Channel Sales and the Channel Incentive Prorgram
The realization that both Vendors and Partners are continuing to modify their business models, is driving change within core channel incentive program areas, which support the channel sales route-to-market. Top performing Vendors are utilizing advanced analytics to evaluate the value of top Partner activities and behavior, so they can identify the greatest areas for potential value lift from changed behaviors.
It is evident that the way the channel has always nurtured and quantified Partner loyalty is no longer effective. Moreover, as incentives have different levels of impact on different groups of Partners, these analytic exercises empower Vendors to determine how each targeted incentive can drive profitable behavior, and accelerate the desired result.
The intelligence derived through these analytic exercises is then used to offer each Partner group a choice of incentives that reward them for behavior changes that have a high return. Engaging your Partners on an individual basis – instead of pushing one-size-fits-all programs and promotions drives response, improves the success of solution selling and increases your revenue and market share.
Without visibility into the behavior of successful Partners, programs can only be judged by tactical measurements, instead of how well they support the real goal of increasing Partner performance. Rewarding Partners throughout the entire sales-cycle is an effective way to capture their attention, maintain engagement, and promote and drive revenue.
Top channel sales performers aren’t the only ones who need incentives.
Vendors understand the importance of recognizing their top channel sales performers. To say that having a President’s Club type program is the only solution to generating results, will leave 75% of your Partner’s sales organization “disengaged.” Beyond rewarding the best, you must drive overall performance by “moving the middle” But shifting business models requires shifting focus from deal closing to incenting Partner-led demand generation, lead management, and opportunity registration.
The real leverage of a properly structured channel incentive framework (plan) comes from engaging the entire Partner sales organization. Many companies stop at having a top achiever’s club, and fail to capitalize on the remaining leverage that they have in driving incremental sales gains, across their Partner’s sales organizations.
A 5% growth from the middle 60% yields 70% more revenue than a 5% lift from the top 10%.
Assuming the 20 / 60 / 20 bell curve structure where 20% of your Partner ecosystem represents the top performers, and the last 20 % is representative of the lowest level of performance, the greatest leverage for incremental sales gains lies in the middle 60% of your channel ecosystem.
The middle 60% of your channel ecosystem represents the largest opportunity for incremental sales growth for a variety of reasons:
- Represents the majority of unrecognized potential for incremental growth
- Represents the largest, most diverse group of your channel ecosystem
- Experienced – usually motivated to reach higher levels of performance
- Also inexperienced, and eager or hungry to learn
- Welcome feedback / coaching / insights to better sales success
- Need skills, and experience
- Need to shift their focus to high-value sales activities
Identify best practices that already exist from within your Partner organization, and define two or three behaviors that consistently provide one specific improvement. By examining these best practices, activities and behaviors of your top achievers; you can then develop a series of metrics by which to communicate and measure the on-going performance of this middle group of sales executives.
Unlike top performers who qualify for a travel incentive program immediately, this group will be engaged in actively emulating the key activities that have been proven to be the best practices for success in your business model, so reward them for hitting proven activity metrics as opposed to transactions.
Once you’ve identified those best practices that already exist within your top Partner organization, and defined two or three behaviors that consistently provide one specific improvement.
- Decide on the length of your program cycles by determining the frequency of that behavior.
- Attach a consequence to those behaviors (rewards) to encourage performance improvement consistently and successfully across your channel.
- Make your expectations clear – driving behavior requires participants to understand exactly what is expected of them.
- Track both behaviors and results so you can provide feedback to your Partner’s sales representatives. Measuring the results and providing a response (individual and team performance metrics) will encourage the desired behavior and improve performance.
- Once Partners understand which behaviors will make them successful, introduce them to your program currency. This should motivate their salespeople and management, compelling action throughout your program’s lifecycle.
These were just a few considerations of how incentives should be formulated in the 2015/16 sales cycle. You may also want to look at this blog post from SiriusDecisions ‘Are You Moving the Middle?’ Want more information or to chat about this?
About the Author
Chief Strategy Officer Claudio Ayub brings over 20 years of global channel marketing experience to Perks.He has executed major go-to-market programs for a variety of vendors, including Bing, Cisco, Dell, EMC, IBM, Kaspersky, Lenovo, Microsoft, Motorola, Seagate, Symantec, and VMware among others.More Content by Claudio Ayub