The Ultimate Guide to Channel IncentivePrograms

The Ultimate Guide to Channel Incentive ProgramsThe key topics impacting the success of channel marketing today are:

Partner/Vendor business goal and specialism alignment – from company level through to an

individual level

Increased necessity to train and upskill sales teams in new vendor revenue models

The ‘third wave’ of marketing automation – Channel Incentive Program Management (CIPM)

In this guide, we’ll consider how you can tackle these topics within your own incentive programs,

and continue to work effectively with your channel eco-system.

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1.Motivating your Sales ChannelThe success of a business can depend on the effectiveness of its sales channels. Elevating channel

teams to a top level of performance can come down to one key factor: how motivated they are

to sell your brand, products or services. Ultimately, the collective impact of individual behaviors

improves channel performance.

A distributed selling environment can be highly competitive, with lots of businesses vying for the

same level of attention and mindshare, to achieve maximum sales.

Consider that channel sales teams, working in a distributed selling environment:

Have company targets to hit

Will be pushing products similar to yours

Must have good knowledge of multiple brands and products

Use their own selling techniques and strategies

Don’t work directly for you and have their own agenda

1. MOTIVATING YOUR SALES CHANNEL

You can work towards overcoming the challenges by offering extra motivation. By building

mindshare and influencing a team’s behavior, you encourage your channel to:

Give your brand more attention

Strive to meet your aims and achieve your goals

Build better knowledge of your brand and offering

Prioritise selling your products over your channel competitors

What does your channel partner want from you?

It’s important to consider what your partner’s expectations are from you as a business, and to

consider their objectives when creating your own.

Build trust by:

Understanding your partner’s needs and challenges - show you know and understand you want

what’s best for them

Help provide support in selling your brand, products and services through effective training

Provide leadership and foster cooperation - demonstrate confidence and understanding

around how they work, their challenges and pain points

Aim to create a continuing mutually supportive relationship with your channel – one where hard

work, loyalty and results are rewarded

Once you’ve established your working relationship, consider building their objectives into your

quarterly business plan and fix review checkpoints. Set agreed and achievable targets – typically,

when launching an incentive, a 15-20% growth target is used as guideline.

Set agreed and achievable targets

– typically, when launching an

incentive, a

15-20% growth target is

used as guideline.

How can you motivate your channel?

Setting up a channel incentive program can meet engagement

challenges head on and exceed a partner’s expectations. You can

demonstrate support by taking the time and budget to invest in

a personalised program – that rewards the desired behaviors of

their team.

Programs could be purely sales driven but the most successful

incentives are tied to e-learning or incentivized learning/training.

Rewards might include desirable gifts based on their personal

interests, or money-can’t-buy experiences, which create

unforgettable memories that recipients will forever associate with

your brand.

SiriusDecisions research indicates partners are three times more likely to respond to a demand creation program offer after engaging in some form of marketing training.

1. MOTIVATING YOUR SALES CHANNEL

Why set up an incentive program?Incentive programs are fast becoming a popular choice for businesses that rely heavily on channel

sales partners. Research from Forrester shows that the automation of incentives helps to remove

the ‘friction’ in the partner’s sales process and to streamline the lead to revenue processes.

A 2017 study from the Incentive Federation measured the expenditure of US businesses using non-

cash rewards for their employees, customers and partners. It showed that overall incidences of

channel reward programs increased by 15% – a 57% increase in three years.

The study summarised that “award points, gifts cards, incentive travel and merchandise are

commonly used tools for firms seeking to reward and recognise and their employees, sales teams,

channel partners and customers.”

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The benefits

Increased engagement

Partners feel appreciated and

valued

Create emotional bonds

with your brand, increasing

engagement with your business

Stand out from competitors

Resulting in

More effective and frequent

sales (and better attach rates)

Partners prioritising your

products above others

New brand ambassadors –

embodying your brand and

values

Tracking performance

Monitor the performance of your

channel sales partners through

PRM/CRM integration, pipeline

tracking, deal registration or

sales receipt submissions

Gauge the level of engagement

by monitoring log-in frequency

and interaction with your portal

Prove ROI by measuring volume

and speed of incremental sales

during a fixed incentive period

Gaining mindshare

Provide long-term awareness of

your products and brand

Offer accessible training

tools and easily referenceable

documentation

Develop skills and brand

knowledge across sales teams

2. WHY SET UP AN INCENTIVE PROGRAM?

Resellers involved in the incentive

program for Pirelli sold 27%more in the same period than

another group that wasn’t incentivised.

increase in total revenue

increase in market share

increase in net operating income

The measurable impact of incentive programs can be split into hard and soft ROI.

 

Hard ROI – The measurable pounds or dollars coming into your business.

Soft ROI – Factors that can’t be measured in dollars or pounds, such as:

 

Increased level of engagement

Improvement in product knowledge

Increased engagement with your brand

Development of joint case studies

 

Research shows the positive impact channel incentives can have on bottom line. A case

study from the Incentive Research Foundation (IRF), featuring one of the U.S.’s top 500

companies, showed: 

32% 30% 19%

2. WHY SET UP AN INCENTIVE PROGRAM?

Buy-inWhenever you think about launching a new sales motivation initiative, ensuring your stakeholders

are on-board is crucial.

The level of buy-in for your incentive program, both internally and externally (from your partners),

can make or break its success.

Internal buy-in 

It’s difficult to expect committed buy-in from your channel partners before you’ve got it from your

own business.

 

Acquiring internal buy-in usually helps to justify budget, as well as ensuring the right KPIs are

in place for ROI purposes. Before launch, it’s important to ensure all stakeholders understand

the rationale behind your incentive and have confidence in your scheme – and that you all have

confidence in the expected outcomes.

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3. BUY-IN

Results your business wants to see 

Measurable results should cover a variety of factors including:

Incremental growth YoY or MoM

Improvement in particular product sales

Aligned targets and annual sales strategy

Better communication channels and reporting

 

Ultimately, by implementing a joint initiative, the most recognisable ‘Soft ROI’ result is likely to be

an improved relationship between you and your channel partner, and embedded behaviors in their

salespeople.

Budget 

Design your incentive scheme to deliver results within a set budget. By offering explicit

understanding of upfront set up fees, ongoing management, comms or utilisation costs, you can

accurately demonstrate the projected ROI of a program, or multiple programs.

 

Consider the benefits of a long or short-term channel incentives, whether they reflect ongoing

loyalty to your brand or offer SPIFs (kickers) on certain products or services per quarter, per

partner and so on.

Typical ROI Calculation: 

Gross profit – Investment= Net Profit x 100

gives you the% Return On Investment

Partner Reward Tiers 

Though traditional partner tiering is something of the past, you can use a tiered

approach based on sales volume and scaled pricing to determine your growth

aspirations and reward budget margins. This table provides a simple example model,

exemplifying the ROI that your business could expect.

Quarterly run rate

Value per unit

Desired uplift

Estimated growth

Reward budget

Partner 1 10,000 £800 20% £1,600,000 3%

Partner 2 5,000 £900 15% £675,000 2%

Partner 3 2,000 £1,000 10% £200,000 1%

£2,457,000 £63,500

3. BUY-IN

Partner buy-in

Once you have internal buy-in, you can work on getting your channel partners on board.

How?

Ensure you’re speaking to the most senior business owners

Explain the bottom line benefit to their business i.e. increased margins and employee retention

Demonstrate an understanding of their business goals

Ensure they understand that you’re utilising your budget to motivate their teams and to

benefit them

Build a joint business plan

 

The more bought in your partners are, the more enthusiastic they will be when introducing and

promoting the scheme to their team, and ultimately the more effective your incentive will be.

 

This buy-in thrives when your approach is tailored to a specific channel and its needs, creating a

mutually beneficial connection between your business and channel partner.

Consider potential previous results, including recent performance statistics and feedback on

previous initiatives, allowing you to better understand what drives team engagement.

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3. BUY-IN

Compliance 

It’s vital that your channel marketing incentives are

manageable from a legal perspective. From data

protection to taxation and anti-corruption legislation,

there are a number of compliance issues you need

to be mindful of in order to ensure the success and

longevity of your incentive.

GDPR/DPA 

Introduced in 2018, the General Data Protection

Regulation (GDPR) rulings have placed a tighter

restriction on businesses that use data on individuals.

 

To make sure your program is compliant, you need to

have clearly identified opt-in and opt-out options. You

should also provide access to information that shows

how any data you collect is utilised.

 

Any data you gather needs to have a legitimate

business interest. If the information will be shared

with a third party, you also need to make that clear.

Users can consent for you to utilise the data you’ve

gathered in the ways you’ve stated via subscription

management tools in your platform.

Key GDPR considerations - Data permissions 

Data Controller

A data controller can process collected data using its

own processes. In some instances, however, a data

controller needs to work with a third-party or an

external service in order to work with the data that has

been gathered.

Even in this situation, the data controller will not

relinquish control of the data to the third-party service.

The data controller will remain in control by specifying

how the data is going to be used and processed by that

external service.

Data Processor

A data processor simply processes any data that the

data controller gives them. The data processor does not

own the data that they process nor do they control it.

This means that the data processor will not be able to

change the purpose and the means in which the data is

used. Furthermore, data processors are bound by the

instructions given by the data processor.

4. COMPLIANCE

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Tax

When it comes to reward incentive schemes, taxation can be a minefield,

if not properly navigated. Any award/reward (with an equivalent monetary

value) could be deemed as a taxable benefit. The law differs between

countries and regions, as does the value of tax-free benefit/reward in kind. To

get the maximum value from your program, ensure you set these boundaries

before agreeing the appropriate scope of rewards.

 

If you are considering an end of program overseas event or celebration,

consider how you structure it, and whether it is business focused or

purely leisure. If it has an element of business focus, it could be void of tax

implications.

 

All incentive programs can be viewed as a taxable benefit. In recent years,

the onus of who is responsible for paying tax has moved from the channel

partner to the program provider. Ensure you involve your finance teams to

help you to gain access into their current processes, hire a third party tax

specialist, or seek advice from your program provider.

4. COMPLIANCE

Key taxation considerations 

When it comes to the tax for your incentive,

make sure that you’ve established:

Who is liable for paying the tax associated

with the end reward

Whether the reward is of professional

benefit or personal benefit

Clear communications with internal

and external stakeholders on financial

implications

Bribery and corruption

The spirit of the law on anti-bribery legislation is targeted at

stamping out corrupt and unethical behavior. This includes

fraudulent and anti-competitive practices. 

 

Incentive schemes are still an accepted and important part of

encouraging the right kind of behavior from team members – be

it to improve quality or drive up profitability or sales. 

 

Provided that incentive schemes are designed and managed

well, they won’t fall foul of anti-bribery legislation.

 

A well-designed incentive scheme should be linked to your

company’s overall business strategy, clearly communicated and

aligned with your company’s values and code of ethics.

 

It’s best practice to conduct a risk assessment to ensure that

there is no risk of the incentive breaching legislation.

Ensure the plan for your incentive is:

 

Clear and transparent

Fair and equitable

Trackable and has an audit trail

Similar to normal business practice in your industry

UK Bribery Act 2010 

This act establishes company liability for corrupt acts

committed by people acting on behalf of a company.

These measures are in place to ensure that individuals are not:

Offered, promised or given an advantage

Public officials

Obtaining or retaining business advantages – clear and

compliant audit trails act in defence for this

Best practice for channel incentives 

Ensure that you have explicit approval from business owners

and channel partner stakeholders that the program is

appropriate and fair.

 

Consider using a single sign-on platform to enable you to

deliver your program in a controlled, consistent and compliant

environment.

4. COMPLIANCE

Building and developing the right program

The best channel incentive schemes are not made with a one-size-fit-all approach in mind.

 

Every partner is different – they will have different ways of working, different objectives

and different types of team members, from the highly experienced to those who are new to

selling. Therefore, each incentive program should be different too.

 

Tailoring your program to fit each partner can help to maximise its effectiveness. It ensures

that it stands out from competitors, maintains momentum of sales employees, and acts to

ensure that it’s less likely to lose steam over time.

Having a deeper view of your partners is key to developing an incentive scheme that’s well

suited to each partner, helping your incentive stand out from your competitor’s programs.

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Knowing your channel partners

To engage your extended salesforce, you need to know and

understand each business individually. By taking the time get to know

each of your channel partners, you build the foundations for long-term,

lasting relationships.

Segment by skill sets and persona/profile:

Business, brand and day-to-day operational processes

Aims and objectives – monthly, quarterly and annual goals

Challenges, and plans to overcome them

Team structure, ways of working and demographics

Approach to sales and selling techniques

Existing incentive schemes and sales tracking/CRM frameworks

Methods through which other vendors engage the team

5. BUILDING AND DEVELOPING THE RIGHT PROGRAM

62%of high performers havesome form of ongoingpartner enablement inplace for multiplepartner personas. SiriusDecisions

How will you recognise sales?

Consider the opportunity to record and track the sales process within your platform.

Incentives typically reward for opportunity registration, deal registration and/or closed

deals. A self-claim form allows team members to log completed sales and their value.

Furthermore, using your platform as an opportunity management tool allows you to

track what’s in the pipeline and monitor deal progression.

You might also choose to reward participants for completing training modules,

obtaining case studies, sharing social posts and or utilising marketing campaigns and

tools.

When new products are launched, you could offer rewards for attaching them to

existing deals – using the program to promote a SPIF.

 

What data will you track and how will you report? 

Capturing the right data is crucial to monitoring the success of your incentive. From the

outset, agree what data will be the most important to measure success by setting KPIs

and objectives.

 

Agree the frequency of reporting cycles and fix regular checkpoint meetings with each

partner and internal stakeholder before launch. By predefining metrics and giving 360

degree visibility of results, either via self-serve reports in the platform back-end or via

automated comms, you reduce admin time and increase program engagement from

the top-down.

5. BUILDING AND DEVELOPING THE RIGHT PROGRAM

Typical key tracking metrics include: 

Platform registrations (% of workforce)

Log-in frequency and linger time

Content engagement

Sales volume

Sales value (and percentage list price)

Sales against target

Type of sale (product/service split)

Points awarded (if using points banking)

Reward redemption

Top performers

Hewlett Packard Enterprise’s incentive travel program achieved a year on year increase of

110%through the right engagement and tracking metrics.

5. BUILDING AND DEVELOPING THE RIGHT PROGRAM

Choosing your rewards

The more desirable your program’s rewards, the more effective

they can be as motivation. The best incentive schemes offer

a range of desirable rewards that can be chosen according to

preference – making it personal – and awarded according to

performance – making it competitive. Top-tier rewards fit these

two key requirements.

 

Effective rewards include: 

Gift cards – rewards from major retailers that give employees

more choice than a traditional rewards catalogue

Prepaid cards – a financial reward that doesn’t get lost within

a salary, perfect for employees with families or broad interests

Experiences – a once in a lifetime opportunity to meet a film

star, or to drive a McLaren F1 car, for example.

Incentive Travel trip – designed to offer unrivalled and

unforgettable experiences that aim to further motivate and

engage with your extended team face-to-face.

Providing personalised rewards demonstrates to individuals that

you value them as an extension of your team and have considered

how your incentive will work specifically for them.

5. BUILDING AND DEVELOPING THE RIGHT PROGRAM

Launching and managing your incentive program

One of the keys to attaining buy-in, engagement and success is your communications strategy.

The method, pitch and frequency of communication needs to be well considered for not only the

introduction of the program, but to drive continued user interactions thereafter, and to launch

new promotions or on-the-spot incentives throughout.

Robust comms strategy 

The initial brief to your channel partner should include an emphasis on the necessity for access to

participants’ contact details. Throughout the program, you can then collect additional data that

helps to analyse success rates and engagement.

 

Regular and relevant comms need to be in place for any program to maintain momentum and

succeed. The more personalised, the better.

 

Set goals – ensure there is a clear understanding and expectation from both parties on the

frequency and content of communications

Deliver the promise – provide reporting and reward/engagement statistics regularly and in a

timely manner

Analyse and review – survey and consider results, share feedback, and improve

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6. LAUNCHING AND MANAGING YOUR INCENTIVE PROGRAM

Aside from the email comms, the promotion and launch of your incentive plays a major role in

getting and retaining engagement.

Tactics might include:

Team event or day out

Take your partner team out to enjoy a team activity, like abseiling or

an experience day (sports car racing or tasting menu, for instance).

Such experiences will create memories associated with your brand,

helping to keep it front of mind.

Marketing campaign

Promote your incentive program by including it on the partner

intranet, advertise it in your channel newsletter or organise a

speaking slot at your partner organisation’s monthly meeting.

A SPIF or hype day

SPIF (Sales Promotion Incentive Fund) days or hype days involve

branded goodies, office decoration and on-the-spot training

sessions on specific products. They often include small incentives/

prizes in an informal setting - giving the participants a taster of the

rewards up for grabs.

Monitor your data frequently. Assess performance and progress to help you identify problems and amend your incentive to keep channel team members engaged and motivated.

Results and ROI

To demonstrate true ROI, it is crucial to agree performance metrics before you create the program –

whether it’s for the launch of a new product or the beginning of a sales campaign.

These metrics help you to generate proof points, which often focus on behaviors at a company, team

or individual level. Increased capabilities in turn lead to better demand generation and ultimately,

impact on the bottom line.

 

Proof Points: basic measures of partner incentive performance

Key Performance

Indicators (KPIs) & ROI

Participant registrations

Participant log-ins

Incremental sales

Increased attach rates

Increased market share

Greater increased revenue than investment

Engaged Workforce

Increased brand knowledge

Opportunity registration

Deal Registration

Closed Deals

Brand ambassadors

Reward redemption

Streamlined Processes

Vendor visibility of sales pipeline

Automated reporting

Any time access product information

Incentive budgeting

Easy roll out point promotion campaigns

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Conclusion

In this guide, we have considered the benefits of building an incentive program to motivate not

only your individual salespeople but your partner organisations at a macro level, to engage with

you further.

We’ve learned how to effectively calculate the return on your investment before gaining buy-in

from internal and external stakeholders.

By driving objectives based on mutual business benefit, you create stronger and deeper

relationships. Further enabling your extended sales teams and rewarding desired behaviors helps

to motivate them to represent your brand and sell more.

The gamification of online enablement, points banking and deal tracking is helping global

organisations to streamline their processes and produce efficient real-time reporting. By

automating incentive-delivery and marketing communications, you are able to create predictable

programs in controlled environments that benefit all parties.

Channel Incentive Programs, the next wave of marketing automation, when executed in a

consistent and compliant manner, form an essential part of your partner engagement and

enablement toolkit.

Talk To Usabout how we can deliver a channel incentive program in your business to make a difference...

call us 0370 405 2020or +44 (0) 1789 404 020enquiries@crworldwide.com www.crworldwide.com