ISVs, Channel Need to Work More Collaboratively

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ISV partnership

There’s room for improvement when it comes to ISVs’ relationship with the channel. Both stand to make lots of money if they can work more collaboratively.

47% of ISVs said they receive less than 25% of their revenue through channel partners. The majority of ISVs work with fewer than 25 partners. Just under half (49%) of respondents also report they have a referral partner program.

The top priorities are recruiting more partners and training partners, at 21%, followed closely by investing in marketing programs with partners (18%).

Recruiting the right partners (25%) and improving their partners’ technical competencies (22%) are the top two channel goals for ISVs.

Only 60% of the ISVs surveyed review and cut nonperforming partners, and only 14% do so systematically.

Only 36% of the respondents expect channel partners to be self-sufficient in closing business. Only 38% of the respondents said their partners were even responsible for qualifying leads.

Only 31% expect their partners to deploy solutions at their customers’ sites. Just over a quarter (26%) said they take their offerings to market via managed service providers (MSPs).

Only 33% of ISVs expect their channel partners to support and bill their customers, and only 10% of ISVs expect their partners to close up-sell opportunities and renewals. A full 62% said their partners are not responsible for customer renewals.

Well over half (60%) said that “selective recruiting of partners” is their most relevant tactic for recruiting. Over a third (39%) of ISVs said that this was the most important method that they use for channel recruiting.

Innovative technology tops the list, at 38%, followed by strong demand and good margins, both tied at 31%.

More than half (57%) give all their partners the same margin. In the cases where margins differ, the reasons given include that the ISV has created a tiered channel program, whether a partner has committed to a business plan or if they are referral partners. Most ISVs surveyed offer between 10% and 20% as a base margin rate. Only 33% of ISVs offer any additional margin for deal registrations.

Only 23% said they provide channel partners with leads. The most popular joint marketing activity is to provide partners with materials for them to co-brand.

25% do not receive forecasts from their channel partners, while only 5% said they now have partners providing sales forecasts that are as good as, if not better than, those of their own sales teams. Only 40% said they their channel teams create written business plans with their partners.

67% said their sales teams are encouraged and compensated to work with the channel. Only 20% said they do not pay their reps on channel business closed in their territories. In situations when the ISVs compensate their sales reps, 35% are compensated on the “net” amount of the deal, while only 15% “gross up” their compensation to recognize the full amount paid by the customer.

Almost two-thirds of ISVs said their sales or channel teams take responsibility for training partners. Very few (15%) ISVs require partners to pass a certification test. One fifth (20%) of the ISVs surveyed either don’t offer any training or they rely on partners to train themselves.

Only 3% of the respondents rated “avoiding conflict with our direct reps” as a major frustration. Only 40% stated that they had partner-engagement policies.