A common goal of all businesses is to offer some level of “differentiation” in terms of what they do or how they do it. For Vendors selling via channel partners, one challenge is to offer an exciting and compelling Channel Partner Rewards program. A program that both recognizes and rewards high performance.
Channel Mechanics recently sponsored the Channel Meetup UK. Held in the beautiful surroundings of the Runnymede Hotel, on the banks of the Thames, it was a particularly appropriate day during Royal Ascot to moderate a round table on incentives and rewards. With a room full of more than 100 companies from vendors, resellers and distributors, in both hardware and software sectors, I just knew an interesting discussion on Channel Partner Rewards would ensue. And I was not mistaken. The Royal Ascot racing festival is an exciting, competitive and fun sporting event. Three characteristics channel sales should also have. After all, who doesn’t want a little fun and excitement along with a little bit of healthy competition in their daily work!
For this particular article I am going to focus on “reward incentives” for channel partner employees. In a later series of articles, I will discuss the topics of MDF and SPIFs as particular types of incentives and what companies are doing in this space. This series of articles will focus on what we understand to be “current practice” among vendors. It won’t attempt to offer a view on what is “best practice” as that, as we know, is very subjective.
If you are thinking of designing your own Channel Partner Rewards program, then read on! Here’s a rich flavor of what we learned at The Channel Meet Up from the many contributors on this increasingly important component of a well-formed channel strategy.
Many of the day’s contributors agreed that the rationale for offering incentives is to drive behaviors or meet some either loosely defined or well-defined better business outcome. Some of the examples we heard from the attendees included:
– Up-skilling: to encourage your channel partner’s people to undertake training on your offerings.
– Professional Certification: to encourage more people to acquire accreditation on how to sell, deploy or support your offerings.
– Increase in the number of Qualified Leads
– Increase in the number of Trial Requests
– Growth in Net New Logos
– Increase in Revenue
– Increase the number of Deal Registrations
It may surprise some readers to learn that not all resellers and distributors allow incentive programs. Some very large resellers in the UK don’t allow any vendor to offer channel partner rewards for their employees. There are some very obvious reasons why enforcing a “level playing” field model like this makes sense. If you are working with hundreds or even thousands of vendors, then dealing with multiple external “rewards” systems for your employees could impose significant challenges:
– what if the incentives meant your top performers were frequently getting multiple offers to go to landmark events such as Royal Ascot or a Grand Prix day? How do you manage/control the number of days they could be away from the office?
– Vendors will usually want something back from the channel partners to indicate how the incentives led to their objectives being met. Increased number of leads, trials, or new customers or revenue are key examples. This means increased administration for the channel partner and replicating this across thousands of vendor incentive schemes could be unwieldy.
Others will allow a channel partner rewards program from vendors, but it must be done at a team level, not an individual employee level.
When it comes to incentives there are some considerations to be aware of when you are designing the scheme. For example, in countries like the UK and Ireland, certain “gifts” that are given to employees are taxable. Take a £100 voucher gift. For the channel partner employee to receive this amount, you would incur a higher expenditure to cover the taxable component – you may have to pay up to £145 in the case of the UK. Some channel partners may discourage offering financial gifts to stay clear of any tax implications for both you the vendor, and their employees.
Incentive scheme design is a cross business function activity, and therefore can significantly delay the finalisation and launch of any new scheme. Participants advised that in most cases the schemes were designed initially by sales and marketing and then reviewed by finance and legal teams for budgetary and compliance approval. This is where delays usually happened – and in some cases the incentives schemes were stalled or even stopped.
Some companies manage the design and implementation of the incentives programs completely themselves. While others use specialist 3rd party companies to design and run the partner rewards program. For example, for City Break rewards, there are several specialist operators. To simplify rewards, some vendors will only offer incentives that are in the catalogue of their 3rd party provider.
However, the one area that most attendees agreed on is that the management overhead and administration of incentives is high. In particular, the ability to clearly “measure” how the roll-out of the incentive programs achieved the original “business outcomes” was still very much guesswork and art-form, rather than a science. This is an area that needs much closer focus in the future as budgets are always going to be under scrutiny for incentive programs. As part of your up-front design of incentives, you should always give careful consideration to the “metrics” that are realistic to measure and tie-back to how successful they have been.
Click here to learn more on how market leading vendors automate and manage their channel partner incentives
It goes without saying that all individuals are different and want to be rewarded differently. Want to know the best way to incentivise your channel partner teams? Just ask them directly. By asking, you’ll discover what type of offers are attractive to different teams in their organisation. For example do people like financial rewards (e.g. gift vouchers), away days, or something as simple as recognition (certificate or trophy)? Remember that many surveys of the modern workplace continue to report that employees crave recognition more than financial rewards. So your incentive program might be as simple as ringing up a channel partner team or employee to say thank-you or sending them a congratulations certificate on a job well done – this will go a long way and stay in their memory for a long time.
Whatever way you choose to design and implement your channel partner reward program, just ensure that as you reward your channel partners’ people, your business is also rewarded by enhanced business outcomes – be it higher revenue or more net new customer logos.
Check out the next Channel Meet Up Event: Vendors are from Mars. Partners are from Venus.
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