Take your Channel Incentive Program to New Heights by Following these Easy 7 Steps.
Over the course of the past decade, there has been a continual shift in manufacturers’ perception in creating successful channel incentive program; a fluctuation in spending that has long divided channel teams, where the decision to slash channel incentive program investment or surge the allocation of trade promotional funds furiously bud heads.
It’s an , nonetheless, a necessary discussion that ultimately asks the question, “How can we make the wisest investment for a that results in the highest possible reward?”
To say the least, , accomplish and channel programs effectively in a convoluted economic and legal landscape, on top of constant scrutiny from financial executives and company stakeholders is challenging.
With that said, ask yourself if any of these questions sound familiar:
- “John, we’ve invested a lot into ‘said program.’ How much did we make?”
- “Jane, which programs are we getting our money from?”
- “John, are our partners not promoting our products, or are we not helping them enough?”
- “Jane, are our programs in accordance with legal compliance standards?”
- “John, are partners even taking advantage of our trade promotions?”
The following information provides Best Practice insight aimed to help vendors confidently answer the previous questions:
- Pre-work makes the dream work
- “Begin with the end in mind” – Stephen Covey, 7 Habits of Highly Successful People
- Strategy over philosophy
- Putting the pieces together
- Communicate, educate, and communicate
- Implement partner scorecard metrics
1.) Pre-work makes the (Channel Incentive Program) Dream Work
American philosopher, Nicholas Murray Butler, said it perfectly: “An expert is one who knows more and more about less and less until he knows everything about nothing.”
If one conducts the research, and carefully evaluates all of the logistics that go into the , then it will be less likely that resources will be wasted in the execution of a plan. This holds true in many aspects of life and business, but in the complex world that is channel program management, pre-work is imperative for a successful channel incentive program.
This includes analyzing the market and channel, measuring the competition and setting up the proper process protocols.
For example, some questions that need to be answered before program implementation may include:
- What are the current trends in the market?
- How does your successful channel incentive program fair in comparison to competitive incentives?
- What components would take your program to the next level?
- Are your channel partners confident in their marketing capabilities?
- What are ‘worse case scenarios’ that may impede your success?
Due diligence is key. It’s important to not only discuss expectations with executive management but to also engage with “foot soldiers:” the personnel in the trenches who deal with partners and end-customers; their feedback serves as a critical tool that pinpoints what your target demographic anticipates and needs to be satisfied.
Pre-work should also include an investigation into the legalities of program implementation. Your financial department or certified public accountant will serve as a critical point-of-contact for ensuring whether or not your company accounts for costs as expenses or as revenue reduction, as well as how to handle disputes in the case of discrepancies and program exceptions.
2.) Successful Channel Incentive Program “Begin with the End in Mind”
A channel incentive program or trade promotion is intended (among many others) to increase market mindshare, revenue and . However, there has to be a relative, logical motive to develop a successful channel incentive program that contributes to your bottom line and overarching business objectives.
Therefore, simply having a program for the sake of “making partners happy” is a great way to pigeonhole your company as someone partners can potentially exploit.
With that in mind, a has to work as a two-way street, where all parties benefit from the successful execution of said program.
So, make sure you establish clear and measurable objectives before the program is made available and that those goals are (whether they are revenue-oriented or not) across all relevant business units as a guide.
This document will serve as a resource for any lingering executive concerns and as a beacon all subsequent planning.
3.) Strategy over Philosophy
Once your outlined objectives are squared away, the next step is to develop an action plan. Although building a strategy may seem like an obvious prerequisite for successful channel incentive program implementation, it’s something that is surprisingly overshadowed by .
It’s important to distinguish strategy from tactics because the two possess different connotations, but share parallel focuses.
As identified by ClearPoint Strategy, strategy “defines your long long-term goals and how you’re planning to achieve them. In other words, your strategy gives you the path you need toward achieving your organization’s mission” while tactics “are much more concrete and are often oriented toward smaller steps and shorter time frames along the way. They involve best practices, specific plans, resources, etc. They’re also called ‘initiatives.”
In the case of channel incentive and trade promotional programs, a strategy often involves decisions on identifying the best channel vertical for a specific solution, segmenting the skill level of channel tiers, generating a market buzz and distributing leads for partners so they can execute on the “ground level.” Ultimately, strategy gives you the groundwork so that tactics can exist and be effective.
4.) Putting the Pieces Together
If you are involved in channel management or developing trade programs, you are probably very familiar with the 80-20 rule: 80% of your channel partners represent 20% of your overall (channel) revenue. If this industry standard is conversant with you, then it is very likely that 20% of your channel partners also spend 80% of the you invest in the channel. In such a case, perhaps then it should be the “80-20-20-80 rule.”
Therefore, given these consistencies, implementing the cookie cutter, the one-size-fits-all program would seem to make the most sense. After all, it sure saves your team time in the long-run when you are designing one, exclusive channel incentive program.
In this case, however, the best solution for truly encouraging partners to participate is to customize your programs and/or, at the very least, offer partners some alternatives. This gives participants the flexibility to leverage a program that best fits their internal agenda while simultaneously support their bottom-line objectives.
5.) Communicate, Educate and Communicate
Another obvious channel practice that is often overlooked is your communication and educational efforts before, during and after program implementation. Utilizing a segment of your channel incentive program spending to invest in partner education validates your commitment and further develops your influence as a market leader. Online tests, gamification systems, and ensure that everyone affiliated with the program—from your channel sales personnel to partners’ go-to-market sales troops—understand the details of the program.
Once everyone is more informed on the overall logistics of the program, the entire process moves in a much more harmonious direction. Remember, channel partners alone endure dozens upon dozens of programs and promotions on any given day. Therefore, you need to have something different and communicated clearly with a unique approach to education.
6.) Implement Partner Scorecard Metrics
At the end of the day, the key to a successful channel incentive program or trade promotion is to ensure you have the right partners on board. This includes making sure the business model, sales capacity, marketing competence, market experience, and longevity, etc., all align with you and your expectations.
Your “Holy Grail” in terms of finding the right partners is via partner scorecards, especially nowadays when market instability, competition and the evolution of could-enabled applications are at the forefront of the channel.
Based on our years of experience in helping manufacturers develop relationships with channel partners, here are our top 10 scorecard metrics to survey:
Total Sales Revenue – The most obvious indicator of a (currently) thriving business partner. Moreover, it also allows you to see how much value they bring the end-customer.
Key traits to consider
- How does the partner perform in value vs. volume sold?
- Are they building long-term customer relationships or settling for short-term wins?
- Are they competent at selling at high margins?
- How much did you invest in establishing their sales?
Technological Savviness – As solutions become increasingly more complex, it’s vital that partners train their sales team to be well-versed in technological competence, and know the ins-and-outs of the products they sell. This is such an important measurement because it directly translates into the satisfaction and confidence end-customers have.
Key Traits to Consider
- Do partners have certification protocols in place?
- Which process takes the longest to accomplish – selling, integrating or managing?
- Do partners seem to play catch-up or are they staying ahead of the curve?
Operational Competence – It’s one thing for partners to be marketing experts, fantastic salespeople, installation experts, and technologically gifted—but, if those competencies exist without a solid infrastructure or assured financial foundation, it’s essentially meaningless.
Key traits to consider
- What is their average response time to end-customer needs?
- How often do end-customers come to you for operational issues?
- Do partners have experience in selling to multiple verticals within the same organization (e.g., CIOs, CFOs, , VPs, etc.)?
- Do they have a system or process for measuring the success of marketing campaigns?
Market Influence – Mindshare is critical; it’s also difficult to measure as it is not always tangible information, but rather qualitative and requires additional investigation.
Key traits to consider
- Does a partner have a company blog? If so, does it receive high engagement?
- How many followers, likes, connections, etc., do they have on their social media profiles?
- Are crowd site reviews available? Sites like Capterra, Software Advice, G2 Crowd, and Crowd Reviews are good sites to explore.
- How many marketing professionals exist within their organization?
Sales Metrics – This is a fundamental component of evaluating partners’ value to end-customers. These metrics can be found via partner POS. However, if you struggle to receive good, complete POS data from partners, there are several you can use to accomplish data exchange compliance.
Key traits to consider
- Does partner have a reoccurring sales history or are one-time transactions more prevalent?
- How quickly can partners attract customers and close deals (i.e., sales velocity)?
- Do partners achieve sales via value and good sales tactics or rely mostly on discounted pricing?
- How much do partners invest (resources) into a single transaction?
Current Revenue Model – With the continual shift from “hardware deals” to subscription models, where partners generate their revenue speaks volume to their market preparation.
Key Traits to Consider
- Do partners offer a variety of products/solutions, including cloud services?
- Do partners sell cloud-services as a last resort?
- Does partner show a general interest in developing their cloud-service offerings?
- What do partners do to prepare themselves for possible revenue disruptions? Do they have an action plan arranged?
Vertical Expertise – Specialization in the channel is growing in value. Therefore, before investing in a partner, it is imperative to ensure they have the necessary competencies to serve a particular vertical. Furthermore, the next question to consider is to not only investigate whether they have the experience to sell to a niche vertical but rather, the resources and knowledge to service those particular customers.
Key Traits to Consider
- Is the partner able to formulate specific requests and questions for a given channel vertical?
- Does partner have segmented training certifications for selling to a specific vertical?
- Does partner request a specific kind of demo equipment?
Wellbeing – Company health is vital to assess. Although easy to detect (a simple Google search can tell you how long they’ve been in business), it does not necessarily mean they are the right fit or “doing well.”
Key Traits to Consider
- Credit rating
- Legal standing
- Company personnel growth
- Years in business (obviously)
Business Plan – Alignment in go-to-market strategies dictate whether you are going to have a successful channel incentive program. However, if there is dissimilarity, acquiring a synergetic rapport is unlikely. Scorecarding is about forecasting the future and analyzing the likelihood of a successful relationship. That ultimately means, ensuring there is a correlation in the business model, sales capacity, and market expertise.
Key Traits to Consider
- What is the partner’s long-term strategy for growth? Is it similar to your own?
- What evidence do you have that ensures they have the resources to manage market shift(s)?
- What are the obstacles that threaten their short/long-term success?
- Does their investment in the training match their need for training?
- Do they outsource software solutions or build in-house?
End-Customer Fulfilment – At the end of the day, the success of your channel depends on the satisfaction of end-customers. Selling indirectly can be an obscure and frustrating practice, given that you don’t have an opportunity to see how your products reach the hands of its final consumer; your channel partner, however, does. Simply put, your partners (in)ability to 100% satisfy end-customers is a critical component to your success, even if the sales numbers don’t always validate its significance.
Key Traits to Consider
Create an end-customers survey that asks:
- How would you rate the channel partner’s support protocols?
- Did you find the project management process to be seamless, or did you have to jump through many hoops?
- When issues arise, how long does it take you to get in touch with a customer service representative?
- How well were purchasing concerns addressed?
- Were you provided with easy, efficient ways to learn more about their offerings?