Accenture has found that sales leaders have the chance to boost returns on their channel partner investments by 10 to 15 percent. How? By adopting a more holistic approach to evaluating the effectiveness of both their channel investments and the channel’s performance.1
Companies spend massive amounts each year to support their sales partners and improve the performance of their partner channels.2 For some, the amount spent on rebates, bonuses, discounts, commissions or other incentives (also known as contra revenue spend) can climb into the billions. Companies justify these investments, which can represent up to 20 percent of topline revenue,3 because of the amount of sales these channel partner ecosystems pull in on their behalf. Our research found that 41 percent of companies generate more than 40 percent of their revenues through partner sales. Nearly 20 percent derive 90 percent or more revenue from channel partners.4
Despite these impressive figures, the reality is that many companies are simply flying blind when it comes to making their spending decisions. That’s because they rely solely on traditional benchmarking, which looks at contra spend simply as a percentage of revenue. What’s missing is a holistic view that also considers channel spend as an investment with tangible returns. Without this broader view, it’s difficult to accurately measure the returns on their investments (ROI). It’s even harder to gauge whether they are spending too much or not enough.
By not optimizing their channel spend, many companies are missing out on growth opportunities, watching their market share and profitability shrink, and leaving some of their partners behind. The problem is about to become even more pronounced. As the pressure to innovate new solutions and protect their declining core solutions mounts, companies will rely more heavily on their sales partners. In fact, 91 percent of companies plan to give their channel partner ecosystems more responsibility.5 Nearly 70 percent believe the sales generated through their partners will increase over the coming years.6
As channel partner ecosystems become more important, they are also becoming more dynamic and more complicated—and more difficult to manage. More than 22 percent of executives already identify the inability to integrate with their channel partner ecosystems as one of their greatest challenges. 7 Amid the growing ecosystem complexity, that percentage is sure to rise. The impact on both bottom and topline growth is profound.
Companies would clearly benefit from greater control over—and visibility into—partner and ecosystem performance. One solution is Channel Data Management (CDM) technology. CDM technologies offer companies better visibility of their transactions and data exchanged with channel partners by cleansing data sets and organizing channel data into a more useable fashion. Leading companies are bolstering their CDM capabilities to gain a more granular and near-real-time view of channel movements and inventory. Using CDM allows companies to gain meaningful insights into channel spend and the factors affecting ROI such as rebates, commissions and incentives. CDM technology is yet another way to gain a more holistic view of partner activities.
Moving forward, companies should answer the following questions to fully examine and optimize their channel spend:
Role of partner. What is the role of the partner in my channel ecosystem and how is it changing as my business evolves?
Market share and growth. Who are my most important partners today? Which ones are best positioned to drive future growth?
Channel investment ROI. Are my channel incentives and programs driving the right returns? What technologies are available to help me gain better insights into ROI and partner performance?
The bottom line is that there are things companies can do today to get more from their channel investments. Answering the questions above will enable them to not only evaluate and integrate with their growing partner ecosystems more easily, but also make the right levels of investment for long-term growth.
1Accenture industry observation
4CSO Insights, CSO Channel Optimization Study, 2016
5Accenture Strategy B2B Research, 2017.
7Accenture Strategy B2B Research, 2017.
8Accenture industry observation