What is an Incrementality?

1. Introduction

Incrementality measures the extra value partners bring. This value would not exist without their specific efforts. Businesses use incrementality to assess their partner program effectiveness. It shows the unique impact partners have on growth. Understanding incrementality is key for strong partner relationship management. It helps optimize the entire partner ecosystem.

For example, an IT company might gain new customers through a channel partner. These customers would likely not have bought the software otherwise. This directly shows the partner's incremental value. A manufacturing firm might see new sales from a partner's distribution network. These sales represent additional market penetration.

2. Context/Background

Historically, companies often tracked only direct sales by partners. They did not always separate new business from existing opportunities. This made it hard to see the true value of partner contributions. The rise of complex partner ecosystems changed this view. Businesses needed better ways to measure partner ROI. They wanted to optimize their channel sales investments. Incrementality provides this clearer picture. It helps companies invest wisely in their partner program.

3. Core Principles

• Net New Value: Focus on value that did not previously exist. This includes new customers or markets.
• Direct Attribution: Clearly link the value to specific partner actions. Avoid misattributing internal efforts.
• Baseline Comparison: Compare partner-driven results against a non-partner scenario. This highlights the additional impact.
• Long-Term Impact: Consider both immediate sales and future growth potential. Partners can build lasting relationships.

4. Implementation

1. Define Baseline: Establish sales and market reach without partner involvement. Use historical data or control groups.
2. Set Clear Goals: Specify what incremental outcomes partners should achieve. Examples include new logos or market segments.
3. Track Partner Activities: Monitor leads, opportunities, and sales driven by partners. Use a partner portal or CRM.
4. Attribute Revenue: Link specific revenue to partner-initiated deals. This often involves deal registration.
5. Analyze Data: Compare partner-driven results to the established baseline. Identify the additional value created.
6. Report Findings: Share incrementality results with partners and internal teams. Use these insights for program adjustments.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Define "New": Clearly define what constitutes a "new" customer or opportunity.
• Use Technology: Implement partner relationship management platforms for tracking.
• Educate Partners: Explain incrementality to partners. Show them how their efforts are valued.
• Reward Incrementality: Structure incentives to reward new business generation.
• Regular Review: Continuously evaluate and refine your incrementality model.

Pitfalls (Don'ts)

• Poor Data Quality: Inaccurate data leads to flawed incrementality measurements.
• Lack of Baseline: Without a baseline, proving additional value is difficult.
• Overlapping Efforts: Internal sales teams and partners might target the same accounts. This complicates attribution.
• Short-Term Focus: Only measuring immediate sales ignores long-term strategic value.
• Complex Metrics: Overly complicated models can be hard to implement and understand.

6. Advanced Applications

1. Strategic Partner Selection: Identify partners best suited for generating new value.
2. Targeted Partner Enablement: Provide specific training to help partners create incremental opportunities.
3. Joint Business Planning: Develop plans with partners focused on net-new market penetration.
4. Performance-Based Incentives: Design compensation models directly tied to incremental results.
5. Market Expansion: Use partners to test and enter new geographic areas or customer segments.
6. Product Adoption: Drive new product adoption through partner-led initiatives.

7. Ecosystem Integration

Incrementality impacts several POEM lifecycle pillars. During Strategize, it helps define target markets for partners. In Recruit, it guides the selection of partners who can deliver new value. For Onboard and Enable, it shapes training on identifying new opportunities. Market and Sell activities, especially co-selling, become more focused on incremental gains. Incentivize ensures partners are rewarded for bringing new business. Finally, Accelerate relies on incrementality data to scale successful partner strategies. This direct link makes incrementality vital for the entire partner ecosystem.

8. Conclusion

Incrementality is crucial for understanding true partner value. It moves beyond simple sales tracking. It focuses on the additional revenue and market reach partners create. This metric is essential for optimizing your partner program.

Companies can make better decisions with clear incrementality data. They can refine strategies and improve partner relationships. Ultimately, measuring incrementality leads to a stronger, more profitable partner ecosystem.