Latest / Partnerships Unraveled / 051 - Breaking the 80-20 Rule: Strategies for Increasing Channel Partnerships and Profitability

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051 - Breaking the 80-20 Rule: Strategies for Increasing Channel Partnerships and Profitability · Partnerships Unraveled

• 0:07
  Speaker 2: Welcome back to Parking Ships Unraveled, the podcast where we unravel the mysteries of Parking Ships and Channel on a weekly basis.
• 0:14
  Speaker 2: My name is Rick van der Bosch and I'm the CEO and founder at Chennext, and I'm here together with Alex Wittford, vp Parking Ships at Chennext.
• 0:21
  Speaker 2: Alex, how are you doing today?
• 0:23
  Speaker 1: Yeah, I'm really good.
• 0:24
  Speaker 1: It's a bit of a weird episode because we just celebrated episode 50 and next week we celebrate episode 52, which will be one year.
• 0:31
  Speaker 1: So yeah, we're at a weird intersectional point where I've got nothing to celebrate, but we're between two good gates, a bit nerve-breaking.
• 0:39
  Speaker 2: Yeah, something like that Final episode, excellent, I think.
• 0:42
  Speaker 2: Actually, we have a very interesting topic for today, to my humble opinion, which is Perita's principle or the 80-20 rule.
• 0:50
  Speaker 2: I think that's one of the conversations at least you and I are having all the time with vendors, because everyone is talking about it and everyone says, yeah, no, 80% Of my revenue is with 20% of my partners, and today we're actually going to dive into what is that rule exactly and what are the risks and the benefits of that.
• 1:08
  Speaker 2: But maybe to start with, what is the 80-20 rule or Perita's principle even?
• 1:13
  Speaker 1: Yeah, so I can't remember his first name, but Perita was an economist in the early 1900s from Italy and I think he noticed that 80% of land was owned by 20% of people and it triggered something in his mind.
• 1:27
  Speaker 1: So he started doing lots of research around this 80-20 rule and it seems a fairly consistent rule of life, which is 80% of creative actions, 20% of creative actions deliver 80% of the impact.
• 1:42
  Speaker 1: So you can break that down into well, thought of productivity and there's lots of areas that you see it.
• 1:47
  Speaker 1: But fundamentally in sales you will hear that 80% of revenue comes from 20% of sales.
• 1:53
  Speaker 1: People or in the channel will be 80% of revenue comes from 20% of partners.
• 1:57
  Speaker 1: It seems to be a fairly consistent rule.
• 2:00
  Speaker 1: I think even he worked out that 80% of crop yields comes from 20% of crops.
• 2:05
  Speaker 1: So it's even in nature.
• 2:06
  Speaker 1: But I think sometimes we're grounded to this rule and we think it can't be broken and I think that can help guide, focus and sometimes and we'll discuss in this episode where it can actually break systems because people believe it too much or not enough.
• 2:23
  Speaker 2: And I think that's what we hear a lot right when even it's not just 80-20 rule with 80% coming from those 20% of partners, but in a lot of partner programs up to 80% generating no revenue at all.
• 2:35
  Speaker 2: And I think that just hurts, if you think about it, because we're spending so much resource into recruiting new partners but because we can't keep their attention and keep them engaged, actually a lot of them are dropping out and are not generating revenue anymore, or many of them actually never generated any revenue at all.
• 2:54
  Speaker 1: Yes, and to me it's funny because I think a lot of people just accept that it's a rule of life, which is absolutely not the case.
• 3:03
  Speaker 1: Right, it's a generalized rule and in some cases it can help drive performance because you can apply focus.
• 3:10
  Speaker 1: But if you're a CEO, you're a hiring manager, and if you said four out of five people will deliver no impact, shall we hire them?
• 3:20
  Speaker 1: You're like, well, no, that'd be a terrible reason to hire people.
• 3:23
  Speaker 1: So we understand that sometimes the rule doesn't work.
• 3:25
  Speaker 1: Yet in the channel, we find it very acceptable to recruit four out of five partners who will ultimately deliver next to or no revenue.
• 3:34
  Speaker 1: And so today we want to discuss where the benefits are, where can we break the 80-20 rule and how to break it best.
• 3:42
  Speaker 2: Yeah, I think that's actually a good point to start.
• 3:44
  Speaker 2: Why do we think that this 80-20 rule exists within the channel?
• 3:48
  Speaker 1: There's a couple of reasons why the 80-20 rule is a really consistent thing is there's two things that you cannot guarantee across all partners.
• 3:57
  Speaker 1: One is effort and two is quality.
• 3:59
  Speaker 1: So some partners just work harder, work better, work more efficiently and therefore will always deliver an outsized return.
• 4:08
  Speaker 1: I think I once heard someone talk about.
• 4:10
  Speaker 1: You know, capitalism is a game and some people play it, like Michael Jordan, right, they're obsessed with it, they're working all the time, they are always going to outperform most people, right, because they just do more high quality work for longer periods of time, and so that is why, very typically, an 80-20 rule occurs.
• 4:29
  Speaker 1: What's interesting about the channel and what's interesting about partnerships in general is there is very clearly across all vendors, an 80-20 rule within partners.
• 4:38
  Speaker 1: So 80% of revenue does come from 20% of global partners.
• 4:43
  Speaker 1: The interesting thing around the way the channel works is we all know who those partners are, and that means that all the vendors are focused on the same group of partners trying to win in that very, very competitive landscape, when actually there's loads of partners who potentially could be doing a lot more.
• 5:01
  Speaker 1: And this is where the 80-20 rule becomes a self-fulfilling prophecy If all of the MDF and all of the focus goes into that top 20%.
• 5:08
  Speaker 1: Well, there's probably partners underneath that that are just working just as hard, but they're not getting the same love, care and attention as those top 20%, and so they're not benefiting from that growth as much as possible.
• 5:19
  Speaker 1: So is the 80-20 rule good or bad?
• 5:21
  Speaker 1: I think it depends if you're winning.
• 5:23
  Speaker 2: Yes.
• 5:24
  Speaker 2: So what you say is that we kind of keep the 80-20 rule in place ourselves by the behavior that we're driving and they're rewarding incentives for those top tier partners, which on one hand, makes sense because the majority of the market is actually in the hands of those top partners, but on the other hand, there's so much more potential behind that and it's also a big risk, right when you work with the top partners only and everyone is fighting for that competition like how do you know that next year you are still the preferred supplier versus another vendor, because there's like a lot happening within those partners as well.
• 5:56
  Speaker 1: Yeah, and the really interesting thing is is it better to be the fourth best vendor in a product category at one of those top partners, or is it better to go down the road to a partner who's less successful by binary metrics but you're their preferred partner?
• 6:11
  Speaker 1: And this, I think, today what we want to discuss is, in some instances you absolutely want to be playing into the 80-20 rule, focusing on that top 20% of partners, but in other instances it's much better to be, you know, winning all the mindsham, winning all the wallet share of a smaller partner, but that's very dedicated and very focused on you, and I sort of call this the rising star potential.
• 6:32
  Speaker 1: If you only focus on that top 20%, you'll never find the next rising star that's actually going to grow into that top 20%, because you're just spending all your time, all your focus, all your MDF spend on that top 20%, and that's really an unsustainable and highly competitive way of growing.
• 6:52
  Speaker 2: Yeah, let's dive into the risks of that model actually in a bit Maybe.
• 6:56
  Speaker 2: Maybe we can start a little bit with the benefit.
• 6:58
  Speaker 2: So let's say you are a channel organization and indeed that 80-20 rule applies Like are there also benefits for a channel team of having the 80-20 rule in place?
• 7:08
  Speaker 1: Yeah, very simply, if there's one area to win, it's in that 20% of partners.
• 7:11
  Speaker 1: Right, if you know that you can only manage, let's say, 100 partners in the UK, I can tell you which 100 partners you should focus on.
• 7:20
  Speaker 1: So, if you've got very dedicated resource, a very good partner program that's going to win at the top level, a very good product that's going to win consistently, then, yeah, you should absolutely go in, tie all your resource, make your big bet and win within those 100 partners that deliver almost all of the revenue within the UK, and the same is true in Picani territory globally.
• 7:41
  Speaker 1: So, yes, there are very specific factors where it's really important.
• 7:46
  Speaker 1: So a great example would be Microsoft.
• 7:48
  Speaker 1: They dominate the partner landscape, most successful channel in the world, and, while they have hundreds of thousands of partners, they have an 80-20 rule and they absolutely dominate in that top space.
• 8:00
  Speaker 1: That is when the 80-20 rule works perfectly, because they've got a digital partner success strategy for thousands and hundreds of thousands of partners, but they have very, very high performing cams the best cams in the world focused on winning in that subsection that drives almost all of their revenue.
• 8:16
  Speaker 1: That's when the 80-20 rule can be an absolute benefit, because you can tie focus in at the bleeding edge.
• 8:23
  Speaker 2: Yes, that's really as a result of having extreme focus on those specific set of partners.
• 8:27
  Speaker 2: And because it's only a smaller set of partners, you can also invest more human resources into building the relationships with them and making sure that you actually extend and build on top of that fundament that you're actually building together with that partner.
• 8:43
  Speaker 1: Exactly, if you've got enough resource to win one partner in a territory, you want to be picking one of that top 20% who deliver almost all the revenue.
• 8:52
  Speaker 1: You don't want to win partner number 7000 in the UK because actually, while you might win 100% of the wallet share, the wallet share is not very big, it sort of doesn't matter.
• 9:02
  Speaker 1: So absolutely, when you're tying your physical, your actual one-to-one relationship, your MDF, your channel account manager, into a particular subset of partners, you want to pick the highest value partners you possibly can.
• 9:16
  Speaker 1: If you've got the partner program to win, if you've got the partner proposition and the product to consistently win, then pick the most competitive landscape and win in that area.
• 9:27
  Speaker 2: Yeah, because I think that's one of the big benefits.
• 9:29
  Speaker 2: Right, they own the majority of the end user market.
• 9:32
  Speaker 2: So if you win there, you will win big.
• 9:33
  Speaker 2: And I think that's one of the opportunities when you work with the 8020 rule that if you invest a lot of time and resources into those partners and you manage to win, then you might still be quite a small part of their wallet, but their wallet is huge because it's CDW or soft cat who are selling to loads, to loads and loads of end users.
• 9:53
  Speaker 1: Yeah, I mean to continue the Michael Jordan analogy.
• 9:56
  Speaker 1: Right, if you're one of the best basketball players in the world, you want to go and play in the US, the best league in the world.
• 10:01
  Speaker 1: That's where you're going to win the biggest contracts.
• 10:02
  Speaker 1: If you are a smaller fish, you might want to go to a smaller pond.
• 10:06
  Speaker 1: Right, you go play in the Chinese League or whatever.
• 10:07
  Speaker 1: The same is true, right, if you're a absolutely killer brand With a killer proposition and killer, go to market, go and play and win in the most competitive league in the world, which is that top performing partner base 100%.
• 10:22
  Speaker 2: I think those are some excellent points on the benefits of working with the top partners and having that 8020 rule in place.
• 10:29
  Speaker 2: Maybe it's also nice that we dive a little bit into the risks, and I think one point that I would like to give away immediately, which we touched upon a minute ago, is there might be a much bigger wallet within that specific partner, but it also makes it much harder for you to become a significant part of that wallet and therefore, indeed, it's really hard To make sure that you keep the attention and the engagement running all the time, because if you are only 0.5% of their total revenue, will they continuously think about you and continuously like build on top of your product, or do you have to fight all the time to make sure you stay top of mind there?
• 11:05
  Speaker 1: So here's the great thing about the 8020 rule is a double edged sword.
• 11:08
  Speaker 1: Not only are you looking at that partner going all we want to play with them, the partner has an 8020 rule based on vendors.
• 11:15
  Speaker 1: So where do you think they put their resource?
• 11:18
  Speaker 1: They're putting all of their resource, their best candidates, all of their marketing focus, all of their best sales people At the 20% of vendors who generate them the 80% of revenue.
• 11:29
  Speaker 1: And guess what?
• 11:30
  Speaker 1: If you're not in that 20 that generates the 80.
• 11:33
  Speaker 1: If you're not in that top tier, you are getting the worst caliber, the least focus, the least attention, the least desire and the lowest mind share.
• 11:42
  Speaker 1: And so, in that this is where the risk becomes is if you can ensure that you're going to be a winner for them and great, then great.
• 11:49
  Speaker 1: But if you're not, then you're in a really uncompetitive position.
• 11:55
  Speaker 1: I used to use to work at a distributor and I used to manage sort of vendors and the commercial relationship and it was so funny I won't say who the partner was, but every vendor I spoke to be like they're my most important partner globally and I used to think that's really funny because if I go and speak to them and I've got some very good friends at that.
• 12:12
  Speaker 1: They don't even know who you are.
• 12:13
  Speaker 1: Yes, they might do them.
• 12:15
  Speaker 1: You might do a significant amount of revenue with them, because they have millions of end users.
• 12:20
  Speaker 1: It's just business facilitation.
• 12:22
  Speaker 1: They're just selling what they're being asked for.
• 12:24
  Speaker 1: So then why are you pouring resource into it?
• 12:27
  Speaker 1: Because, guess what, if they just every time someone says I want X product, they sell it.
• 12:31
  Speaker 1: You don't need to put time into that relationship and all the time that you put into that relationship is wasted because they're not proactively selling your solution, they're just facilitating your solution.
• 12:41
  Speaker 1: So you need to understand the difference between revenue transacted and revenue generated.
• 12:47
  Speaker 2: That's a very valid point and I think from that perspective as well like, if you want to get more of a steer or guide your channel in a certain direction, that's way harder if you only work with the 80 20 partners, because those large partners are very hard.
• 13:01
  Speaker 2: Like it's like you need to steer the direction of a container ship versus speedboat Right.
• 13:05
  Speaker 2: Like it's really hard to do such a thing.
• 13:08
  Speaker 2: Like, let's say, you have a very important product launch coming up or you have a very important proposition that needs to be translated to the end user market.
• 13:15
  Speaker 2: Such a large partner is not going to do that for you if you are not in their 20 percent top vendors.
• 13:21
  Speaker 2: Indeed, and I think that's where you really need to get a grasp.
• 13:24
  Speaker 2: Okay, what is our strategy, what is the direction that we want to follow, and from there think what type of partners would suit best to get that into the market as efficiently as possible.
• 13:34
  Speaker 1: Yeah, the other thing that I see a lot in that sort of top 20 percent of partners.
• 13:37
  Speaker 1: They know that they're in that top 20 percent and so they run their marketing teams very often as profit generators, right.
• 13:45
  Speaker 1: So they go look, we'll email our thousands of end users and position your product or we'll do a social media post or we'll do some campaign for you, but we want to be paid for that.
• 13:56
  Speaker 1: Because they know they have control of their end user base, they know they can sell access to their end user base and so they monetize that.
• 14:04
  Speaker 1: And so one of the risks is and sometimes it doesn't perform very well and one of the risks is you're going to put 10,000 in, going, oh brilliant, we're going to see a return.
• 14:13
  Speaker 1: Your direct competitor might be putting in two million, might be pouring in resources, because if you're a small brand competing against a very large brand, they are putting most of their marketing resources into those same partners and they're just winning the mind share very continuously.
• 14:28
  Speaker 1: So you've got to ensure that you are getting the best bang for your buck right, Getting the hardest ROI, and sometimes there are far more effective partners in, because it's much easier to win mind share because everyone is competing for that top set.
• 14:41
  Speaker 1: Actually, you only have to go a few partners deeper and go oh, actually I can run an MDF campaign continuously with this partner, generate huge amount of focus.
• 14:50
  Speaker 1: They're really bought into us because they're getting the love from us.
• 14:52
  Speaker 1: We're really bought into them because they're showing us the love and suddenly we can really build a partnership that's continuous and scalable.
• 14:59
  Speaker 2: I think focus really is the name of the game there and that's just much easier with partners that are a little bit smaller.
• 15:05
  Speaker 2: So let's say Max 100 FTE or something like that.
• 15:08
  Speaker 2: More niche, Like those are usually the partners.
• 15:10
  Speaker 2: And what I love a lot of times I hear lately the definition of a boutique partner.
• 15:15
  Speaker 2: I really liked that, Like partners who are very specialized in what they do, maybe an AV integrator or a data specialist et cetera, who do all the configuration et cetera.
• 15:23
  Speaker 2: And those are the partners you can really build that joint value proposition with and proactively put that to market versus more following the market, which are the facilitators, like you just named them.
• 15:35
  Speaker 1: Yeah, there's two ways you can build channel revenue right.
• 15:37
  Speaker 1: One is channel push and one is end user pull.
• 15:39
  Speaker 1: Channel push is typically those boutique partners Unless you're one of the premium brands in the world, it's those boutique partners.
• 15:46
  Speaker 1: That's where a partner hears about a problem at the end user and they proactively position a solution right.
• 15:52
  Speaker 1: So they position this or this brand.
• 15:54
  Speaker 1: End user pull is when an end user says I'm after this brand, right, They've seen the marketing.
• 16:00
  Speaker 1: I used to work at Zoom.
• 16:01
  Speaker 1: We used to get this all the time.
• 16:02
  Speaker 1: I want to buy Zoom.
• 16:04
  Speaker 1: Great channels do both very, very well, but different types of partners will facilitate those different deals and end user pull predominantly is that top 20% of partners because they have access to thousands and thousands and millions and millions of end users and so it's just a funnel right.
• 16:21
  Speaker 1: If lots of end users are asking for different products.
• 16:23
  Speaker 1: If you've got most of the end users in the world, then most often that end user pull is going to come through you, Whereas to really drive and build a channel partner, you're after those boutique partners where you can pour time in and training and enablement and really drive that motion.
• 16:39
  Speaker 1: And what's great about that is, if you do that well, you can start to break down and flatten that 80-20 because your boutique partners, who are less competitive right, Not everyone is pouring time and effort into those particular partners are able to flatten that 80-20 and break that 80-20.
• 16:55
  Speaker 2: Yeah, and I think maybe to slowly start getting into the how do you break it?
• 16:59
  Speaker 2: One final point One of the things I hear time and time again from every VP, channel and global people who are working on that why they so want to focus on SMB partners and more partner breath is that part of the channel is way more profitable Because those top partners they want highest margins, they are on top of your partner tiers within your program, so they get the most discount there and therefore maybe your top line revenue keeps increasing if you pour more energy into that piece, but your profitability won't necessary and that's why everyone is really looking at okay, how can we flatten the curve?
• 17:31
  Speaker 2: Because that will mean a more profitable and more successful company all together and therefore more shine for the channel.
• 17:38
  Speaker 1: I love that one.
• 17:39
  Speaker 1: And I tell you one of the great reasons why that happens is because all of that top 20% right, they don't just sell you, they sell your direct competitor, they sell your other direct competitor and they sell your other direct competitor.
• 17:52
  Speaker 1: What they do is there is a vendor manager who manages the relationship between all of those vendors.
• 17:58
  Speaker 1: The first thing they do they compare margin, they compare rebate, they compare MDF and they negotiate oh we can flip this, this, this a deal across.
• 18:07
  Speaker 1: And they negotiate with the distributor and the vendor to ensure that they are always retaining the best margin possible, because they know they've got you over a barrel, right, they have access to the market so they can control that, whereas there's other vendors more in that SMB space who don't have that same negotiating power.
• 18:24
  Speaker 1: Meaning you can put a bit of time in, put a bit of love in, invest in tooling and automation to drive your play at breath and not have to be held over a barrel and negotiated all the time on every single deal to ensure that the partner is making margin and it can just be a more sustainable win-win relationship, right, and I want to be very clear those top 20% of partners are fantastic, provide a huge amount of value, but it's super competitive.
• 18:49
  Speaker 1: So you've got to make sure that if you want to win within there, you absolutely can do.
• 18:53
  Speaker 1: But you've got to have one of the best brands and one of the best go-to-market propositions on the market and fairly deep pockets and if you get it right it's the biggest return.
• 19:02
  Speaker 1: But if you get it wrong it can really really just be a very slow and painful growth process.
• 19:08
  Speaker 2: Yeah, 100%.
• 19:09
  Speaker 2: And I think actually one of the trends that I see happening more and more lately is that usually we would always say for the long tail that's what we call it right that the other 80% of partners like, oh, there's this distribution, who does that?
• 19:21
  Speaker 2: Or oh, we can't spend any resources on that.
• 19:23
  Speaker 2: And that might be true from a human resource perspective within your channel team, but there really needs to.
• 19:29
  Speaker 2: What I really see is a trend is that everyone wants to become a lot more proactive and get more grip on that long tail and wants to get way more involved as a vendor as well, and I think that's something really interesting to think about.
• 19:40
  Speaker 2: Like, how can we build a skilled partner program really towards that long tail where we can actually facilitate them properly without indeed having the same one-to-one relationships as our 80-20 partners, because that's simply not possible.
• 19:53
  Speaker 2: But I think that that's one of the things and maybe we can touch upon to give some tips there.
• 19:57
  Speaker 2: But I think that's one of the crucial things that you have to think about if you're building a channel and want to get more partner breath in your channel.
• 20:04
  Speaker 1: Yeah, to me, the 80-20 rule is really logical, right?
• 20:07
  Speaker 1: If we just go back 20 years, when the channel was still a huge thing, the technology in the automation just wasn't there.
• 20:13
  Speaker 1: The tooling doesn't exist, so you would go well, I can hire 10 people for my territory, so I'm going to put all 10 people at the accounts where they can deliver maximum impact Makes complete sense.
• 20:25
  Speaker 1: However, the world's not the same.
• 20:27
  Speaker 1: The automation and the tooling isn't the same, and now you suddenly see well, actually, we could digitally drive performance across thousands or hundreds of thousands of partners and generate the return that we need, which is why, when you look at the biggest and most successful companies in the world people like Metta, people like Google yes, they do have contracts with large enterprise, but let's be very, very clear, they make most of their money of consumers, of millions of one person.
• 20:56
  Speaker 1: End users, partners and channel will go exactly the same way.
• 20:59
  Speaker 1: Once you can drive digital performance across the long tail, that's where the breadth of revenue will start to come.
• 21:06
  Speaker 1: The problem is, you just couldn't do that before because we were relying on people, and now we will start relying on tooling and automation, and I think we'll absolutely do podcasts around how you can really digitally drive performance, get some tips and tricks there, but that's, for me, is going to be the big shift in the next five years.
• 21:22
  Speaker 1: The biggest shift for channel is when we speak to vendors and we speak about their global strategy.
• 21:28
  Speaker 1: They're all talking about the bottom of the pyramid.
• 21:30
  Speaker 1: They're all talking about channel breadth, because really that's where the outsized return is going to come from?
• 21:34
  Speaker 2: Yeah, 100 percent.
• 21:35
  Speaker 2: And that's also where you find those rising stars you were just talking about.
• 21:39
  Speaker 2: I think, when I think about it and have to split it up a little bit in terms of how do you approach that long tail is you need to do three things.
• 21:45
  Speaker 2: You need to be extremely good at parking segmentation, because you need to give content and information at a very skilled level.
• 21:53
  Speaker 2: So let's say you want to facilitate 10,000 partners.
• 21:56
  Speaker 2: The only way you can do that properly while giving them a good experience, is by knowing exactly what they want, what type of information and what type of content they need to get to automation and then getting to measuring and optimizing that continuously.
• 22:11
  Speaker 2: And I think that segmentation piece that's always, when we speak to customers as well, what we focus on most.
• 22:16
  Speaker 2: That's what you have to get right.
• 22:18
  Speaker 2: That's a super clear understanding of your partners, of what product categories do they sell within your product suite, in what regions, what type of verticals are they focused on, which distributors do they buy, etc.
• 22:30
  Speaker 2: Because if you get that type of information right when you onboard your new partners in the long tail, then you can actually make sure that with every type of content you're going to give to them, or every type of information announcement that it's highly relevant for them, so that if, let's say, you have a product introduction around the specific product category, it only goes out to the partners who have actually said that they want that type of information.
• 22:53
  Speaker 1: Yeah, to me, the traits of driving performance at scale is marketing.
• 22:57
  Speaker 1: It just is.
• 22:58
  Speaker 1: We've got the data.
• 23:00
  Speaker 1: It's very, very clear If end users put their hand up and ask for a particular brand, nine times out of 10, the partner will sell that brand.
• 23:07
  Speaker 1: And so the game, in my mind, is very simple how do you get end users to ask partners more continuously for your product?
• 23:14
  Speaker 1: And the best way to do that is to part is through partner marketing at scale getting thousands of partners to message to their end users and to market to their end users, continuously encouraging end users to put their hand up, and the right way to do that is to bring the right content through to the right partner, through to the right end user, and the tooling that really automates that end to end procedure.
• 23:34
  Speaker 1: That's what's going to drive partner performance at scale.
• 23:37
  Speaker 2: Yeah, and I think indeed that piece of automation that's always what we hear from the market you can only do that with the right segmentation.
• 23:44
  Speaker 2: So if you have that in place, then you can start automating.
• 23:47
  Speaker 2: And, to be honest, automation is a requirement for the long tail because almost every parking in the long tail is highly under resourced.
• 23:55
  Speaker 2: They have quite some technical people, some salespeople, with no marketing people, and that's what you really need to get the information and the messaging out to the end user and need to drive.
• 24:04
  Speaker 2: That's what you want to do in long tail.
• 24:05
  Speaker 2: Right, you want to drive macro like macro behavior and the only way you do that is by actually activating the end user base of your long tail partners at scale.
• 24:14
  Speaker 1: Yeah, I mean, we know this because we look at the consumer marketplace, right, and I think consumer marketplace is the way to analyze SMB partner behavior, because it's a bit of the same process you automate as many of the steps for a consumer as possible.
• 24:29
  Speaker 1: I think Meta have just launched threads, right, and it's the fastest growing software platform of all time, but the reason is it's one click joined because everyone's already got an Instagram account and so they've just automated the sign up process, translating to the fastest growing software platform ever because it's one click.
• 24:45
  Speaker 1: And that's the way you want to treat your marketing behavior as well as how do we just automate the entire thing so that partners can actually just focus on what they're already doing but get the increased behavior of all that marketing performance at scale?
• 24:57
  Speaker 1: That's what we're passionate about, chanx, and that's what we see huge returns coming because of that automation and those returns.
• 25:04
  Speaker 2: That's where it becomes interesting as well, Because if you look at SMB partners or long tail partners, you measure that wildly different than what you do with your top 20% partners.
• 25:13
  Speaker 2: So what we see within the top 20%, we just give our partners MDF.
• 25:17
  Speaker 2: They need to come with a plan based on the MDF that they're getting.
• 25:21
  Speaker 2: They need to assign for a number of leads or a number of pipe that they have to generate, and that's how we measure.
• 25:25
  Speaker 2: So what budget did you got?
• 25:26
  Speaker 2: What converted into pipeline and then what converted into revenue?
• 25:30
  Speaker 2: Eventually, with long tail or SMB, this is not possible because you can't talk with everyone one on one.
• 25:35
  Speaker 2: So you really need to get to much wider data model where you measure exactly which your partners, those two behaviors or motions.
• 25:43
  Speaker 2: You just mentioned channel push.
• 25:44
  Speaker 2: So that's really how top of mind are we with the partner?
• 25:46
  Speaker 2: What's the engagement, et cetera and end user pool.
• 25:49
  Speaker 2: So how many end users did we reach, engage, convert, et cetera on the macro level and that's what you really want to tie to your revenue growth within that partner base.
• 25:58
  Speaker 2: Because if you get those two things together, that's where it becomes really interesting, because then you measure over hundreds of partners at the same time?
• 26:05
  Speaker 2: Which partners are most successful in driving the behavior that we want to see to drive to revenue?
• 26:11
  Speaker 1: Yeah, to me and to me it's very simple right.
• 26:13
  Speaker 1: This is the number one opportunity within the channel.
• 26:16
  Speaker 1: It's the 80-20 rule, is a phenomenal tooling to understand where to put your people.
• 26:21
  Speaker 1: But in terms of where I would put my focus and my growth opportunities, I'm driving that towards the long tail because I think we can approach it with tooling and automation in a way we never could approach it before, and if you get that bit right, you are going to win in the highest opportunity, least competitive part of the channel and that, for me, is the golden opportunity that we see over the next five years.
• 26:43
  Speaker 2: Couldn't agree more, I think.
• 26:45
  Speaker 2: Indeed, for our listeners that want to break the 80-20 rule, check out the description if you want to find how you can actually do that.
• 26:50
  Speaker 2: Alex, thanks again for sharing today.
• 26:52
  Speaker 2: I enjoyed the conversation about how do you break the Pareto principle or the 80-20 rule in the channel.
• 26:57
  Speaker 2: I hope our listeners did too, and see you next week.