Companies that rely on an indirect sale and/or delivery model to get their products and services to market, face the issue of properly equipping their partners with the right data and supporting them with the right content.
Employing effective channel relationship and sales managers to support their Distributors, Resellers, Solution Providers, Dealers or Agents gives these companies a competitive edge. Yet for ongoing support functions like partner onboarding, lead registration, opportunity management, sales forecasting and self-service support, manual processes become increasingly time-consuming, costly and impossible to scale. Partner Relationship Management (PRM) software solutions can automate many day-to-day partner maintenance functions and enable channel managers to stay focused on strategic activities like partner recruiting and pursuing high-value sales opportunities.
Most channel-driven “sell with” and “sell through” companies are already managing a lot of their data with a CRM application like Salesforce or Dynamics CRM. This can be effective for internal data and processes but does little to remove the manual processes that involve external stakeholders such as channel partners. Integrating a PRM solution can create new efficiencies by delivering an integrated, collaborative, data-driven approach to all the partners in your sales channel.
Determining the ROI of PRM
A comprehensive PRM community solution can have a big impact on your partner program by increasing efficiencies, reducing costs and reducing barriers to revenue growth. To determine the size of this impact, you will want to evaluate the potential growth in revenue driven by collaborative, well-supported channel partners as well as the cost savings of switching channel processes from a spreadsheet-based model to an integrated PRM solution.
Revenue upside will be the result of increasing the number of leads and opportunities, increasing close rates and deal sizes. You can expect leads and opportunities will increase due to the enhanced visibility provided by the PRM solution. Close rates and deal sizes should also improve with access to sales tools, targeted support, training and incentives. Many organizations that have implemented PRM solutions see increases in channel-driven revenue of at least 10% with some as high as 40%.
On the cost-savings side, you’ll see the impact in the reduction of direct expenses as well as time savings from more efficient sales processes. In many cases, a PRM solution will replace several disparate applications such as:
- Content management systems
- Community platforms
- E-commerce platforms
- Channel sales performance management applications for gamification, incentive management, etc.
- Third-party storage apps such as Dropbox
- Analytics/data visualization apps
- Learning Management Systems
- Helpdesk applications for support tickets, knowledge bases and FAQs
- Integration “middleware” or API coding to integrate with email marketing, CRM or other business applications
A cloud-based PRM application also eliminates many IT and operating expenses related to managing a PRM platform in-house including hardware/network infrastructure capital costs and maintenance, software and database costs, and development and integration.
Efficiencies created by a cloud-based PRM portal solution include increased data accuracy and reduced data quality costs. Data such as forecasts, support cases, and contact details are significantly more accurate as partners are able to maintain their own account details in a centralized place. Partners can communicate their ideas with peers and channel managers in a community. Their employees can complete role-based training courses on their own time, and OEM vendors or manufacturers/publishers can track certifications in their CRM system.
ROI Calculation Example
Allow us to introduce ACME Industries. (Not a real company). They have 10,000 partner contacts around the world that need role-specific access to a partner community for sales, support, training, marketing collateral access and presentation materials.
Let’s say a cloud-based PRM subscription runs about $2,000 per month and when you add in implementation and the cost of an administrator, your total first-year investment might be about $94,000. Next you will want to add up the cost savings from eliminating the redundant applications, licenses and infrastructure. This could vary quite a bit depending on your environment but let’s take the costs of content management (CMS), Learning Management (LMS), B2B e-commerce, sales performance (SPM), BI/analytics, community platform, and estimated development costs which would be required to deliver PRM functions. Licensing alone would be about $250,000 annually and when you add infrastructure and administration costs, you could be looking at $400,000 a year.
Another important factor in the business case for PRM is your channel management team efficiency. Channel Managers will be able to handle more partners each so there will be cost-saving in headcount as your partner program grows. For ACME Industries, this means additional savings of $100,000 for a total cost-saving of $500,000 annually.
Now, let’s add a conservative estimate of revenue upside. If ACME Industries increased their revenue from channel partners by only 5% and it added just $500,000 to the ROI calculation, the net benefit of the PRM solution would be $1,000,000 on an investment of less than $100,000.
Based on this example, for every dollar you invest in the PRM solution, you will generate a rough ROI of $9.00. Sound too good to be true? Try your own calculation and let us know what you come up with.
Check out some of our PRM customer successes to find out how our customers have created additional efficiencies for their channel/reseller/service provider partners themselves. We have helped hundreds of our customers optimize the time their channel managers spend with their distribution/reseller counterparts and assisted just as many generate more sales at higher margins while reducing administration costs.
Would you like assistance to build a business case for a Partner Relationship Management community portal for your organization?
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