Where is my investment of time, resources and money working? Where is it not? Are there places in my channel where revenue could be better?
If you find yourself asking one or more of these questions, you may need help with your channel management. But you certainly aren’t alone. Understanding the intricacies of your specific channel can be tricky, which is why it’s best for channel managers to adopt a system of measuring and evaluating partners across their sales channel in a data-driven manner. This is done using the PERC score.
What is a PERC score?
PERC, The Spur Group’s innovative and proprietary scoring system, is short for Partner Estimated Revenue Capacity. With this data-driven score, you are able to assess all of your partners, further segment partners of the same size and measure the total impact of your channel management efforts.
In fact, it’s much simpler than it may sound. In order to effectively measure and segment your partners, this system enables you to score each one based on the 5 Cs.
What are the 5 Cs?
1. Contribution: You need to look at each partner’s overall contribution to revenue. This is an important first factor – but certainly not the only thing that matters. Five partners all generating one million dollars in revenue could be viewed as equal, but they shouldn’t be.
2. Capability: Since not all partners bringing in a million dollars are actually the same, you need to assess what they’re capable of doing. Not every dollar is equal! If you have a partner generating one million with your most strategic product, this partner is more valuable than another generating one million with an end-of-life product that may go away in a few years.
3. Coverage: It’s also critical to identify what markets your partners serve, both in terms of geography and business segment. Even if you have only one million-dollar partner in China, they may be more valuable than 50 million-dollar partners in the U.S.
4. Commitment: Be sure to factor in partners’ commitment to your company. If a particular partner is selling multiple products for other companies besides your own, they aren’t as dedicated as one who works more exclusively with your products or services. Growth rate is also a factor here: If a partner is growing faster than your company, they’re bringing customers to you, but if they’re growing at a slower rate, they may not be selling your product to every possible opportunity.
5. Consumption: How effective is the partner at driving customer adoption and usage? If contribution represents revenue, then consumption is the increase in the average customer’s lifetime value through affiliation with the product or service.
By looking at these five different measurements, you begin to see a very accurate picture of your partners, which enables you to focus the most energy and time on those best poised to make a difference.
Why should channel managers care about PERC scores?
You can’t focus an equal amount of resources on every partner in your channel. When used properly, your PERC Score helps define the right territories to focus on, manage partners more effectively and better use incentives to fuel the growth of your organization.
By giving each partner a score, you have the intelligence to decide which partners need specific resources. Of course, that doesn’t mean you should write off partners with lower scores or sink all of your efforts into your rock stars. The PERC score simply aids in making educated decisions with your resources.
A PERC score is one important factor for making smart decisions for your channel. But, it isn’t the only area channel managers need to address in order to optimize partner performance. There are five disciplines of effective channel management that not only improve your standing with partners, but also help deliver the business results you need this quarter.
Richard Flynn is a recognized leader in channels and go-to-market business strategy and execution. A Founding Partner and Chief Marketing Officer for The Spur Group, Richard has over 25 years of go-to-market experience in sales transformation, channel management, and customer marketing.