“You can’t fix what you don’t measure” runs a popular adage. Metrics are certainly imperative to assess performance within an organization. But they are equally important when it comes to building effective, high-performing partnerships. What items should you be looking at? Guidance has identified a few key performance indicators (KPI) that you need to consider to ensure that your partners will measure up to expectations.
How Do You Measure Partnership Performance?
To begin assessing partner performance metrics, it’s helpful to break them into two main types of key performance indicators: strategic KPIs and financial KPIs.
Strategic key performance indicators are intangible performance measurements used to determine the success of business activity or engagement. These prove to be important as they assist with the mitigation of potential risk and ensure the partnership is beneficial and productive.
On the other hand, financial key performance indicators, also known as measurable data KPIs, are tangible performance metrics used to indicate the financial success of a partnership. Unlike strategic KPIs, which rely on qualitative analysis, financial KPIs use quantifiable data to determine the effectiveness of a particular partnership.
While strategic KPIs evaluate factors such as competitive advantage, risk assessment, and partner engagement, financial KPIs evaluate measurements such as revenue, transaction frequency, and customer value. With that in mind, let's jump into the specifics of each.
Three Strategic Partnership KPIs You Should Measure
Choosing the right strategic partner requires more than evaluating the financial upside. It also means ensuring they have business values that align with your own. If this potential partner doesn’t believe in the same level of transparency or align with your overall goals, the misalignment could have disastrous effects. To choose the right partner, you need to have clarity and set expectations regarding multiple areas. Throughout a partnership, you should be considering alignment and effectiveness on the following factors.
1. Partner Values and Experience
If this potential partner doesn’t believe in the same level of transparency or align with your overall goals, the misalignment could have disastrous effects. Informal or delayed responses to important matters, deferral to absent authority, and lack of engagement are just a few examples of risks that should be noted when reflecting on a partnership. If communication is harmful to the partnership and there is a lot of conflict in company values, you may want to reassess the relationship.
2. Scope of Work
You should always insist on Scope of Work documentation for all the mutual work activities that you and your partner undertake. SOW documents clarify what you should expect of each other, which reduces the chances of misunderstandings. They also help gauge progress towards objectives and in keeping costs in line. Metrics that help assess the performance of both partners are:
- Did they meet the appropriate timelines?
- Are they on budget?
- Have technical challenges been properly addressed?
- Have outstanding invoices been paid?
- Did everything happen that was supposed to happen?
- Was the Net Promoter Score (NPS) completed? Are the results satisfactory?
3. Partner Engagement and Satisfaction
Regardless of the platform used for communication, an online portal, email, or in-person/video meetings, clear partner engagement is imperative. Prioritizing how to measure partnership engagement helps partners understand the strength of communication and the partners’ commitment to each other and their goals.
Partnership satisfaction surveys can be created at any time during the partnership, and they should be carried out regularly. Regular partner check-ins and assessments are known to improve working relationships, maintain goal alignment, and help both parties gather feedback on the working relationship. Partner satisfaction surveys can be completed through a variety of methods, like anonymous multiple choice response formats, business review sessions, or one-on-one discussions with the management team.
Three Financial KPIs You Should Measure
Although qualitative data can play a key role in determining how well a partnership can sustain itself, the financial numbers are one of the biggest indicators of a successful partnership. Businesses may work well together, but the main goal is to increase revenue for both partners. If the partnership does not deliver financially, then it calls into question the need for the relationship. The following are a few financial KPIs that are important to measure with any business partnership
1. Partner Revenue
One of the biggest program performance indicators is whether both partners experience an increase in revenue. Partnerships require time, commitment, and extensive communication to maintain. Therefore, it is crucial that both sides experience a tangible increase in revenue as a result. Similarly, partners should measure where in the sales cycle each business contributes most. These metrics help partners make collective decisions and determine how to continue to invest resources.
2. Customer Satisfaction
It is imperative to understand which partners are selling, marketing and supporting their customers successfully. Failure to do this could lead to unhappy customers, affecting overall sales and revenue. Although revenue or engagement may speak for itself, surveying customers on their satisfaction with the services they received is a crucial tool for understanding the success of a partnership. After all, if customers are not happy with the services the partnership is providing, then the partnership is not living up to expectations.
3. ROI Measurement
ROI stands for “Return on investment” and is used to evaluate how effective the partnership investment has been. ROI compares the financial return of an investment against its total cost. A few measurements that can help assess ROI include:
- - Click through rate: The ratio of clicks against impressions, typically displayed as a percentage.
- - Cost per lead: The cost-effectiveness of marketing campaigns to generate new leads for the company. Leads are individuals who have expressed interests in the particular product or service.
- - Conversion Rate: The number of times a website link has led to a sales purchase compared to the number of times the link was clicked, given in a percentage.
- - Lifetime Value: An estimation of the average revenue generated from a customer throughout their lifespan.
A Success Story Using Strategic Partnership KPIs
At Guidance, we know that utilizing key performance indicators is the key to having an efficient and successful partnership. We are proud to have a reputation for using strategic partnerships to build relationships between brands and enhance performance along the way.
When K-Swiss first realized they weren't operating at their maximum eCommerce potential, they decided to make a partnership change and relied on Guidance’s expertise to accomplish a full eCommerce migration. Shopify Plus was the ideal partnership solution as it allowed for K-Swiss’ nine international sites to be housed in one platform while also accommodating the personalization needs of a world-renowned brand.
With Shopify Plus, K-Swiss was able to reduce costs, create consistent customer experiences and simplify management of virtual storefronts across multiple markets and currency regions. As the result of the engaged and motivated partnership between the K-Swiss and Guidance teams, all nine eCommerce site migrations were accomplished within just eight weeks.
Early on, Guidance and K-Swiss completed a KPI analysis to determine if the migration would be beneficial to performance, efficiency and revenue in comparison to the current contract held with their eCommerce platform.
The consideration of strategic KPIs such as overall engagement, proven expertise, and company values and culture were key in the success of the K-Swiss engagement. With only eight weeks to complete the project, it was essential that both companies had a clear understanding of the expectations and were able to communicate effectively throughout the project.
Financial KPIs were also an important consideration before, during, and after the partnership. At the front end, Guidance’s expert eCommerce team was able to show K-Swiss the projected financial benefits of the Shopify Plus migration. Since Guidance has partnered with other large enterprise brands, they were able to show proven examples of how the migration would not only bring more sales to the websites, but also bring down internal costs by simplifying the backend management for the K-Swiss team. Since reducing costs was a primary goal for K-Swiss, knowing that they were avoiding increased expenses and saving their team management time, these financial KPIs were influential in the decision to go forward with the partnership.
To read more about this partnership, visit our K-Swiss Case Study.
Utilize the Right Partner Performance Metrics for Your Business
Ideally, establishing KPIs for your partnerships should help you work more effectively with them. It takes effort, discipline, and careful planning to get two cultures coordinated so they work together seamlessly towards shared goals.
Once you begin measuring your strategic and financial key performance indicators, you gain a new perspective on the success of your partnerships. Understanding the tangible results of a partnership from multiple angles allows you to make confident decisions and develop low-risk relationships.
To learn more about determining helpful KPIs for your business and establishing profitable partnerships, contact Guidance today. Guidance strives to help you elevate your brand, optimize your eCommerce platforms, and stand out to customers. Let us help you get started.