Archive for July 2012

Measuring Alliances: Quantitative Metrics for Influenced Business   Leave a comment

Martin Fifield, in his comment on my first post on alliance metrics, asks a key question about measuring the full impact of an alliance: how to measure “influenced revenue”?   

In my experience this has been quite easy and extremely valuable.
It’s easy, because it is a quantitative metric and a subset of standard ones such as sales or revenue, so tracking it becomes a matter of keeping simple the definition of what subset it is, then asking the right person a simple question at the right time.
It is valuable, well worth the effort to define, manage and track it, as it truly helps an alliance perceive its full impact on the business of each partner, and so achieve it.

First, what is it?
In my opinion, “influenced” business is different from the new or “incremental” business for one or both alliance partners that comes from exclusive joint solutions, and additional to it. It is further new business, generated with an organization’s standard sales processes and offerings rather than the alliance’s special joint solutions, and still becoming easier to sell or deliver because the two organizations cooperate in selling their complementary business together, or endorse each other, or gain a positive market perception because of their alliance’s success.
So, first and foremost, influenced business is a broad metric that captures business where the alliance we consider is one among many factors, and the most important factor remains clearly the capability of a direct sales field team.

Since influenced business is closer to direct business than alliance-specific incremental business, capturing it drives cultural considerations about how each allied organization, and especially their sales and delivery teams, view the other and the alliance itself. For this reason, influenced business can be an ideal bridge between quantitative, business-focused alliance metrics and qualitative metrics such as I describe in my second post on alliance metrics.

How to measure influenced business? Here is what I have seen work.

Wherever alliances professionals are directly involved and help sales and delivery teams work with alliance partners, just ask them: what alliances have influenced a core direct business success?
Telling what alliance partners have helped achieving what sales will be straightforward: alliance professionals have been there and know, and capturing this component is fully consistent with their objectives and culture.

Each organization will want to tailor this metric with few specifications.
The first is its own specific definition of what subset of total business to consider “influenced”. Another one can be applying an independent check on what alliance professionals report about this metric. This does add some effort to the tracking process, and still can boost trust in the metric and awareness of the alliance in the teams that work with the alliance partner directly.

How do these approaches compare with yours?

What challenges may you have encountered?

I have encountered one main objection and one tangible obstacle to this approach, both important and still well worth overcoming.

The objection: this metric is an overlay or double-accounting metric; it really counts again business results that the sales and delivery teams themselves have achieved already, would mostly have achieved even without the alliance’s influence, and so have been rewarded for. In other words, when rewarding both the alliance teams and the field teams on the same results, an organization is really paying twice to achieve the same business objective. This is true, and still I believe the second rewarding achieves a distinct, complementary and worthy objective. Rewarding the alliance team for influenced business gives an organization a better idea of alliances’ impact on the broader direct business, and their performance.

The true, hard obstacle to applying this influenced business metric to all of an organization’s direct business is scalability. Direct support of alliance professionals can reach only a small share of an organization’s direct business; beyond their reach, sales and delivery teams of the two organizations are on their own. How to track alliance influence there?
This is really a scalability challenge of the alliance itself, rather than of the metric measurement. I believe this challenge is worth taking for the most impactful alliances, those that aspire to influencing a significant share of an organization’s overall business.

How to make an alliance work beyond the reach of alliance professionals, wherever sales and delivery teams rub shoulders with an alliance partner on the field?
This is well beyond the scope of this discussion – ASAP for instance devoted to this the best part of its first 2012 issue

Let’s assume we  get there. Then, measuring this broader influenced business becomes straightforward again: ask those very sales and delivery teams. Since they will have worked together we can then ask them what alliances – in addition to their own capability – have helped close that business.  Influenced business as understood, measured and reported by field teams themselves can then become the most meaningful quantitative metric of broad impact for the farthest-reaching alliances an organization has.

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Learning a Lesson in Alliance Metrics – More Simple if Less Easy With Qualitative Relationship Metrics   4 comments

My earlier post on alliance metrics has drawn many valuable comments, and helped me evolve my perspective significantly.

Some colleagues have provided special advice. I strongly recommend any readers of this to follow their valuable contributions to online discussion forums.

  • Joe Kittel – driving Spiritual Principles in Business Relationships  –  and Eric Moss  engaged generously in deep, in-person discussions.
  • Peter Simoons – leading Simoons & Company  –  also raised a very relevant point in his quick overview of alliance metrics.
    Peter distinguishes between metrics internal to one organization and metrics agreed between two alliance partners, and points to scorecards as a comprehensive if complex approach.
    Finally, and most importantly in my opinion, Peter leverages contributions by other commenters to my original post to highlight *relationship metrics* as a key tool to focus on.
  • Both Peter  and I are grateful to Tara Mylenski for her comments.

The key lesson I have been able to gather from this wealth of insight is: measuring alliances is more simple than it is easy.
It takes a specific effort to go beyond an initial level of simplicity to a higher level that is, as Joe helpfully articulated, beyond complexity.  

Commenters helped me get there by considering and comparing quantitative metrics and qualitative metrics, especially relationship metrics.

For quantitative metrics we can argue, and hopefully agree, that they are easy.
Quantitative metrics are easy because they ultimately measure the economics of each alliance partner’s business (say revenue, or sales) Since we all measure our business, measuring an alliance is really about agreeing which part of one organization’s business is associated to one specific alliance.
If this is difficult, then something in the specific objectives of that alliance needs more clarity. This is a helpful result in itself, and it can drive either a clarification, or a conscious choice to focus on other alliances, or even the discovery that what makes this alliance special is really qualitative in nature and is best managed with qualitative metrics.

For qualitative metrics I now believe that they are difficult, and make measuring alliances more difficult.
Still, various examples from comments and discussions have convinced me that some of the most valuable features that make one alliance special are qualitative. So it is important that we define them so well as to make them, finally, simple.

A very concrete, specific instance: on the one alliance I focus on, I have begun discussing with my colleagues and correspondents how some key limits to growth may be easier to address if we start measuring and managing few qualitative parameters that address relationship in the field.
One such parameter could be mutual satisfaction at selected touch points in the field – just how happy are key account managers and solution sales managers with their work together?

This example suggests how more difficult and still so much promising and insightful alliance metrics may become when we add a qualitative, relationship-focused component to a solid foundation of quantitative, business-based metrics.

Getting there may help us to make an alliance, and measuring it, truly simple – if more difficult than using quantitative metrics only.

Posted July 9, 2012 by Gianluca Marcellino in Alliances, Computer e Internet

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