Impact Forecasting

Uncovering the True Value of Partnerships

Rev­enue is often deemed the pri­ma­ry bench­mark to eval­u­ate the suc­cess of part­ner­ships. It’s the eas­i­ly quan­tifi­able ele­ment man­age­ment teams turn to for assess­ing a part­ner­ship’s via­bil­i­ty. The reflex isn’t ill-direct­ed, as rev­enue is indeed a con­se­quen­tial part of the equa­tion. How­ev­er, part­ner­ships are about more than just enhanc­ing the bot­tom line, and an overde­pen­dence on rev­enue fore­cast­ing can cause busi­ness­es to over­look vital ben­e­fits from alliances.

 

Eval­u­at­ing and plan­ning part­ner­ships based sole­ly on rev­enue has three major drawbacks:

1. Ignor­ing the auton­o­my of part­ners: Part­ners have their own incen­tives and KPIs. They oper­ate autonomous­ly and are not under our direct con­trol like inter­nal sales teams. So, should our fore­cast­ing sole­ly rely on some­thing we can’t con­trol? The answer is no. It’s more prac­ti­cal to focus on indi­ca­tors we can con­trol or influ­ence when required, which ulti­mate­ly lead to addi­tion­al rev­enue or cost reductions.

2. Ignor­ing effi­cien­cy gains: A rev­enue-cen­tric eval­u­a­tion over­looks a part­ner­ship’s broad­er con­tri­bu­tion to over­all busi­ness objec­tives. Part­ner­ships often pro­vide sub­stan­tial effi­cien­cy gains. They can reduce sales cycles, low­er cus­tomer acqui­si­tion costs (CAC), increase mar­ket reach, lift brand rep­u­ta­tion, and intro­duce inno­v­a­tive solu­tions at high speed. These ben­e­fits might not trans­late or be mea­sured in rev­enue but sig­nif­i­cant­ly con­tribute to long-term prof­itabil­i­ty and sustainability.

3. Ignor­ing ecosys­tem lever­age: Part­ner­ships can enable busi­ness­es to achieve results that would be impos­si­ble to do on their own. For exam­ple, increas­ing the mar­ket reach with­out hir­ing and train­ing many new full-time employ­ees or gain­ing access to new cus­tomer seg­ments that require spe­cial­ized knowl­edge or fea­tures that a busi­ness does not have inter­nal­ly. There are many ways that part­ner­ships can mul­ti­ply a busi­ness’s capa­bil­i­ties beyond what it could achieve through sole­ly organ­ic growth.

A sole focus on rev­enue miss­es the upside of part­ner­ships. It also over­looks poten­tial val­ue left untapped with­out pur­su­ing alliances. A broad­er view is required to assess part­ner­ships ful­ly.
Insist­ing on using a broad­er “Impact Fore­cast­ing” does the job. Rev­enue remains a key com­po­nent of part­ner­ships, but it stems from oth­er mul­ti­ple mean­ing­ful impacts that dif­fer­ent part­ners bring to the business.

 

How to measure the potential impact?

Rev­enue fore­cast­ing tends to be the com­fort zone for man­age­ment teams, pri­mar­i­ly due to a lack of knowl­edge about more fit­ting meth­ods, espe­cial­ly for part­ner­ship strate­gies. The chal­lenge with part­ner­ship-appro­pri­ate fore­cast­ing is to iden­ti­fy and quan­ti­fy tan­gi­ble and intan­gi­ble ben­e­fits across fac­tors like cost, effi­cien­cy, access, rev­enue, and inno­va­tion. Track­ing and quan­ti­fy­ing these impacts where pos­si­ble and as ear­ly as pos­si­ble is essen­tial to under­stand­ing the actu­al val­ue derived from each partnership.

Here’s a table illus­trat­ing how dif­fer­ent cat­e­gories of part­ners gen­er­ate dif­fer­ent impacts:

* Also con­sid­er “pro­por­tion­al­ly low­er” costs while increas­ing mar­ket pres­ence or devel­op­ing new fea­tures.
**Check here for “Decid­ing Between Build, Buy or Partner”

 

The spe­cif­ic impacts can vary great­ly depend­ing on the part­ner­ship types, terms, and objec­tives. When enter­ing a part­ner­ship ini­tia­tive, you should fol­low these steps to pre­pare impact forecasting:

1. Iden­ti­fy the over­all busi­ness objec­tives your part­ner­ships should con­tribute to. Con­sid­er goals around rev­enue growth, cost reduc­tion, oper­a­tional effi­cien­cy, expand­ing capa­bil­i­ties, etc.

2. Select the part­ner cat­e­go­ry and type based on which one can best help achieve those objec­tives. Check here for an overview of Part­ner Types & Categories.

3. Define the appro­pri­ate impacts achiev­able with your part­ner selec­tion. Brain­storm the poten­tial ben­e­fits aligned to your four impact cat­e­gories — cost sav­ings, effi­cien­cy gains, access expan­sion, and rev­enue increase.

4. Esti­mate or project the mag­ni­tude of each impact. Assign tan­gi­ble tar­gets around cost reduc­tion, increased rev­enue, etc. where feasible.

5. Track and mea­sure impact over time. Con­tin­u­ous­ly eval­u­ate per­for­mance on impact KPIs vs. pro­jec­tions. Refine part­ner­ships to max­i­mize val­ue. Learn more about Per­for­mance mea­sure­ment here.

6. Com­mu­ni­cate impacts inter­nal­ly. Report on part­ner­ship val­ue beyond just rev­enue for greater buy-in.

7. Use impact fore­cast­ing to guide part­ner­ship strat­e­gy. Iden­ti­fy new oppor­tu­ni­ties to fill gaps and con­tin­u­al­ly expand pos­i­tive busi­ness impact.

And last but not least, you should also con­sid­er the poten­tial costs of not lever­ag­ing the ecosys­tem. This includes missed oppor­tu­ni­ties from being late to mar­ket, fail­ing to reach key cus­tomer seg­ments, lag­ging behind in prod­uct devel­op­ment, or inabil­i­ty to scale efficiently.