Measuring Predictive Indicators Strategic intent and financials are performance outcomes of successful alliances. But using only these metrics is like using only the rearview mirror to navigate your car. They tell you the success of past actions, but they do not help alliance managers optimize future performance. “We have many services alliances that are in early stages of engagement,” said Kerri Lampard, CSAP and director of global strategic services partners at Cisco. “Revenue from these newer engagements will seem quite low if compared to our mature partnerships. We are still developing initial business models and joint strategy with these partners, so revenue is not a useful measure of value or success.” Looking at revenue alone can also belie the size of these newer partners when, in fact, some are the same size as Cisco and are market leaders in their categories. It could lead management to cut these alliances based on a misperception that they are less significant or underperforming, “yet these new alliances will ultimately drive future revenue and potentially replace that of the current partners,” added Graham Dunn, CA-AM and strategic partner development manager at Cisco. “For all of these reasons, we focus on other leading indicators aligned with our strategic priorities when measuring the success of newer partnerships,” concluded Lampard. To optimize revenue production, one needs to understand the production process and measure the leading indicators that correlate with future success. Most frequently measured indicators of marketing and sales effectiveness are leads generated (81 percent) and joint pipeline (66 percent), according to our study. If you understand your sales funnel—that is, how many leads will ultimately convert to revenue—you have better insight into how to manage revenue generation. “We measure leveraged dollars,” explained Aimee Catalano, senior director of alliance marketing at Citrix Systems. “So for every dollar of Citrix marketing spend, how much is each partner contributing toward joint marketing campaigns? We also measure return. For each campaign, we measure prospect ‘interactions,’ leads, opportunities, and opportunity dollars. Opportunities are owned by the sales team, and they have assigned a dollar amount to the deal. This gives us the ability to measure our return on investment for joint go-to-market campaigns with
Quarter 3, 2011
partners, and justifies an increase in budget allocation for future spending.” “It doesn’t do any good just to measure pipeline if nothing ever comes out of it. We track pipeline velocity. We break the pipeline into twelve stages and look at how long it takes a deal to progress through each stage,” said Amir Sohrabi, Middle East alliance manager at SAS Institute.
If you understand your sales funnel—that is, how many leads will ultimately convert to revenue—you have better insight into how to manage revenue generation Relationships Matter One area frequently overlooked in alliance metrics is the strength and health of an alliance relationship. In a world where hard dollars and bottom-line analysis dominate, measuring the “soft side” of the business is often dismissed—at great cost. When an alliance is not operating effectively in the human dimension, it will cost the business in time and in fiscal performance. “I measure happiness!” said Daniele Zarka, partners and alliances director at EMC. “It’s a question on our quarterly partner surveys: Are you happy working with us? We know if partners don’t like working with us, the revenue won’t come. It’s best to know early whether you’re going to be able to work with a partner and produce results. If I don’t feel comfortable in picking up the phone to call a partner, we aren’t going to get there, and it would be the same for our partners.” n
Norma Watenpaugh, CSAP, founding principal of PhoenixCG, is an acknowledged industry expert in partnering best practices and has had extensive experience in partnering, alliances, and channel development. Her 25 years of professional experience includes executive positions at Sun Microsystems, Amdahl Corp, and BEA Systems. She is also a global board member of the Association of Strategic Alliance Professionals and chair of the organization’s Best Practices Committee.
Non ASAP Member Limited Edition, Q3, 2011