue because as Vendors make the transition, they’ll likely want to build a Channel of businesses using the same model. In a
survey of CRN’s Top 100 Channel Chiefs of 2017, over 36% of channel leaders said they want to, “increase the amount of recurring revenue going through partners” and 30% said they want to “migrate partners to cloud solutions.” Partner organizations may be accustomed to selling large, one-time revenue deals, so this shift forces them to learn to sell either multi-year subscriptions or find ways to capture the “lost” revenue. This could be through new offerings or offerings from additional vendors. These changes present opportunities and risks for Vendors and Partners— while new offerings may result in a higher margin for the Partner organization, the cost to drive this change across their organization can also be significant. But, with proper planning and alignment, the positives can far outweigh the negatives and help all parties achieve their revenue goals.
Update your route-to-market strategy
Partner programs are transforming with the introduction of cloud and subscription-based businesses. These new offerings bring with them new incentives and definitions of success for Partners. Businesses who are able to pivot are reaping the rewards. Transitioning to a recurring revenue model can spur Partners to redefine their route-to-market strategy. This can be done by introducing new Channel programs, revamping existing ones, or aligning with new Vendors. Enterprising Partner organizations may see these new programs as a way to differentiate themselves with their Customers and prospects. In the same survey of CRN’s Top 100 Channel Chiefs, they agree the following actions are priorities for 2017:
- 18% will be revamping their Partner programs
- 30% will be encouraging current Partners to embrace cloud offerings
- 36% will be encouraging current Partners to embrace recurring revenue offerings
Goal 2: Maximize ROI
"[A manufacturer’s] best bet is to take a page out of the SaaS vendors’ playbook and deploy a customer success function."
Maximizing Lifetime Value (LTV) with a customer lifecycle strategy
The idea of an
optimized customer lifecycle is quickly gaining popularity within customer-centric businesses. Expanding focus beyond the initial sales cycle enables organizations to maximize the LTV of a Customer or Partner.
Mapping the customer lifecycle can also increase the efficiency and efficacy of the upfront investment made to secure the relationship, also know as Partner Acquisition Costs and Customer Acquisition Costs. It’s a big decision to engage in a business relationship, and every organization navigates this process differently based on their internal, business-specific drivers. Because of the variation between processes, buying decisions are occurring throughout the entire lifecycle and, if left unattended, can manifest as high rates of attrition in a company’s portfolio.
Optimize your portfolio mix
Another way for Vendors and Partners to maximize ROI is by optimizing their portfolio mix. A good place to start is by redefining what “success” means for your ecosystem. Once determined, you can either roll it out to existing solutions or retire them and introduce new solutions into your portfolio that align with your “success” goals.
There are two sides to a portfolio-rebalancing strategy. For Vendors, it’s important to focus on
quality versus quantity. Having clearly defined criteria for success will allow you to be more confident when pursuing new Partners. Vendors like Microsoft and Adobe Creative Cloud have pursued this strategy this year. For Partners, this is an opportunity to align with Vendor and solutions that give you a competitive advantage. With this new push for a more connected Channel ecosystem, this is also a great chance to find Vendors with goals that align with your business.
Goal 3: Create a Foundation for Growth
"Partners who are leading edge in customer success are seeing double digit increases in renewal rates and expansion rates leading to double or triple the lifetime value of a customer."
Ed Daly
Customer Success-Global Leader at Cisco
When investing in the Channel, it’s important to focus your efforts and budget on creating a solid foundation for future growth. As your Channel expands, it will get increasingly difficult to control so setting up processes early and
aligning with Partners and Vendors on Customer Success will allow for manageable scaling. Making Customer Success a priority can reduce attrition, increase upsell and cross-sell revenue, and improve expansion revenue by encouraging growth from within your established customer base.
At Gainsight, we call this the Helix and it represents how growing from within results in exponential growth.
One surefire way to leverage your customer base is by nurturing happy customers into becoming advocates. This is a great way to drive the Helix and gain new logos without increasing Customer Acquisition Costs. Each successful customer generates three revenue generating opportunities:
- Renewal: when a customer chooses to continue using your product or services at the end of their contract period
- Expansion: when a satisfied customer adds new product or services alongside the ones they are already receiving from you
- New Customer: when a happy customer evangelizes your product, driving new customers through referrals or through reference calls with prospects
Setting these initiatives as a priority will give your Channel a strong foundation and enable future growth with significantly less impact on your budget.