Must-read for Channel Professionals Looking to Transform their Incentive Programs
Discover proven strategies and industry secrets to maximize your channel incentive programs, boost your sales, and bolster your market share.
Today’s businesses are facing an ever-evolving digital landscape that demands swift and effective adaptation. But the channel continues in a state of flux driven by the transition towards an ecosystem economy, advancements in artificial intelligence, the widespread adoption of cloud computing, and the new digitally oriented buyer’s journey. In this environment, vendors must invest smartly and judiciously in their channel incentive programs and digital marketing strategies to ensure worthwhile returns.
Back in 2023, vendors spent a whopping ~$95 billion USD on channel marketing, with the lion’s share of around ~$75 billion USD going towards incentives. The key to optimizing the effectiveness of this enormous budget is to make certain that those incentive dollars motivate the right kinds of partner behaviors.
So, what exactly makes a channel incentive program successful? To answer this question, we bring you the top 10 best practices that can help you maximize your incentives spend.
1. Partner Assistance in aligning to the new digital buyer’s journey
In this new channel paradigm, partners need assistance in transforming their business processes and models more than ever. This includes marketing knowledge transfer and tools required to promote new AI solutions and services around the new digital buyer’s journey, and how to align their sales process to this new buyer. Vendors need to provide systems and tools for partners to collaborate with other partners around a single customer with multi-vendor solutions, to help them successfully transition into the ecosystems economic model. In a transaction-less economic model incentives are critical to reduce friction and promote collaboration and co-selling.
2. Ease of Doing Business
The adjusted view from sales channel to engagement channel brought on by the ecosystem economy intensifies the demand from partners for relationships and programs that emphasize ‘ease of doing business’ (EODB). EODB is a critical element for increasing mindshare with channel partners. Partners want incentive programs that are straightforward and easy to use. This is especially true for non-transacting partners, such as influencers and referral partners.
3. Consumer-Like Experience
Your incentive programs should mimic a consumer experience in terms of ease of use, aesthetic appeal, and seamless access to information. A program that feels as intuitive as using your favorite online shopping site encourages partner participation. AI powered incentive automation tools provide this level of PX.
4. Remember long tail partners
Unlike the traditional two-tier distribution model, the ecosystem economy fosters a more interconnected network of partners working collaboratively to deliver to customers a better more complete solution and an exceptional integrated experience. Don’t limit your attention solely to top tier partners. Long tail partners, which are more likely to be centered on SMB, represent a rapidly growing opportunity for cloud services and solutions.
5. Compensation Based on LTV
In the world of channel marketing, it can be quite a challenge to determine which incentives automation solution is the perfect match for your requirements, especially when it comes to building successful channel incentives programs. Vendors need to explore new ways to motivate and compensate their partners and their sales team. Incentives should be proportionate to the lifetime deal value, not the unit price of the product.
6. Target Rewards at the Point of Impact
Ensure that your incentive programs reward those individuals at the partner who are making the effort to bring forward your products and services, typically that would be the sales rep, sales engineer, and marketing associate. Not the partner company. Your programs need to be structured to target those most likely to drive performance in the new channel.
7. Consolidate Platforms
Smart business operation involves consolidating your incentive programs to as few platforms as possible, ideally, one platform. This not only helps with operating efficiency, but also makes it significantly easier to run your program globally. Assessing your channel IA technology stack, therefore, becomes a crucial task. It’s essential to understand your partners’ perception of their experience. Expert guidance is integral in identifying the right solution for your business.
8. Provide Incentives Across the Partner Life-Cycle and Throughout the Sales Cycle
Awarding incentives should not be limited to just deals won and quarterly revenue goals. They should be targeted in areas such as partner education, training and certification. Also, demand generation, lead management, and opportunity management throughout the entire life cycle and sales-cycle, instead of just closed deals.
9. Rethink Rebates
Company level incentives are crucial but make sure they are rewarding incremental growth, not just revenue attainment. Rebates are typically reserved for top-tier partners and are calculated as a percentage of revenue growth averaging around 2 to 7.5 percent. Consolidating company-level incentives with individual and team-based incentives helps align all stakeholders in their earning and redemption opportunities.
10. Measure Performance
The efficacy of your incentive programs can only be improved if it is accurately measured. When designing incentive programs start with the activities, behaviors and transaction that you can systematically track, measure and report on. This way you can configure a live dashboard to track ongoing measurements. This is a must-have for vendors looking to optimize their incentive spends.
In conclusion, the shift to an ecosystem economy, advancements in artificial intelligence, the widespread adoption of cloud computing, and the new digitally oriented buyer’s journey are significantly transforming the channel business. Smart consolidation of incentive systems, attention to the partner experience, and a re-prioritization of incentive strategies can help businesses and their partners yield a competitive advantage in the new channel. Talk to us and learn the many ways we can help!
