How much would you pay for a Partner Portal and Partner Relationship Management System?
Rather than give you some hard fast number or some crappy ROI equation showing how revenues increase and costs decrease, etc. with a Partner Portal and Partner Relationship Management solution, I’m going to give you some tools for how to think about most any technology investment.
We invest in any technology for two reasons:
- To manage and streamline processes
- To analyze patterns and make decisions to create more value in our organizations
How much you should plan to invest in a system will depend on your circumstances. In other words, the complexity of your workflows and processes and volume of data to create actionable information that needs to be analyzed.
One thing is for certain: The cost of information management is a constant. If you under invest in the technology, you will create costs due to inefficiency and lack of decision-making ability. So if you purely look to reduce your expenditure on technology, you may be creating phantom costs and you will likely be restricting your ability to grow.
Every company reaches equilibrium with their ability to process information and make decisions. If your information system is spreadsheets, word docs, or emails, you can probably manage 10 to 20 partners effectively. If you try to manage more, you will find that partners start dropping off as you add new ones as you reach your plateau.
Lets use a real world example to illustrate:
Deciding to build a channel is like deciding to become a homebuilder for a living. If you were going to build homes for a living which tool set would you invest in?
Again, your investment depends on your circumstances.
If you plan to build one house every two years, toolset A might suffice.
If your circumstances are that you’re serious about becoming a homebuilder and planning to build hundreds of homes each year you will need to make an investment in toolset B.
In too many cases, I have seen people launching a channel with the strategy of investing in toolset A first and then if it works, we’ll invest in toolset B. Planned failure!
So how does this translate to what you should pay?
- If you are launching a program and are serious, you need to compare the technology investment to the planned channel revenue. Otherwise you will make the mistake of choosing toolset A.
- If you have an emerging channel program it’s reasonable to have your toolset cost you 3% to 5% of your channel revenue per year. As your program scales, the toolset cost should decline as a percentage of your channel revenue.
- Be mindful as you scale where you may be outgrowing your toolset. Toolset C will likely be a major investment. To continue our homebuilder analogy, toolset C would be akin to building a prefabrication factory to manufacture walls, roof trusses and cabinetry. Now you can build 10,000 homes per year.
So, in closing:
- If you underinvest in your channel launch, plan to fail.
- As you grow your channel, technology should be a declining percentage of the channel costs. Reinvest in any tool that will help you streamline a process or give better visibility into performance.
- Plan ahead for a major investment and complete retooling if your channel program has the potential to grow substantially. Underinvesting in time or late investing here can be more catastrophic than when launching a program as you have much more to lose.
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