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The 80:20 rule – does it still apply?

by | Jun 14, 2022 | Blog

The 80:20 rule – does it still apply?

In my experience, vendors accept that a large swathe of their partners will be inactive, or opportunistic. Research supports that there is a Pareto Law of revenue distribution from partners where the  lion’s share of revenue  is generated by a small group of partners . However, is that still the case in the changing landscape of an annual recurring revenue (ARR) model?

Historically, maintaining a meaningful relationship with partners was a manual task. So periodically, inactive or underperforming partners would get phased out in favour of more engaged partners. From the vendor’s perspective, the partner team could only look after so many partners and the smaller revenue earners simply didn’t justify a 1:1 relationship. The global shortage of talent in the technology sector is impacting this still, as good, and experienced partner account managers are hard to find.

80/20 pie chart

With the move towards ARR, some would argue that consistent, regular monthly income is worth its weight in gold, even if small. With good customer retention rates, you can accurately forecast turnover, and accommodate even the smallest of partners with a predictable revenue flow.  This becomes an efficient model when you have a channel automation and engagement solution that delivers what the partner needs in terms of assets, enablement, resources, and tools. The software must provide an excellent partner experience from which partners can self-serve 24/7 because it is likely that they are not visiting your portal daily, so it needs to be intuitive and easy to use.

Be wary, though, as ill-conceived partner recruitment can still clog up the systems and create mountains of work which can be avoided with a prescriptive approach to partner selection – which need not only revolve around revenue targets. Here are tips towards an efficient process that avoids “culling” partners but keeps a constant finger on the pulse of who should be in your partner community. 

1. Automation Platform – your first choice

Firstly, pick an automation platform that takes care of your day-to-day tasks so that the channel team is free to build the partner relationships and progress joint opportunities. We see daily how different vendors have different requirements dependent upon the complexity of their solution, the size of the community, and many other criteria. We recognise that there is no one-size fits all solution. However, our experience shows there are some clear guidelines. 

Simply put: your channel automation and engagement solution should be very good at the things you do most often. For more complex sales cycles you will need to build sales playbooks (which pull together the appropriate assets in one place). You may need to build marketing campaigns for your partners, or it could be all about enablement and training. The portal should present a simple shop window to your partners – showcasing all they need to know and do, tailored to different roles, or partners.   

2. Pick Your Partners

Partner recruitment should not be a random process, but you need to apply and maintain decision criteria for your partner selection. It is well documented that partners have more choice with thousands more solutions in the market today, creating a competitive maelstrom of noise. To stand out and differentiate is a challenge, and you may be excited when a potential partner comes knocking, but don’t just accept anyone who signs a loose agreement. This route will cost you time, wasted effort, and money.  The criteria you use to select your partners defines you and the relationships going forward. They need to be well thought-out, documented, and most importantly maintained with a regular revisit to ensure that partners still meet the criteria. 

This regular survey or review can expose useful information; they may be focused on a new vertical or have opened a new office, and this helps to build a picture of how you map to one another now and over time. This information will also ensure you serve the right information to the right partner on your portal as you should be able to segment and slice and dice your partners into different categories and then apply visibility filters to ensure they see the information that is relevant to them. This filter should be applicable to the partner company and the individual (sales, marketing, or technical). 

3. Think Partner Community 

Many vendors now think of their partner community as an ecosystem where partners can do better when they work together. Partner-to-partner is increasingly seen by your partners as a source of leads and opportunities and competition has become cooperation and collaboration. We like to see vendors helping with this and facilitating interaction and connections between different partners. We have seen 1st-hand how this helps the partner ecosystem flourish. Your portal can be the conduit for this, as you track specialisms, monitor enquiries, and match your partners together to take advantage of opportunities. 

4. Gap Analysis with Data 

Using and maintaining your selection criteria and applying some intelligence, with good dashboards and data analytics, will enable you to see the gaps more accurately in your partner coverage. You may have a partner in all your locations, but do they cover all the products, verticals, and sectors you need to be successful?  This analysis is not possible without an understanding of your partners’ specialities, growth, visions, and plans. How does this relate to the 80:20 rule? A small niche partner may be considered the “long-tail” and only contribute a fraction of the revenue, but they may influence the deal and create opportunities for other partners or fill a capability gap in a region. Only a deeper understanding of your partners will give you this data so you can make data-driven decisions rather than “seat of the pants” culling because a partner didn’t make the cut.

5. Partner Satisfaction Survey to Make Sure You are Doing it Right 

Adding more data to this picture can only be helpful and we find vendors who operate a regular Partner Satisfaction Survey have a greater understanding of their channel. And their partners feel more included and involved as their opinion has been canvassed. Although these are generally automated online surveys, adding a few 1:1 depth interviews can provide you with the anecdotal background to the data and can be worth the extra time and effort. The key to breaking the 80:20 rule is ensuring that your systems and processes take care of the mundane and repetitive tasks involved in looking after partners who only bring in a small revenue stream. They could be niche but be a vital cog in the wheel of your partner ecosystem, so don’t cull, but enable and empower, with tailored access to the tools and assets they need to continue to work with you automatically. The decision to maintain and empower the “long-tail” of partners can be endorsed by data collected on your portal, through the partner selection process, and with the addition of a regular satisfaction survey to ensure you are meeting the requirements of partners so that they stick with you. 

Remember that automation doesn’t replace face-to-face or 1:1 interaction, it just makes them possible by removing the everyday clutter and repetitive tasks

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