emerging trends in channel incentive programs
TRANSCRIPT
Emerging Trends in Channel Incentive Programs
Key Take-Aways from the 2015 Channel Incentive Benchmark Study
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PRESENTER
Steven Kellam
SVP, Sales & Marketing
CCI | Global Channel Management
Diane Krakora
CEO
PartnerPath
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After all, we are in the incentive business…
PRIZES TODAY!
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Respondents: Who We Surveyed
Optimism Varies by Industry
Vendors React to Industry Challenges
An Overall Lack of Access to Information
Partner Programs That Grab Top of Mind
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2
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WHAT WE’LL COVER
Digging Deep into MDF/Co-op
Rebates: An Opportunity Squandered?
The Well-Rounded SPIF
The Automation & Integration Lag
Our Conclusions
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10
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What would you like to change about your MDF/Co-op processes?
1. ROI (1, 4, 5)
2. Improve partner marketing efforts (2, 3)
3. Pay faster (6)
HOWEVER - IF YOU ONLY PAY ATTENTION TO ONE SLIDE
41% 40%37%
32%
23% 23% 22% 21% 21%18% 18%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Improve Data Analytics and ROI measurementImprove marketing execution by partnersImprove marketing support/program planningOverlay/ tie back sales data to Co-op/MDF spendClosed loop process tied to POS data and/or deal registrationFaster payment processImprove Partner support and issue resolutionIntegration with CRM systemRevise guidelines to better reflect company goalsGlobal standardizationStreamline administrationOther
Who We Surveyed
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Industry
• Software
• Hardware / Devices
• Telecoms
• Smaller %: Pharmaceutical, Health Care,Insurance, and Non-High Tech Manufacturing
Job Functions
• Heavy on Channel Marketing, Channel Sales, also Channel/Sales Ops and Execs
Seniority
• Nice mix of Manager, Director, VP, C-level
WHO WE SURVEYEDHardware
23%
Manufacturing22%
Software20%
Other18%
Telecom18%
Breakdown of Respondents by Industry
Primary Job Function Within Organization
n Channel Marketing (28%)
n Channel Sales (23%)
n Executive Team (CxO) (14%)
n Other Role (13%)
n Purchasing (10%)
n Product Development/ Technical (3%)
n Sales Engineer (3%)
n Finance (3%)
n Sales Operations (3%)
48%
26%
12%
10%4%
Position Level
n Manager (48%)
n Director (26%)
n Vice President (12%)
n Program Support/Coordinator (10%)
n C-Level (4%)
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Size of Channel: Primary Categories by Annual Channel Revenue
• < $100 million - $25%
• $100 million to $499 million – 15%
• $500 million to $999 million – 29%
• > $1 billion – 31%
Really nice mix
WHO WE SURVEYED
n Less than $100 million
n $100 million to $499 million
n $500 million to $999 million
n $1 billion to $2 billion
n Greater than $2 billion
25%
15%
29%
23%
8%
Approximately how much revenue goes through your channel per year (in $US)?
Optimism Varies by Industry
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2015 GROWTH PREDICTION
Hope springs eternal
Double-digit growth plan is the norm
Software vendors are the most bullish about growth this year
0% 10% 20% 30% 40% 50% 60%
About theSame
HigherPercentage
of Total
LowerPercentage
of Total
As a percentage of total company sales, how do you envision your channel sales revenue will change in 2015 vs. 2014?
36%
57%
6%
0% 20% 40% 60% 80%
Software Industry
Lower Percentage of Total
Higher Percentage of Total
About the Same
Vendors React to Industry Challenges
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#1 pain point for 2015: Complex or cumbersome processes for partners
Has been the number one for challenge for partners for the past 3 surveys
But what does it really mean?
Lots of talk from clients about this… “partner experience” initiatives, etc.
The key is…what are you going to do?
TOP CHANNEL CHALLENGES
What are your channel team’s biggest challenges?
1. Complex or cumbersome processes for partners 32%
2. Helping partners migrate to new business models (cloud, etc.) 28%
3. Ineffective sales and marketing capabilities from channel partners 28%
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Top overall pain points over the years:
2010: Poor analytics & ROI tracking
2012: Sales and marketing readiness from channel partners
2015: Complex / cumbersome processes for partners
Top 2015 challenge by industry:
Software: Help partners migrate to new business models (cloud, etc.)
Hardware/Devices: Inefficient access to data/analytics tracking for program measurement
Telecom/Cable: Complex or cumbersome processes for partners
TOP CHANNEL CHALLENGES (CONT.)
Pain Points
An Overall Lack of Access to Information
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Which of the following percentages show the amount of individuals who believe they do not have enough data to manage their channel well?
a) 10%
b) 25%
c) 40%
d) 60%
AUDIENCE PARTICIPATION
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40% of vendor channel professionals say NO
• Do I get the data I need?
• Do CAMs share enough info?
Channel marketing very dissatisfied with info sharing
VPs perceive a data access problem most
DATA ACCESS & INFORMATION SHARING
True60%
False40%
My channel team members have adequate access to the program and partner data we each need to
make informed decisions on a daily basis.
True54%
False46%
Channel team member access to information by department.
True73%False
27%True55%False
45%
Channel Marketing Channel Sales (CAMs, etc.) Executive Team
True32%
False68%
Vice Presidents
Partner Programs That Grab Top of Mind
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INCENTIVE TYPES RANKED BY IMPORTANCE
Incentive Programs Ranked by Importance(1 being most important and 5 being least important)
1 2 3 4 5Don’t Offer
Deal Registration 26% 14% 15% 14% 10% 20%
Rebates 25% 14% 21% 15% 9% 17%
Co-op/MDF/Joint Marketing Planning 21% 33% 16% 11% 7% 11%
SPIFs 12% 17% 17% 16% 18% 21%
Referral/Influencer Rewards 11% 15% 20% 19% 14% 22%
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However, most vendors don’t have time or headcount for the majority of partners.
LOOKS LIKE A WHOLE LOT OF PLANNING GOING ON
1%
7%
22%
29%
28%
13%
We don’t have a joint marketing planning process.
Don’t Know
More than 50%
20-50%
11-20%
1-10%
0% 5% 10% 15% 20% 25% 30% 35%
Pe
rce
nta
ge o
f P
artn
ers
Vendors
What percentage of partners are involved in your joint marketing planning program?
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Filtered by industry:
Software: heaviest joint planning
Hardware JMP is much more exclusive
LOOKS LIKE A WHOLE LOT OF PLANNING GOING ON
0%
8%
32%
28%
32%
0%
0% 10% 20% 30% 40%
3%
6%
6%
21%
47%
18%
0% 10% 20% 30% 40% 50%
1-10%
11-20%
20-50%
More than 50%
Don’t Know
Don’t have a JMP process
1-10%
11-20%
20-50%
More than 50%
Don’t Know
Don’t have a JMP process
1-10%
11-20%
20-50%
More than 50%
Don’t Know
Don’t have a JMP process 0%
8%
17%
21%
25%
29%
0% 10% 20% 30% 40%
Software Hardware Telecom
Vendors Vendors Vendors
Digging Deep into MDF/Co-op
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Which activity does not qualify as OPEX?
a) Trade Shows
b) Advertising
c) Demo Equipment
d) Direct Mail/Email
AUDIENCE PARTICIPATION
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FASB rule 01-9: Classification of Marketing Expenses (must meet all 4 criteria)
1.The payment covers a service by the partner that is a benefit to you
2.The benefit is clearly separable from the sale of the product
3.The benefit could be purchased by you from a source other than the partner
4.You have obtained proof of performance to reasonably estimate true cost
OPEX VS. CONTRA REVENUESales Development Fund or Marketing Development Fund?
Marketing Expenses:
Advertising (Print/Web) Broadcasting (TV/Radio) Catalogs Direct Mail/email Telemarketing Trade Shows
Contra-Revenue:
Certification Training Seminars Demo Equipment Funded Headcount Recruitment
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Do you offer MDF/Co-op funds?
Filtered by channel size:
Always ‘yes’ when >$1B
Often ‘no’ when <$100M.
MDF/CO-OP FUNDS
Yes77%
No23%
Organizations that offer MDF or Co-op funds, filtered by channel size.
Yes59%
No41%
Yes89%
No11%
Yes100%
No0%
Less Than $100 Million $100-$999 Million More Than $1 Billion
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Filtered by industry:
Software: More alternative routes to market
Hardware & Telco: More physical constraints and commoditization
MDF/CO-OP FUNDS
Yes67%
No33%
Yes89%
No11%
Yes79%
No21%
Software Hardware (High-Tech) Telecommunications
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Key theme: getting reps into the same room as prospects
Social media scores low – why?
Enablement on the rise – increase in more complex sales
MOST IMPORTANT REVENUE-DRIVING ACTIVITIES
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Customer seminars/ road show/ floor day/ webinarIn-Person Events: Industry Conferences, Workshops, etc.Funded Headcount/ Brand Champion expenseDemo EquipmentSales and technical training /certificationsOnline webinar eventsEmail marketingOutbound Sales Calling/TelemarketingProduct CatalogsNewsletter/email campaignsOnline AdvertisingCo-branded merchandise/ Promotional ItemsThought Leadership content developmentPrint AdvertisingPDF Collateral/Case Studies, Pre-recorded sales/marketing videosDirect MailPublic RelationsWebsite Development and managementSocial Media Enablement/SyndicationBroadcast AdvertisingOther
For your MDF/Co-op program, which reimbursable activities that you currently offer to your partners do you think represent the MOST significant contribution in building business for you and your partners?
Rebates: An Opportunity Squandered?
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How does the IRS define a SPIF (as opposed to a Rebate)?
a) Reward for selling something
b) Reward for buying something
AUDIENCE PARTICIPATION
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Do you offer SPIF, Rebates, or Loyalty Rewards?
Filtered by industry:
73% say yes
Hardware vendors – heaviest reliance on reward incentives
Software vendors the least
Still a lot of old school rebates out there
OFFER SPIF/REBATE/LOYALTY REWARDS
Yes73%
No27%
Yes52%
No48%
Yes90%
No10%
Yes64%
No36%
Software Hardware (High-Tech) Telecommunications
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OFFER SPIF/REBATE/LOYALTY REWARDS
Do you offer SPIF, Rebates, or Loyalty Rewards?
Filtered by channel size:
97% ‘yes’ when >$1B
50/50 when <$100M
Yes50%
No50%
Less Than $100 Million $100-$999 Million More Than $1 Billion
Yes79%
No21%
Yes97%
No3%
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Rebates most common
Easy to administer
Easy to get CFO approval
Treated as a discount
Limited impact in shaping pre-sales behavior, since received AFTER sale
Don’t reward the actual sales guy who made it happen
Become an addiction/entitlement, so hard to turn off
MAIN REWARDS FOCUS FOR 2015?
2%
7%
18%
25%
49%
Other
None of theabove
Loyalty
SPIFs
Rebates
0% 10% 20% 30% 40% 50% 60%
+
+
_
_
_
_
What form of reward did most responders prefer?
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A mix of both is best practice – hard to do
Use of an application is pre-requisite for targeting individuals
Filtering by industry:
• Company-level rewarding is highest in hardware
• Software companies showed a balance of doing both
TARGET REWARDS AT COMPANY OR INDIVIDUAL LEVEL?
0% 10% 20% 30% 40% 50% 60% 70% 80%
At the company level.
At the individual level (the specificsalesperson, sales engineer, marketer, etc).
How do you target incentive reward payments to partners?
The
Well-Rounded SPIF
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What are the SPIFs for?
Sales is #1
Move to behavior modification
Filtered by industry:
ARE ALL THE EGGS IN ONE BASKET?
0%
10%
20%
30%
40%
50%
60%
70%
What are the MOST effective SPIF rewards you offer?
47%
19%13%
19% 22%13%
6%
0%10%20%30%40%50%
Hardware80%
20% 25% 20%5% 10% 5%
0%
20%
40%
60%
80%
100%
Software
60%
20% 25%
10%
30%
15% 15%
0%10%20%30%40%50%60%70%
Telecom
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How do you pay partners for rewards programs?
Cash still king
Filtered by industry:
• Telecoms most open to non-cash
• Software most into cash
• Very cool travel and merchandise on the horizon
HOW DO YOU PAY FOR REWARDS?
0%
10%
20%
30%
40%
50%
60%
70%
Cash (checks,wire transfers,
ACH, etc)
Gift Cards ReloadableDebit Cards
Credit PointsRedeemable in
Travel andMerchandise
Catalogs
How do you pay partners for rewards programs?
0% 20% 40% 60% 80%
n Credit Points Redeemable in Travel and Merchandise Catalogs
n Gift Cards
n Reloadable Debit Cards
n Cash (checks, wire transfers, ACH, etc.)
0% 20% 40% 60% 0% 20% 40% 60%
Software Hardware (High-Tech) Telecommunications
The Automation & Integration Lag
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Is your MDF/Co-op program run on an automated system?
Overall: about half use an automated system
Filtered by channel size:
• <$100M – 13% automated
• $100M to $499M – 50% automated
• $500M to $999M – 43% automated
• $1B to $2B – 29% automated
• >$2B – 67% automated
MDF/CO-OP: SPREADSHEETS OR AUTOMATED?
Automated System48%
Spreadsheets46%
Not sure6%
Automated System
50%
Spreadsheets50%
Not sure0%
Automated System
43%
Spreadsheets52%
Not sure5%
Automated System
29%
Spreadsheets71%
Not sure0%
Automated System
67%
Spreadsheets33%
Not sure0%
Automated System
13%
Spreadsheets80%
Not sure7%
Less Than $100 Million $100 - $499 Million $500 - $999 Million $1 - $2 Billion Greater Than $2 Billion
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How do you manage your SPIF and Rebate programs?
Filtered by channel size:
• <$100M – none automated
• $100M to $1B – half automated
• >$1B – 40% automated
SPIFS & REBATES: SOFTWARE OR SPREADSHEETS?
How Do You Manage Your SPIF and Rebate Programs?
n Automated – tool runs calculations and generates payment batches.
n Spreadsheets – manually calculated and paid.
38%
62%
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Overall 37% say their MDF system IS NOTintegrated with other internal systems
Filtered by channel size:
• <$100M – about half integrated (53%)
• $100M to $1B – about half integrated (55%)
• >$1B – 70% integrated
SYSTEM INTEGRATED WITH OTHER SYSTEMS?
0% 5% 10% 15% 20% 25% 30% 35% 40%
If your MDF/Co-op system is integrated (automatically shares data) with other internal systems, which ones is it integrated with?
n Not Integrated
n PRM/Partner Portal
n CRM
n Don’t Know
n ERP
n Deal Registration System
n Learning Management System (LMS)
n Other
Our Conclusions
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Key take-aways:
Some old habits die hard…
• Use of volume rebates
• Complexity for partners
• Check payments
• Limited access to information
Growing awareness of the importance of partner experience
Telecoms slowly but surely gaining on software and hardware in channel maturity
Cloud models are now core to all tech channels
IN CLOSING
Key Take-Aways
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Steven KellamSVP, Sales & Marketing
CCI | Global Channel Management
www.channelmanagement.com
Diane KrakoraCEO
PartnerPath
www.partner-path.com
THANK YOU!
QUESTIONS?