Vendors selling through the channel face an ongoing multi-dimensional puzzle: how to be more effective, how to differentiate their products, and ultimately, how to drive profitable growth. Layered atop this puzzle is the need to pull the right financial levers, at the right time. One of those levers is the use of channel incentives and rewards. Many vendors use SPIFF Programs or SPIF’s (Sales Performance Incentive Funds) to influence behavior with their channel partner’s sales teams.
A SPIFF is a short-term incentive, tied to driving sales in a set period of time. It can be dollar rewards, prizes, or loyalty points. A good SPIFF program is aimed at one thing, and one thing only – driving your sales.
Any kind of activity can be rewarded. Examples include Sales, New Logos, Certifications, Recruitment, Meetings, Distributor activity, and YoY growth to name a few. All of which can vary by Partner Type, Geography or any characteristic or attribute the user wishes to add as a level to the program.
Sounds good, right? But anyone who has experience working in the channel will tell you that if it were that easy, they’d use Spiff programs all the time and just call it a day. The simple truth is…. it’s not that easy.
Often, and after a lot of analysis, vendors will launch incentive programs they believe will accomplish their immediate objectives. And yet they just don’t pan out. So, what goes wrong? Channel Mechanics has a lot of experience working with companies that have come to us for help in getting their SPIFF programs right. Based on what we’ve learned, these are the 3 most common mistakes vendors make when it comes to getting SPIFF Programs right:
The best SPIFF Program in the world will fail if it’s not communicated to channel partners in the right way. Or if it’s too difficult to take advantage of, once the audience becomes aware of it’s existence.
The reward being offered has to be relevant to the sales person. Offering rewards that are misaligned with the recipient’s needs or interests leads to non-redemption. But probably worse still, a disinclination to participate in future offers from that particular vendor.
Some companies launch a SPIFF program with no simple way to measure the outcome. This often leads to misreporting or non-reporting of results back to management. And if management aren’t seeing the ROI on a SPIFF program, it likely won’t be repeated.
Some mistakes are consistently made when it comes to SPIFF Programs. Three of the most common we’ve seen revolve around making it hard to consume the offer, improper targeting, and ineffective measurement of results. But the good news is these are all easily solvable!
Once you’ve figured out the right SPIFF targeting for your channel, ensure to communicate it well and that you have a way to measure the impact it’s having with your partners. Channel Mechanics is one SaaS provider with extensive experience in designing and implementing channel SPIFF programs. If you ‘d like to learn more about how Channel Mechanics optimizes vendor SPIFFs in a closed-loop cloud-enabled environment, more information is available by requesting a demo.
Download our complimentary White Paper: Building the Business Case for a Channel Incentive Program – The 5 Drivers of Incentivizing Channel Performance. Or view our Webinar “Best Practices in Channel Incentives“. Alternatively, view Phil’s previous post “Getting SPIFFs Right – Move beyond the old ways of doing Channel Incentives and Rebates”
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