Building a business case: A guide to uncovering your partner org's revenue potential
If you caught our last (brilliant, glorious, exceptional) article (that went viral), “Why a Partner Activation Funnel is the Key to Co-Selling at Scale”, you’ll know exactly what you’re looking at when you see this diagram:
For those who haven’t read it (and those who have), here’s a quick recap:
This is what a typical partner journey looks like. You’ll notice that it has two glaring holes in it – a dead zone between onboarding and referral, and an engagement wasteland post-referral. These are the phases where most people fail to engage their partner contacts properly, and it’s costing you significant revenue.
TLDR: your partner contact activation funnel is leaky, and your partner contacts (along with their sweet, revenue-driving potential) are falling out the bottom through these two gaps, into the abyss.
In our previous post, we explained how to close these gaps to generate predictable revenue at scale.
In this article, we’ll explain why you really, really should.
You know what they say – money talks! And if you listen very carefully, it’s telling you it’s time to calculate a business case for advanced partner activation and co-selling!
Here’s how you do it.
Let’s talk business
So, how much revenue is falling out the bottom of your leaky partner contact activation funnel?
This is probably the wrong question.
A better question to ask would be: how much additional incremental revenue could I gain by
1. Activating more partner contacts and
2. Applying systematic co-selling to plug the two big holes in my funnel?
There’s an easy way to work it out, with the help of this handy Business Case Calculator Template (note: you might have to request access to the file and then copy it, so you can add your numbers):
The business case calculator has two sections. In the first, we’re going to calculate the revenue impact of activating more partner contacts (and driving more referrals). In the second, we’re going to calculate the revenue impact of more systematic co-selling.
Ready? Let’s go!
A. Calculating the impact of activating more partner contacts
It’s really this simple: better partner activation drives more referrals. If you engage more people, more systematically, the result will be that more of them know you, trust you, and feel valued, which means they’re more likely to drive referrals your way.
But what does this look like in monetary terms?
Let’s find out!
It might be a good idea to open the business case calculator template on your second screen/in a second window so you can follow along as we go.
The calculator will do a lot of the math for you (you’re welcome!), but here are the steps to follow.
Step 1: Calculate how many partner contacts you have in your ecosystem.
These are individuals employed by your partners with whom you have established connections, and who are recorded in your CRM as “Contacts”—the people who can bring you deals.
Remember, we’re looking at partner contacts – not partners – because it’s the individual people who work for your partners that you need to activate in a systematic way.
For the purpose of this exercise, let’s say the number is 1000.
Step 2: Input the number of partner-sourced deals.
This is the number of deals these people have sourced in the last year.
Step 3: Calculate (or estimate) how many of these partner contacts are actually active.
One way to determine an active contact is by looking at the last activity date. Anyone whom you haven’t engaged with in 6-12 months can (and should) be considered inactive. Normally, it’s about 10-20% in an average ecosystem at most. We’re going with 20% here.
Step 4: Calculate how many deals an activated contact generates per year.
The calculator will give you this number based on your other inputs. In this case, we get 0.25 per contact, per year.
Step 5: Calculate how many of these partner contacts are passive/inactive.
With 1000 contacts in our ecosystem and 20% of them active, we’re left with 800 passive/inactive contacts. This is also calculated automatically.
Step 6: How many passive/inactive contacts can you activate?
You’re not going to be able to activate them all. There are a lot who are either irrelevant, or just aren’t doing stuff with you. That’s fine.
This number shouldn’t be too aggressive – realistically, it’ll be between 10-30%.
We’ve gone with 15% for this example.
We do recommend to think in scenarios when it comes to this input, e.g. worst case (5%), expected case (10%), best case (15-20%).
Step 7: Calculate potential additional partner-sourced deals.
We’ve got 800 inactive partner contacts. We can activate 15% of them. Each activated partner contact brings in 0.25 deals a year. That’s 30 additional deals. (you don’t need to do this math - the calculator’s got you covered here, too!)
Step 8: Input your average contract value per referral.
Let’s say your average is $30,000 per deal.
Step 9: Calculate incremental revenue generated by activating passive contacts.
30 additional partner-sourced deals at an average of $30, 000 per deal = +$900,000.
Boom. Mic drop. Explosions. Don’t look back at the explosions.
B. Calculating the impact of systematic co-selling
Right, now that we’ve calculated the impact of activating more partner contacts in our funnel, let’s calculate the impact of more systematic co-selling.
When we talk about systematic co-selling, we’re talking about the process of bringing a partner contact into the sales process systematically by aligning them with your AE and working together to close. By doing this, your partner contact can help support the AE, increasing win rates and deal sizes, and reducing sales cycles.
Let’s take a closer look at how we calculate the impact of systematic co-selling.
Remember, the calculator works out most of these values for you.
Step 1: Input your current close rate for partner-sourced deals.
If the partner source is a referral, how many of those do you close, on average?
For this example, we’re going to say 23%.
Step 2: Input the number of partner-sourced deals.
This should be your current partner-sourced deals, PLUS the additional ones you’re going to generate via better systematic activation of passive contacts, as calculated above. This will be calculated by the calculator, based on your previous inputs above.
Step 3: Input the estimated improvement of your close rate via better partner activation and proactive co-selling.
In our experience, 25% is a safe value to input here. According to other research (and our data), it’ll be between 25-50%. We recommend you choose a value between 20-30%.
Step 4: Calculate your new close rate.
The calculator will work out your new close rate. In this example, the new close rate will be 29%.
Step 5: Calculate the number of additional partner-sourced deals.
A 25% increase in our close rate means we generate 20 additional deals.
Step 6: Calculate incremental revenue generated by systematic co-selling.
20 extra deals at an average of $30, 000 per deal = +$600,000.
Another boom. Mic drops again. More explosions. A marching band.
TOTAL IMPACT OF FIXING THIS COMPANY’S LEAKY PARTNER CONTACT ACTIVATION & CO-SELL FUNNEL: $1,500,000.
Need we say more?
Okay, we might say a little more!
Use the above business case calculator template to create your own business case for a systematic approach to partner contact activation.
And once you’ve got your “why”, Superglue can help you with the “how” by unlocking a programmatic approach to driving predictable partner-sourced revenue at scale.
You’ll be on your way down predictable revenue avenue in no time!
But don’t take our word for it, because we are biased!
Get in touch for a free demo and we’ll show you how it works.
What have you got to lose?
(Apart from a whole bunch of money, as you now know for sure…)
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