The 80/20 rule, also known as the Pareto Principle, is simply an unequal relationship between inputs vs. outputs. This principle can be applied to many measurables: time, revenue, and even communication. In terms of channel networks, those suffering from the 80/20 rule means that the top 20 percent of partners in the network drive 80 percent of the revenue.
Effects of the 80/20 Rule on the Channel Network
One of the most obvious effects of the 80/20 rule in a channel program is lost opportunities. The top performing partners are likely to be dispersed throughout the network. Likewise, so are their skills and sales. Revenue will increase significantly increase when the 80/20 rule is offset.
However, the 80/20 rule affects more than just profitability. Interactions with customers are likely to differ from partner to partner, territory to territory, and region to region. A channel network should deliver an excellent and consistent customer experience for more than just 20 percent of the network.
5 Contributors to the 80/20 Rule
Those networks hinging on the 80/20 rule didn’t happen that way overnight. In fact, the millstone doesn’t solely lie with channel partners. Multiple groups contribute to the Pareto Principle in the channel environment. A few contributors to the 80/20 rule in partner networks include:
1. Disengaged Partners
Too many channel programs make the mistake of over-recruiting partners. As a result, training teams are unable to provide the majority of channel partners with adequate training. Additionally, an overflux of partners means less time for onboarding. Left out of the know on multiple levels, channel partners are less likely to engage with materials, training, local teams, and even customers. Lack of engagement is detrimental. As LogicBay states, “Engagement is the cornerstone of any channel management strategy.”
2. Outdated Sales Literature
Outdated sales literature is another contributor to the 80/20 rule in channel programs. There could be many factors leading to this. Marketing or sales enablement teams may be at their bandwidth. New or updated documents aren’t produced due to lack of resources and personnel. Some salespeople who can’t find the correct content will distribute the wrong or outdated content. And some may even begin to create their own unique material.
3. Inadequately Trained Channel Partners
Channel partners who lack proper training are huge contributors to the 80/20 rule. Poor training or no training leads to information gaps. Customers in different territories may receive an entirely different presales process and customer experience. While the top 20 percent may be knowledgeable and perform well, the other 80 percent is ill-informed and missing out on mindshare.
4. Poor Access to Resources
Have awesome resources? Do your channel partners know how to access them? If you’re using a PRM, portal, or another software type ensure that every partner understands how to use it. Additionally, frequent innovations should follow with new supporting content to an asset library. However, many partners struggle to keep up with content churn or don’t know when there are updates. Partners should use and access a central library to keep up with the right content as well as the right amount of it.
5. Lack of KPIs
Defining KPIs (key performance indicators) is the first step towards making data-driven decisions. Some KPIs may be high level—the number of channel partners and those that have completed certification paths—but there are other KPIs to consider measuring. PartnerPath named a few KPIs to start tracking. These KPIs include marketing effectiveness, partner engagement, and customer satisfaction.
Overcoming the 80/20 Rule
One of the easiest ways to overcome the Pareto Principle is to keep it simple. Allbound, a company dedicated to partner sales acceleration, says it best: less is more. Invoke simplicity with open access to content and partner requirements. One other suggestion is to use software to streamline training and onboarding processes.
Moreover, you can eliminate multiple contributors to the 80/20 rule through training and incentive program alignment. When value propositions, training programs, and incentive programs are all aligned, engagement is driven. Ensure that stakeholders from all of these groups sit down to identify goals. In addition to goal setting, KPIs should be defined for all parts. This will provide measurables to help define success in the channel program.
Learn how channel network training teams are overcoming training challenges with our free ebook: Training Channel Partners: How To Deliver Excellent (And Measurable) Training in Today’s Channel Partner Network.