021 - Why Partners CHURN and What to Do About It

No revenue, no attention.

This is especially true for partnerships. 

If you want to get the attention of your partners, you need to pick the right ones and show them how you could generate revenue together. 

👉Stop chasing after high-profile partners without really thinking about whether they're a good fit. 

👉Focus on partners who can help you create value for your customers.

👉Close the partner engagement gap. 

Remember: where revenue goes, attention flows. 

Episode 21 of Partnerships Unraveled is available 🎧

Tune in to learn how to cut through the noise, from recruitment to onboarding and retention. 

#podcast #partnershipsunraveled #engagement #sales

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Transcript

0:07

Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries of partnerships and channel on a weekly basis. My name is Rick van den Bosch, and I'm the CEO and founder of Channext. And I'm here together with Alex Whitford VP partners at Channext. Alex, how are you doing today? I'm doing really well. We're excited to be back on the podcast. Yeah, agreed there. And I think lately we've been doing quite some podcasts where we try to get deeper and deeper into what drives a partner. And I think for today as well, we were planning on thinking about, hey, what does a partner, what's actually a reason why a partner can churn and what can you do about it as a vendor? What do you feel about that today? Yeah, obviously there's two ways that you can drive significant partner improvement, right? One is to track how do you win with partners, but I think it's also important that you track how do you lose with partners. So today we're going to discuss how through the cycle of sort of partner success, from recruitment onboarding and enablement through to co-marketing co selling. And ultimately the goal is to get partners to a self sustaining revenue perspective, but through that entire cycle there's an opportunity to cock it up. So how and what do we see in the market today and how can we tighten those up so that ultimately you're getting as clean a pipeline from Net new partner all the way through to sort of self sustaining revenue? Maybe to give some context to our listeners. Did you know that in the everage channel program more than 80% of partners are inactive? I think that's a crazy amount, right? Like, I heard this statistic from Jay McBain and there you could really see like so from all the partners that we get into the program, most of them are inactive. So all the partners that we got into, it eventually churned. And I think that's the thing in channel, right, they don't really churn, but they leave your program without telling you so to say. Yeah, and the thing that with my sort of operational hat on, the operational lag of recruiting and enabling 80% of partners that ultimately don't deliver revenue is crazy. You're better off not recruiting and onboarding those partners. And so for me, especially as we now get into a recession thought process and people are looking at efficiencies having as tight a funneling process as you possibly can to get a partner from recruiters all the way through to self sustaining revenue. The businesses that do that very, very effectively, one, they're going to have a sort of cleaner channel because partners are fully bought in. But two, it means they've got better ROI per head internally and better ROI per partner externally. And that's going to be critical to sort of minimising costs but maximising impact. Yeah, I fully agree there. I think maybe for our listeners could you take us through that process. So when you get a new partner in your program for the first time until it's a self sustaining partner. Sure. So the first thing if you want to look at recruitment, there's two types of recruitment. There's organic recruitment and strategic recruitment. Organic recruitment is inbound recruitment or maybe distribution outbound, but there's no sort of specific targeting around ideal partner profile. You're just sort of targeting the masses and see who comes in. That's a sort of great continuous motion. But my advice to all partner programs is also to strategically recruit. So what are the type of partners in territory, size, segmentation, specialization that you want to go out recruit, put those onto a list and make sure you're taking the right messaging to them to recruit very, very effectively. Your closure rate here should be extremely high if you've put together a very strong value proposition. My expectation, your partner recruitment should be well over 85% from your strategic list. Obviously your organic list, you're expecting a much lower rate, but you're putting a lot less effort in that's going to happen. More organically, yeah. And then after the recruitment phase, which like, what are the other phases that are going through? So then you go through to the onboarding and enablement phase and that's very much training, certification, getting them to understand your go to market proposition, explaining the sort of sales, marketing, technical and operational flow through to the partner. Then you're going to pivot into what we like to brand the revenue phase and that is your co-marketing and your co selling, which is how are you going to really attack the market, how are you going to generate inbound demand, how are you going to generate outbound demand and really getting the partner into a closing process. And then you get all the way through to the sort of self sustaining revenue phase which for vendors we like to call retention. So that's keeping the partner updated, keeping the partner engaged, but that's very much course correction. The partner is now off the runway and they're at cruising altitude and very much making small adjustments all the time to keep them maximally performing, keeping them engaged, continually doing QBRs. But that very much is a very different process to the first four. And I think that's essentially the ultimate goal, right? To get your partners to self sustaining revenue where they can handle the full sales cycle within your channel, so they can recruit new customers, they can make sure that they onboard them, that they implement, they do marketing themselves and they do the retention flow for you. That's when you really make your channel self sustaining as well. Yeah, for me, if you're looking at channel revenue operations people, that's what they should be doing. They should be analysing not just average spend per partner and what's our 80 20 look like, but they're analysing the funnel. So they're looking at each one of those catchment areas? What's our conversion rate between those catchment areas? What's market average, how can we drive above market average? And really looking at the velocity to get a partner from recruited all the way through to self sustainable. And the idea is to bring that number as short as possible. Some people do it very, very quickly, less than a month. And that's great for shorter deal cycles. Obviously the longer and more complex deal cycles, there's more training and enablement that goes in. But the idea is to keep that as short as possible because you want at least 80% of your channel to be in that retention mode, that self sustaining mode, but that they are actively selling, not that they are self sustainable, but they're not doing any revenue. That's the rebalance that we want to see. And I very much brand that as the lean channel. If you can have 80% of your partners in retention mode and delivering revenue, that means you've churned out your partners that you aren't dealing with, which is good because ultimately it minimises operational lag and you're able to run that at a very lean resource perspective because you've invested well in automation and data. And is that 80%? Is that what you see within your strategic partners list? Because I can imagine from a lot of the inbound partners, if you don't, if you can't put the resources there, then maybe that's a bit high as a percent, correct. From your strategic list, right? That's who if you look at your pareto 80 20 for your channel, 80% of your revenue is going to come from 20% of your partners. And realistically, almost 100% of your 20 that does the 80 is going to be strategic partners. There will always be some superstars that you weren't expecting and that's great. That means your funneling has done very, very well. But you want to make sure that of all the partners that you decided were going to be key players for you, you managed to get as many of them all the way through to self sustaining revenue. I'm very engaged. I think the magic word to keep your partners active in your program is partner engagement. And I think that might be fun for today that we look at it like in every phase you need to continuously think how can I keep my partners engaged? And maybe for today we can go through those phases. So start with recruitment, then afterwards go into the onboarding, then in the revenue phase. I really like the term by the way, because then indeed you do the co-marketing and the co-selling which is your go to market plan and continuous development there and then finally in the revenue. But maybe to start with the recruitment phase there, what are things there that might lead to partner losing attention there, but also what are things that you can actually do to make sure that you're on top of that and keep your partners engaged in their attention throughout that process. Sure. The one mistake that I see in the recruitment phase all the time is vendors spend too much time giving information that isn't relevant to that stage. So why it's so important to break down the cycle from recruitment all the way through to retention is you need to give different pieces of information to the partner to get them through to the next stage. In the same way, in a sales cycle, you don't start talking about contracts in a discovery call. It's just not relevant. Yet the same is true of the recruitment phase. The three things that you need to focus on in the recruitment phase are what type of customers, what type of end-users does the partner need to sell to, how easy is the product to sell? What does the partner need to put in to get a deal closed, and how much margin is the partner likely to make? And include the wrap around services that they're going to put into that sales cycle. That's really important because if you get a good answer on those three, ie. The partner knows those types of end-users either already deals with them or is looking to target them, they are going to make enough margin that they feel comfortable and the work margin balance. How much effort they need to put in versus the margin reward. If that is good enough, the partner will say yes, okay, I'm now willing to go through to the next phase. Why it's really important to break down that information is hunt for the no. Right. This is so often I see partners are sort of pushed into the onboarding and enablement phase when the recruitment hasn't been done. If they've not been qualified properly, then once they get through to margin expectations it's all out of whack and suddenly it's like, well, I don't want to go ahead. If you get the qualification done searching for the no early on, you save time further down the line. That qualification is crucial because we always say, like, it's very easy to get a partner agreement but then the actual work start and I think there's so crucial to have a very clear view on what type of partners fit well in your partner program. So what is your ideal partner profile? Because based on that you can get the right partners in. And I think that's why it's so crucial to be very delicate in your recruitment process because if you get the wrong partners in, no matter how well you do in the later on phases, on the onboarding enablement, the revenue phase, et cetera, they will churn out eventually because it's not the perfect fit with your program. No, exactly. And I think to go back to the Jay McBain statistic of 80% of partners ultimately churn out, I think a lot of that happens due to inadequate conversations at the recruitment phase. Not qualifying the partner in or out effectively and effectively just getting a vanity metric. Oh yeah, we've got 10,000 partners. Well, it doesn't matter if you've got 10,000 partners if 8000 of them don't do anything. You actually only have 2000 partners. And so you can get a lot of that out by qualifying effectively. Here's the amount of effort I need you to put in and here's the margin expectation that you should get out of it. If that's healthy and the partners bought into that as a strategy then you can start to get into the more detail around here's what a sales cycle loses training, onboarding certification. Yeah, I think we always call that the shiny Partner syndrome, right? Where vendors are continuously looking into new partnerships and the deep partnerships that will make all the difference and therefore we are very focused on getting more and more partners into it. But indeed maybe because that's one of the metrics usually for a lot of our customers as well, it's one of their KPIs recruiting net new partners. But if there's no qualification to that recruited partner then that can become a vanity metric. Indeed. Because then it can seem like, hey, we recruited 1000 partners this year but if 800 of them were not a good fit and won't turn into revenue generating partners, then the end result is not what we all wanted as channel revenue people. 100%. I think that the key to running a lean channel is think like a sniper, not like a shotgun, right? You don't want to just mass recruit, mass enable and hopefully some of it lands. You want to be super precise in terms of who you recruit and have as close to 100% of conversion to get them from recruited all the way through to retaining as a self sustainable revenue. And then I think once you got those partners recruited then of course the onboarding phase starts. And what are some of the things that you really need to be aware of in the onboarding phase to make sure you keep the traction in the partnership there. So the first thing to be very clear when you're in Onboarding certification and enablement is what's your expectation of the partner once they're in revenue mode and then you build your onboarding and enablement and certification around that process. So the example I always give is if you need your partners to act very much as referral merchants and they're just there to get you an introduction, then you need to cater and tailor your training around that process. So phenomenal elevator pitch, really good value add messaging, but just enough to get an introduction. They don't need the full level of detail of an entire technical sales cycle if they aren't required to do that. The counterargument to that is if they are required to do that then you need to do a far deeper level of Onboarding and Enablement to get them up to speed. To perform those duties. But my advice is minimum effort required. So give them the minimum amount of information that they need to be successful. Because if you spend nine months onboarding a partner and then you find out they weren't the right partner, you've just wasted nine months. It's a huge operational lag. So break it down into the pieces that they need to be successful. So the right content at the right time, I think there indeed, because I think one of the things we tend to do a lot is we start blasting all the information we have as soon as they get on board it. But also some of the things that I find interesting to think about is what type of information do they actually need? I think the best way to get traction in a partnerships is to find your first customers together and instead of just immediately, completely training the partner on implementation, et cetera, it might be better to actually focus a lot on how do you pitch it, and make your partners comfortable to talk about the product to their customers. And then later on, once you get maybe your first opportunities in, then you start training the people who are actually going to implement it. And then you get a much clearer view also for the partners, I think, on where the partnership is heading. And you keep them a lot more involved. Yeah, absolutely. You want to be training them slightly ahead of where they are. So train for top of funnel when they're in top of funnel. Train for middle of funnel when they're just about to get to middle of funnel, bottom of funnel just before they get to bottom of funnel. And like you say, implementation, installation, management service, you do that just ahead of their first customer. The whole idea is that they are very aware of the full plan to give them the expectation of what the entire training cycle looks like. But don't tackle the middle and the end when they're not yet started. Right. You want to take them through that journey as easily as possible. And again, minimum information to be successful. You don't want to overload the partner. I think sometimes vendors can get a bit confused because they forget that the partner's got to sell multiple products. And if I'm turning up to a training session and I'm bored and I'm checking email and I'm doing everything else because I've got a very busy schedule, I'm not paying attention, and therefore I might as well have not turned up. Keep your training short and punchy and most specifically clear call to action. Yeah, that clear call to action is indeed very important there. And I think what's also interesting, what you touched upon is that be very precise to your partners of what the upcoming time will look like. So show them the full onboarding plan immediately. Create common actions there mutual success plan where you say, what are you going to do? What are we going to do? And show them very clearly where the finish line is. And I think what every partner loves to hear is the finish line is that you have your first customers together off the onboarding, so to say. So to really get into such emotion, I think that's where you can really bring it to the next level because then for your partners it's very clear like what's the starting point, what's the finish line and what steps are we going to take to get there? I've never seen a partner get annoyed about having a full view on what the onboarding cycle looks like if they know it's going to take three months. Here are the key stakeholders we need to speak to. Marketing on this date, sales on this date, technical on this date. Here's the entire training schedule. It just leaves the partner fully confident that you are working towards their success and you know how to do it right. I see partners all the time get frustrated where they think sales training is pizza, beers for a night out. We have a really good time. Lots of relationships are built, but there's no clear call to action. They don't understand the product, they don't know what they're going to do. Relationships great. Initially it's really important, but at the end of the day, revenue drives attention, right? And if they don't feel confident that you can continue to drive revenue with them, they are going to look at the other way. It doesn't matter how many beers you buy them, they've got quota to hit. They need to go and be successful and you need to align their success with you. I think that better together story is very important there. I was just thinking like you have different teams in a partner company, of course. So sales, marketing, technical, et cetera. In what order would you onboard those team or would you do it all together? What would you advise there? So it does sort of depend on the sales cycle in terms of how technically proficient does the partner need to be? What sales Acumen does the partner need to have? What marketing Acumen does the partner needs to have? However, a good rule of thumb is get them to revenue as quickly as possible and then you can worry about everything else as long as you've got the right levels of technical support. So you want some very, very precise channel push. Who are the ten end-users we are going to target in the next three weeks? What does the partner need to do? And I would start there simultaneously. I would start trying to generate inbound demand because that's going to be what drives long term sustainable success. And marketing has a bit of a longer runway. If someone needs to see ten posts or ten emails to trigger a buying cycle, you don't want to wait four months to start drip feeding that content through. So get those two pieces driven almost immediately and then you can start to worry more about the sort of technical and operational flow as we get there. Don't forget, you're starting at top of funnel, so start your top of funnel activities. What's your precise outbound activity and what's your precise inbound activity? I think this is a very interesting one because you could almost say, I think how many channel teams look at onboarding is that it's really the training, the technical, the certification, et cetera. But I think we've spoken about phase three as the revenue phase. Of course, that you might even say that those phases are very parallel to each other and you should not wait until you have all the certification, et cetera, before you dive into the revenue phase. So my whole thing is it's not a complete cycle, it's actually a stacked flow because onboarding for technical should already be happening while revenue is happening. We're at middle or bottom of funnel. We're about to start seeing our first customers land. Well, that's when I'd start with here's how you onboard them technically. Here's the post sales metric, here's the presales onboarding that stuff. It shouldn't just happen in a linear fashion. Bring it at the right time to align with customer journey, right. And that's really, really important. And don't forget, if you train me on features and benefits and I don't speak to a customer for nine weeks, you're going to have to retrain me anyway. So don't just think, oh, it's better to chop all the information up front, drop it in at the precise time that they need it, a week to two weeks before they need it. But you want to share shorten the journey as quickly as possible to self sustaining revenue. And that means starting on top of funnel activities as quickly as you possibly can. I once spoke to a head of Chennai where he said we have two onboarding plans, actually, a go to market onboarding plan and a technical onboarding plan. And I think that's a very interesting one where you immediately kick start with the go to market onboarding plan. So you start with your joint value proposition and your messaging. Then you start doing account mapping so you can together see what kind of accounts would be the quick wins to get us to revenue together. And then indeed start all the comarketing activities to make sure you lend and expand with and through that partner in the local market there. And I think if you completely focus on that immediately, you get the revenue phase in a lot earlier and then you can start making those moves already. Yeah, and to me, what you're talking about there is effective resource allocation. I cannot tell you how annoyed technical guys get when they get an enablement session from a salesperson who really if you quiz them on it, they don't understand how it works because they feel like, well, you've not actually educated me. You've just given me the sort of very superficial 30,000 foot view of the product. I want to know the actual ones and zeros. I want to know the mechanics of how it works. And so why it's great to have two onboarding plans is because they should be owned by two completely different people. Technical needs to be owned by a technical onboarding person and sales need to be owned by a sales onboarding person and marketing as well. Right, but they typically fall into the same sort of top of funnel, middle of funnel, and bottom funnel onboarding plan. That's critical to segment those two because they shouldn't necessarily be happening at the same time depending on the technical requirements of the sale. Yeah, I agree there. I think if you look at it from the parking perspective, they just love to talk to people who are in their own role, but then at the vendor because then it makes a lot more sense to them and you get that connection very quickly. So the the better you can allocate your resources like that with specialists in the right moment, then you can do that very effectively. Yeah, you want peers talking to peers. So you want sales talking to sales, marketing talking to marketing, and technical talking to technical. And the last one that's way too often missed executive talking to executive. In your key strategic partners. You should be having EMEA directors talking to sales directors. They want to know that if push comes to shove, there's a deal at the end of the quarter and we need to be creative that I've got the right person to call. And this is so often where you've done a really good job at the mid layer. But if a senior sponsor at the partner is not bought into the strategy or doesn't have a view on it, or doesn't understand why it's important, you can just get the rug pulled out from you from underneath. So once you're into onboarding and enablement, you need to be setting up an executive meeting, dinner or whatever so that they can get a view of each other. You're a key partner to us, we're a key vendor for you. Start to build that relationship that's critical to ensuring continuity. Because I've seen partners drop out once they're in the retention phase, because the senior sponsor just goes, I didn't sign this off, or I'm not interested in this, or actually our businesses headed this direction and the rest of the business didn't know that. That's why you need to sort of do that vetting early on to make sure that everyone's bought in. That's an interesting one, I think. And I think if you look at that retention phase, that's where actually the majority of the partners are dropping off because you get them through. You have that traction in the beginning. Maybe you get that first or second customers together. So the recruitment phase has gone well, the onboarding phase and then also the revenue phase where you have the first traction, but then you get into the retention phase. What are the important things to look at there and what are some things that are leading to those partners churning? Yeah, so I think the interesting thing about the retention phase is that the profile for the person that runs a partner in the retention phase is not the same profile as the person to recruit on board and enable. And so I like to look at it much more from a sales perspective, like a pure end-user sales motion. You have the revenue team who are there to go and bdr and break into accounts and an aid to close the deal. But once that deal is closed, they fall into a customer success rep. Those two functions are very different. The thought process and the metrics that you drive into those two functions are wildly different. So I like to think rather than a Channext account manager, because I think that's too loose a term, I prefer a partner success manager. They are there, they build plans, they look at strategic objectives, they drive cadence, they look at growth, they sit down and do QBRs, they sit down baseline objectives and they pull all of that into a cohesive plan and drive that through the key stakeholders within the partner. That's the motion you want to get to. And the word I like there is clarity. People have to have a very, very clear understanding. Where are we today, where are we going and how are we going to get there? Yeah, if you do that, I think we did the same here at Chenxt. Of course, eventually we divided the partner team into partner development reps and into partner success managers. And I think that's a very interesting way to look at it because then you got the partner development who is focused on breadth of your channel, but then the partners success manager is on depth and then you really get into the best of both worlds. But at the same time, also, what I see at the moment with a lot of vendors, we often call it the partner engagement gap where we keep adding more and more partners. So everyone is very focused on that partners development, a lot of the camps as well. But then we don't have the resources to continuously onboard and support our partners to drive that revenue and to make themselves sustainable. And because of it, we see all those partners churning out again. And that's such a pity eventually. Yeah, to me it's very clear, right? You hire salespeople and are they a hunter or are they a farmer? And you then align good corporate design would say you then align the profile into the right type of role. If you've got too many hunters, you get loads of activity at the top and then there's lots. Of drop out through the funneling process. So you won't get partners onboarded effectively or once they're fully onboarded and engaged, they close a few deals, the right objectives and training and cadence isn't delivered into the partner. And so then they churn out there, which is the worst case because you've got a few partners, but there's been a lot of heavy lifting to get a few end-users across the line. You then want that to become self sustainable. And if you don't have the right farmers in that territory to really continue to drive success, then you're not going to deliver the level of continuous success that you need. And so for me, the good strategic design would be split out that function very very clearly. So that you are getting the right breadth, which is critical because if you don't have the right breadth, you are never going to be successful. But then if you're not getting the right depth, you get significant operational lag. And that's where especially in a recession, you start to see CFOs, look at cost base and go hang on a second, we've got all these people and there's loads of partners who aren't delivering earning revenue. We can now cut our team. And so to get the right level of debt, focus on driving the average spend per partner up. And you do that by building very very clear success plans. Yeah, and I think then we got the partner development reps very much focused on recruiting the partners, onboarding them and getting to that first customers together. And then that will be the hand over then to the partner success where you really get into the retention and making sure they stay self sustainable. Because I think that's very important to keep reminding ourselves once a partner is sustainable, it doesn't mean that they will remain that forever. So you need to keep nurturing the relationship, keep training them. The partner also has turnover, et cetera. So you want a partner success manager who's completely focused on that process. And by the way, partner success managers should deliver significant revenue increases. It's not to say oh, they do a few QBRs and have a couple of beers. No, they should be able to deliver massive, massive growth because recruiting the partners and getting the first few deals over the line is only 30% of the journey. 70% of the journey is delivering massive, massive growth. And don't forget, most partners sell your competitor. So a good partner success manager is then able to go and get increased wallet share within your partner. That's a really, really critical job. And if they're spending time recruiting on onboarding partners instead of doing that activity, you are wasting their time because there are far more revenue driving opportunities within their partner base. You do not want to split focus. Try and drive very very specific job roles and functions into your channel team because that diversification drives specialization and therefore. Increased output I think that's a great place to stop for this episode. A lot of food for thought for our listeners there. So I really hope our listeners enjoyed it again and see you next week.