Guest Column | June 20, 2014

Changes In The Air For Channel Incentive Programs; Resellers Stand To Gain

Dan Hawtof, EVP of Corporate Business Development, Products and Solutions, parago

By Dan Hawtof, EVP of Corporate Business Development, Products and Solutions, parago

Last month, I hosted a webinar during which I talked about parago’s recent survey of channel marketers. One thing our research pointed out was their desire to grow beyond pure sales incentives, and start including the behaviors that support sales. But they also told us they’re having difficulty figuring out exactly how to do that.

During the Q&A portion of the webinar, an attendee asked how to go about identifying exactly which non-sales behaviors he should be incenting. It’s a great question, because it’s one of the biggest stumbling blocks channel marketers face. To layer on additional incentives that will result in a measurable bottom-line increase, marketers need to 1) know which behaviors to focus additional spending on, and 2) have a channel platform capable of handling the inherent complexities.

My suggestion to the attendee: Identify your top-performing resellers, and figure out what they do differently from the rest. That should reveal which non-sales actions his company could tie incentives to, and have a good chance of increasing program participation and, ultimately, sales.

Identifying The Top Performer

To determine which behaviors to focus on, a vendor needs to identify which resellers are consistently bringing in the most sales, and what behaviors and level of incentive program engagement they exhibit. lf you’re participating in a channel incentive program, your vendor might begin to:

  1. look closely at sales totals to identify top performer(s)
  2. review their organization’s sales process
  3. define the behaviors that support that sales process
  4. determine which behaviors the top performers have adopted that the low- and non-performing resellers have not

When they finish this process, they will be able to put together a basic behavior profile of their most engaged channel partner. You may or may not fit the profile. For purposes of this example, though, let’s call her Joan.

Testing New Incentive Strategies

Now your vendor partner needs to figure out how to get the rest of their resellers behaving like Joan. But first, they need to understand why that isn’t already happening.

They’ll probably start by talking to low- and non-performing resellers about those Joan-like behaviors, and asking questions like, “Why aren’t you doing X?” and “Does our incentive program make it difficult for you in some way?” If you communicate that the current channel program is making it difficult to engage in the vendor’s desired behaviors, the vendor can stop investigating right there — they will have discovered what they need to change.

After they address the problem, they may watch the process for a few months to see if things improve. (My hunch is that while a program glitch or two will certainly have an impact, it’s likely not the whole story.) If the problem persists, now the vendor knows it’s a matter of motivation.

Next, they will determine a plan for incenting Joan-like behaviors. The idea is to overlay additional incentives on the desired non-sales behaviors when they lead to actual sales.

The vendor will implement a plan, then sit back and watch again.

An Example

Let’s say Joan makes it a rule to register her deals. Registering doesn’t benefit her financially, but being the first to register the deal appeals to her competitive nature. Low-/non-performers are, by nature, less competitive, and since they have no financial incentive to register, they don’t bother.

Knowing this about Joan, the vendor adjusts the program so that now, when a seller registers the deal before making the sale, his or her sales incentive increases. By tying a reward to the deal registration behavior, they drive more participation in their program, incenting more sales, and increasing partner engagement.

Making Adjustments

If resellers begin to close a few more sales, but not as many as the vendor had hoped for, the vendor might decide to incent an additional behavior or two to see what happens. Different behavior/incentive combinations could prove to be more effective motivators. And it also may work for Joan, kicking her totals up even higher.

If you have a vendor partner re-evaluating their channel program, you might find yourself cast in the lead role of “Joan” — the reseller who sets the standard — or as one of the supporting cast of resellers who fall a bit short of the vendor’s vision of the ideal program participant. Either way, communicate honestly with your partner, and view changes to their incentive programs as attempts to improve your partnership, and make it more beneficial to you both.

Dan Hawtof is parago’s EVP of Corporate Business Development, Products and Solutions. For more than 25 years, he’s been involved in almost every aspect of the channel. He’s been affiliated with large enterprises and small startups, working in every department, from sales and strategy to product marketing and management, and more.

parago offers a channel platform capable of handling the most complex incentive programs, as well as monitoring and reporting performance.