By Larry Walsh
A challenge facing channel leaders and practitioners is as old as the channel itself: how to demonstrate the value partners contribute to corporate objectives and overall performance. Put more bluntly: Are partners pulling their weight, and are they having a material impact on the business?
Channelnomics typically finds that six out of 10 channel chiefs are under pressure from executive teams to demonstrate the return on channel investment (ROCI) associated with indirect-sales programs. The issue is rarely a lack of value. Executive teams, private equity firms, and boards understand that scaling without the channel is impractical. Few companies can afford the cost structure of an organization that makes only direct sales while maintaining expense discipline. Partners also provide reach and relationship equity that vendors can’t replicate organically without years of sustained investment.
The more durable approach is to align channel objectives directly with corporate growth targets. For example, if a $1 billion company is pursuing total growth of 20% ($200 million) and expects the channel to deliver half of that increase ($100 million), the math changes significantly based on the channel’s starting position. If the channel is currently producing $100million in revenue, meeting that expectation requires the channel itself to grow by 100%.
The math is straightforward, but it doesn’t tell the whole story. Maintaining what Channelnomics refers to as “channel positivity” requires that vendors believe they’re receiving a more-than-fair return relative to the value extended to partners. Even when vendors provide balanced economic support through discounts, incentives, and sales enablement, they may still perceive that the cost of their channel investment outweighs the return.
Demonstrating the full power of the channel requires showing management not only how partners generate revenue but also how they reduce operational and fixed costs. This is where disciplined channel attribution becomes critical. By clearly defining the activities partners perform, channel leaders can quantify cost savings alongside top-line contribution.
International expansion provides a clear example. When partners extend a vendor’s footprint into new geographies, the vendor often relies on distributors and local resellers rather than building a direct presence. This avoids the cost of establishing legal entities, opening offices, hiring administrative staff, and developing localized marketing programs. In these scenarios, partners absorb the bulk of the expense and risk. Even if the per-deal economics appear less favorable, the total cost of market entry and time to revenue is materially lower.
Professional services present another often-misunderstood trade-off. Vendors frequently focus on the cost of training and enabling partners to deliver implementation and support. Deferring these responsibilities, however, keeps highly compensated technical resources off the vendor’s balance sheet. The result is a dual benefit: higher partner engagement and materially lower operating expenses.
The same dynamic applies in subscription-based models. Managing adoption, renewals, and ongoing customer success at scale requires significant head count. By leveraging partners, vendors effectively outsource much of the retention workload. Partners function as localized experience providers, ensuring products are adopted, integrated, and renewed. When partners manage renewals, vendors avoid both administrative overhead and the high customer acquisition costs associated with replacing churned customers. In this context, partner margin isn’t simply a cost of sale; it’s a form of churn mitigation that protects net revenue retention without incremental staffing.
Channelnomics research consistently shows that channel-led transactions deliver average selling prices that are 10% to 15% higher than those associated with direct sales, even after discounts. Partners are economically motivated to preserve pricing discipline to protect their margins, whereas direct-sales teams often have greater latitude to discount aggressively in pursuit of quota attainment.
Price realization, however, is only part of the equation. The deferral of customer engagement, delivery, and support functions can reduce operating expenses by an additional 15% to 25%. These savings are rarely visible without proper attribution mapping. More important, they’re most effective when presented at the outset of go-to-market planning, rather than introduced defensively after results are challenged.
Demonstrating positive channel value requires looking beyond immediate revenue and pipeline contribution. It requires showing how partners strengthen a vendor’s overall financial performance through operational leverage and cost avoidance. When channel leaders balance top-line growth with the efficiencies partners deliver, they can shift the conversation from what the channel costs to how the channel scales the enterprise.
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Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.