What are the key metrics for measuring partner program ROI?

Partner Revenue is an obvious measure, however Partner Sourced Revenue (and pipeline) is a great metric. That measures how much the partner is creating rather than fulfilling. Having a metric around Partner Sourced is a good indicator, that helps to identify enablement and training as well as commerically how attractive the program is to partners. A measure of volume and value may also be relevant. Another measure to consider may include new customer acquisition.

The most direct metric for measuring partner program ROI is the revenue generated by partners, including sales, referrals, and upselling opportunities. For example, a software company's revenue from both direct software sales and ancillary services provided by IT service partners reflects the program's effectiveness. Tracking this via Partner Relationship Management (PRM) or Customer Relationship Management (CRM) software, along with a revenue attribution model, helps quantify each partner's contribution, offering insights into their impact on overall revenue and areas for growth.

Partner revenue is the king of KPIs and should be always visible in any Partner-related report. At the same time it is a dangerous KPI (if it is the only one looked at) for early stage partner programs, where other KPIs like number of lead and opportunities generated and influenced by partners is a great indication of early success.

-The ROI by partners is key to measure the relationship.This can be attested by referrals,leads,cross-selling and upselling and various recommendations to boost the returns

Measuring partner program ROI also involves assessing partner costs, including expenses for recruiting, training, supporting, and rewarding partners, plus the opportunity cost of allocating resources and time. Calculate this by summing all direct and indirect costs of your partner program and dividing by the number of active partners, providing a clear cost-per-partner metric for ROI analysis.

Partner profitability, the difference between partner revenue and cost, is crucial in assessing the true value each partner brings. By subtracting partner cost from revenue and dividing by revenue, you get a clear profitability ratio. This not only shows profit per partner but also helps in segmenting partners based on their profitability. For instance, a partner contributing high revenue but with substantial support costs might have a lower profitability ratio compared to a low-maintenance partner. This insight allows for strategic adjustments in resource allocation and partner engagement, aiming for a more balanced and effective partner program.

From my perspective, Partner Lifetime Value (PLV) is a vital metric, offering a long-term view of a partner's worth. It's not just about immediate gains; PLV represents the total revenue a partner is expected to generate over the duration of your relationship. To estimate PLV, multiply the average annual revenue from a partner by their retention rate and lifespan. This approach underscores the importance of nurturing long-term partnerships rather than focusing solely on short-term gains. It encourages investment in relationships that promise sustained growth and stability, a strategy that often proves more beneficial in the long run.

In my opinion I believe that talking about profiatbility is highlighting Partner Performance. These are the important points to really have a look at 1. Partner Conversion Rate: The percentage of leads or referrals from partners that convert into paying customers. 2. Partner Churn Rate: The rate at which partners discontinue their involvement in the program. 3. Partner Contribution Margin: The profitability of partner-generated sales, factoring in partner commissions and associated costs. These will valuably contribute to rewarding the top performing partners.

This whole article is a textbook case of how to run a partner program directly into the ground. It concentrates exclusively on "What revenue does the partner give me" and only briefly mentions in the form of Partner Satisfaction what you can do for your partners. True enduring partner programs come from companies that understand partnership is a two way street. You need to measure the revenue they are sourcing and influencing, but you also need to measure how successful you are making your partners. Are you driving leads/opportunities to them? Are you co-marketing? How many opportunities have you generated together? Only by concentrating on both the near term (my revenue) AND long term (their revenue) can you make a successful program.

There is another indicator of a successful partner program: number of leads sent to partners. This KPI might seem irrelevant as it is focused on “giving” rather than “getting”, but partnerships are based on reciprocity and a giving motions sets the foundation for a flywheel of opportunities generated by partners, and so revenue.

My key metrics for measuring partner program ROI’s would be - Signup rates - How many new partner signups do you get per week, per month, per year? Rate of conversions - How many partnership discussions VS how many actually sign up to the program? Sources - what kind of sources are you receiving from your partners? Active partners - as a % who is still active and who is not? Inactive partners - track who is inactive, why, timelines and amount Types - who are the go-to partners and what does this tell us about new market penetration possibilities? Commissions - monthly paid commissions VS total turnover? Lead quantity and quality - How many leads are being past across, how often and are they high-value leads?