What is Sourced Revenue?

1. Introduction

Sourced Revenue represents sales directly initiated by a channel partner. These partners proactively find new business opportunities. They bring these opportunities to a vendor. This revenue stream clearly shows a partner's direct impact on sales growth. It includes deals where partners discover and qualify leads. This metric highlights the value partners bring to the sales pipeline. It also measures a partner program's outreach effectiveness.

An IT channel partner might find a new client needing cloud software. They then introduce this client to the software vendor. Similarly, a manufacturing partner could identify a factory needing new robotics. They present this need to the robotics manufacturer. Both are examples of sourced revenue.

2. Context/Background

Historically, vendors drove most sales. Partners often fulfilled existing demand. The modern partner ecosystem changed this dynamic. Vendors now rely heavily on partners for market expansion. Partners offer local expertise and reach. They open new customer segments for vendors.

Sourced revenue became a key performance indicator. It shows how well partners generate new demand. It also proves the return on investment for partner relationship management (PRM) systems. Understanding sourced revenue helps optimize partner strategies. It ensures partners actively contribute to growth.

3. Core Principles

• Partner-Led Discovery: Partners initiate the sales cycle. They find the initial opportunity.
• Net New Opportunities: Sourced revenue comes from new leads. These leads were unknown to the vendor.
• Direct Impact: Partners directly influence the sale. Their actions lead to the deal's creation.
• Mutual Benefit: Vendors gain new customers. Partners earn commissions and build their business.
• Measurable Contribution: This metric quantifies partner value. It shows their specific sales generation.

4. Implementation

1. Define Clear Criteria: Establish what qualifies as sourced revenue. Ensure all partners understand these rules.
2. Implement Deal Registration: Use a deal registration system. Partners submit new opportunities through a partner portal.
3. Validate Opportunities: A vendor team reviews registered deals. They confirm the opportunity is net new.
4. Track Partner Contributions: Monitor the sales pipeline. Attribute deals correctly to the sourcing partner.
5. Calculate Commissions: Pay partners based on their sourced revenue. This incentivizes new lead generation.
6. Analyze Performance: Regularly review sourced revenue data. Identify top-performing partners and areas for improvement.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Provide Strong Enablement: Offer training and resources. This improves partner selling skills.
• Simplify Deal Registration: Make the process easy for partners. Reduce administrative burden.
• Communicate Clearly: Explain sourced revenue expectations. Ensure partners understand the benefits.
• Offer Competitive Incentives: Reward partners generously. Encourage them to find new business.
• Build Trust: Maintain transparent communication. Show partners their efforts are valued.

Pitfalls (Don'ts)

• Vague Definitions: Unclear rules lead to disputes. Partners may claim opportunities incorrectly.
• Complex Systems: Difficult partner portals discourage use. Partners will bypass necessary steps.
• Lack of Follow-up: Ignoring registered deals frustrates partners. They stop submitting new leads.
• Low Payouts: Insufficient commissions demotivate partners. They will prioritize other vendors.
• Channel Conflict: Competing with partners on their sourced leads. This damages trust and relationships.

6. Advanced Applications

1. Predictive Analytics: Forecast future sales based on partner sourcing trends.
2. Partner Tiering: Differentiate partner levels by their sourced revenue performance.
3. Geographic Expansion: Use sourced revenue to identify new market opportunities.
4. Product Adoption: Track which products partners are sourcing most effectively.
5. Co-Selling Optimization: Identify partners best suited for co-selling new solutions.
6. Targeted Enablement: Customize partner enablement programs. Focus on areas where partners need help sourcing.

7. Ecosystem Integration

Sourced revenue is crucial across the Partner Ecosystem Operating Model (POEM) lifecycle. During Strategize, it helps define target markets. In Recruit, it attracts partners focused on growth. For Onboard, new partners learn to identify opportunities. Enable activities provide skills for sourcing. Market efforts support through-channel marketing for lead generation. Sell processes ensure proper deal registration and closure. Incentivize strategies tie compensation directly to sourced revenue. Finally, Accelerate focuses on growing partners' sourcing capabilities.

8. Conclusion

Sourced revenue is a vital metric for any vendor. It quantifies the direct sales impact of channel partners. By focusing on sourced revenue, vendors can build stronger, more productive partner programs. It ensures partners are not just fulfilling demand but actively creating it.

Effective management of sourced revenue requires clear definitions and robust systems. It also needs strong partner enablement and fair incentives. When implemented well, sourced revenue becomes a powerful driver. It fuels mutual growth for both vendors and their partners.