Partnerships are a powerful way to grow your business, reach new audiences, and create value for your customers. But how do you know if your partnership programs are working? How do you measure the return on investment (ROI) of your partnerships? How to Track Partnership KPIs.
The answer is to track your partnership key performance indicators (KPIs) and metrics. These are the data points that help you evaluate the performance and impact of your partnerships. By tracking these metrics, you can gain insights into what works and what doesn’t, and make informed decisions to optimize your partnership programs.
In this article, I will share 10 key metrics and KPIs that I recommend tracking for your partnerships. These metrics will help you assess the effectiveness of your partnerships across different dimensions, such as revenue, customer acquisition, retention, and engagement.
1. Revenue Generated
The most obvious and important metric to track is the revenue generated by your partnerships. This is the amount of money that your partnerships bring to your business, either directly or indirectly.
Direct revenue is the revenue that is directly attributed to partnerships. This includes tracking the deals that are closed with partner involvement, such as referrals, introductions, co-selling, or co-delivery.
Indirect revenue is the revenue that is influenced by partnerships, but not directly attributed to them. This includes tracking the uplift in sales or retention that is caused by partner activities, such as co-marketing, co-branding, or cross-selling.
To track revenue generated by partnerships, you need to have a clear and consistent attribution model that defines how you assign credit to your partners for each deal. You also need to have a reliable and integrated system that tracks and reports the revenue data from your partners and your own sales team.
2. ARPU
ARPU stands for Average Revenue per User, and it measures the average amount of revenue that you generate from each customer. ARPU is a useful metric to compare the revenue potential of different customer segments or acquisition channels.
By tracking ARPU from partnership programs, you can compare it to the ARPU from the traditional sales funnel, and see how partnerships affect your revenue per customer. Ideally, you want to see a higher ARPU from partnership programs, as this indicates that your partners are bringing you more valuable customers.
To track ARPU from partnership programs, you need to segment your customers by their acquisition source, and calculate the average revenue that you generate from each segment over a given period of time.
3. Partner Contribution Percentage
Partner contribution percentage is the percentage of your total revenue that is generated by partnerships. This metric helps you assess the overall impact of your partnerships on the business growth.
By tracking partner contribution percentage, you can see how much your partnerships contribute to the top-line revenue, and how this changes over time. You can also benchmark your partner contribution percentage against your industry or competitors, and see how you compare.
To track partner contribution percentage, you need to divide the revenue generated by partnerships by your total revenue, and multiply by 100. You can also break down this metric by different types of partnerships, such as strategic, reseller, referral, or co-marketing.
4. Customer Acquisition Cost
Customer acquisition cost (CAC) is the average amount of money that you spend to acquire a new customer. CAC is a key metric to measure the efficiency and profitability of your customer acquisition channels.
By tracking CAC from partnership programs, you can compare it to the CAC from other channels, such as organic, paid, or inbound. You can also calculate the CAC ratio, which is the ratio of CAC to CLTV, and see how profitable your partnerships are.
To track CAC from partnership programs, you need to add up all the costs associated with acquiring customers through partnerships, such as partner commissions, incentives, marketing, and support. Then, you need to divide this amount by the number of customers acquired through partnerships.
5. Customer Lifetime Value
Customer lifetime value (CLTV) is the average amount of revenue that you generate from a customer over their entire relationship with your business. CLTV is a key metric to measure the long-term value and loyalty of your customers.
By tracking CLTV from partnership programs, you can compare it to the CLTV from other channels, and see how partnerships affect your customer retention and loyalty. You can also calculate the CLTV ratio, which is the ratio of CLTV to CAC, and see how profitable your partnerships are.
To track CLTV from partnership programs, you need to estimate the average revenue that you generate from a customer acquired through partnerships over their lifetime, and multiply it by the average retention rate of these customers.
6. Conversion Rates
Conversion rates are the percentages of leads or prospects that move from one stage of your partnership funnel to the next. Conversion rates are important metrics to measure the quality and quantity of your partnership pipeline.
By tracking conversion rates at various stages of your partnership funnel, you can see how effective your partnerships are at generating and closing opportunities. You can also identify the bottlenecks or gaps in your partnership funnel, and optimize your partnership strategy accordingly.
To track conversion rates at various stages of your partnership funnel, you need to define the stages of your partnership funnel, such as lead, opportunity, closed deal, and renewal. Then, you need to calculate the percentage of leads or prospects that move from one stage to the next, and compare it to your benchmarks or goals.
7. Partner Engagement
Partner engagement is the level of activity and collaboration that your partners have with your business. Partner engagement is a crucial metric to measure the health and satisfaction of your partner relationships.
By tracking partner engagement, you can see how active and involved your partners are in your partnership programs, and how this affects your partnership outcomes. You can also identify the most and least engaged partners, and segment them accordingly.
To track partner engagement, you need to monitor various indicators of partner activity, such as the number of leads generated, marketing activities, training sessions, feedback surveys, and communication frequency.
8. Churn Rate
Churn rate is the percentage of customers that stop doing business with you over a given period of time. Churn rate is a vital metric to measure the retention and satisfaction of your customers.
By tracking churn rate from partnership programs, you can compare it to the churn rate from other channels, and see how partnerships affect your customer retention and satisfaction. You can also analyze the reasons for churn, and take actions to prevent or reduce it.
To track churn rate from partnership programs, you need to divide the number of customers that churned from partnership programs by the total number of customers from partnership programs, and multiply by 100. You can also break down this metric by different types of partnerships, or by different time periods.
9. Marketing Qualified Leads
Marketing qualified leads (MQLs) are the leads that have shown interest in your product or service, and are ready to be passed on to your sales team. MQLs are a key metric to measure the effectiveness of your co-marketing activities with your partners.
By tracking MQLs from co-marketing activities, you can see how many leads you generate from your joint marketing efforts with your partners, such as webinars, ebooks, blogs, or social media. You can also evaluate the quality and relevance of these leads, and see how they convert into sales opportunities.
To track MQLs from co-marketing activities, you need to define the criteria for qualifying a lead as an MQL, such as the source, behavior, or demographic of the lead. Then, you need to count the number of leads that meet these criteria from your co-marketing activities.
10. Partner Performance Scorecards
Partner performance scorecards are the reports that summarize the performance and impact of each partner on your business. Partner performance scorecards are essential tools to track, evaluate, and improve your partner relationships.
By developing partner performance scorecards, you can track the key metrics and KPIs that matter for each partner, such as revenue, ARPU, CAC, CLTV, conversion rates, engagement, churn, and MQLs. You can also identify the strengths and weaknesses of each partner, and provide feedback and guidance for improvement.
To develop partner performance scorecards, you need to select the metrics and KPIs that are relevant and aligned with your partnership goals, and set the targets or benchmarks for each metric. Then, you need to collect and analyze the data for each partner, and create a visual and easy-to-understand report that shows the performance and impact of each partner.
By tracking these metrics, you can gain a comprehensive view of your partnership ROI and make data-driven decisions to optimize your partnership programs.
If you are interested in other metrics and in particular in looking at what is going and what is not going in the medium to long term, I suggest you take a step back and read my article about OKRs.