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Some vendors believe recruiting more partners will lead to higher revenue growth; the reality is focusing on existing partners is often more advantageous.
Vendors always want to grow revenue and market share with partners. The conventional wisdom is that more partners equal more revenue, and vendors will then seek recruiting more partners in that pursuit.
This approach overlooks a crucial reality: 90-95% of channel revenue typically comes from just 5-10% of partners. Rather than diluting resources on recruitment, vendors should focus on developing their existing partner base.
Effective channel optimization requires:
- Identifying partners with untapped market access
- Removing barriers to partner investment
- Creating targeted expansion plans
- Maintaining sustainable wallet share (5-10%)
Success in channel sales depends on strategic enablement of current partners, not continuous recruitment. Vendors who focus on optimizing existing relationships often see better returns than those pursuing partner quantity.
While visiting Singapore, Channelnomics’ Larry Walsh muses about this issue of more partners vs. more focus on existing partners. Hear more of his insights in the latest installment of In the Margins.