A New Channel Incentive Framework for Hybrid & Cloud Partners

July 6, 2015 Claudio Ayub

perks channel incentive framework

Since the nineties, the channel ecosystem has been characterized by traditional relationships such as partnerships with long-standing vendors, suppliers, and customers. With these partnerships comes well-established operating protocols that foster consistency and predictability.  When innovation is linearly paced, these ecosystems are effective.

However, since 2010, the pace of change from disruptive technologies has increased exponentially. The traditional concept of a channel ecosystem is currently being redefined and, in many cases, totally redesigned.

The mind-set for a new channel ecosystem should be agile and adaptable instead of prewired and static. For vendors who are accustomed to linear change but planning for exponential change, the requirements gap may prove to be significant. Gartner is predicting that over the next five years, a large majority of re-seller partners will have made an effort to evolve their business into the hybrid model. But beyond basic resale, only about one third will make the transition successfully. It is clear that the transition to a Cloud-based or hybrid model, coupled with a sound cloud-based, go-to-market strategy will continue to pose many challenges for both vendors and partners alike.

In the 2015 sales cycle, most technology vendors and their channel partners who are going through transformation find themselves in the implementation stage of a hybrid Cloud model. These evolving business models have put pressure on the traditional channel as they transition to the Cloud, further complicating efforts to simplify and become “easier to do business with”. The new reality is that channel professionals can no longer categorize channel partners according to discrete business model types. The hybrid channel partner is now the new norm, but supporting the go-to-market needs of resale, hybrid, and born-in-the-cloud partners will present several challenges.

There are three transformational channel incentive best practices

Developing and managing channel incentive programs while the industry is evolving into the cloud is a real challenge.  As a channel marketer, you will need to adapt your existing incentive programs to a recurring revenue model that supports your partners today and those into in the near future.

First: shift from transactional to behavioral incentives

Behavioral incentive models should be designed around lead generation, lead management, and early opportunity registration.  You will want to move away from just rewarding for deals to addressing everything from qualified leads to the closed deals.  Marketing and demand generation activities are essential to both drive and support rapid business model transformation. Education, training and certification programs help partners ramp-up and prepare for new business models.

Second: Education, it’s not just about your product

Offer your partners marketing certification programs that strengthen their expertise. Also offer marketing enablement/demand generation tools such as self-service, pre-packaged cloud service marketing campaigns, and compelling incentive programs that motivate both the partner organization and their teams to actively participate in this new way of doing business.  Consider “non-traditional” education such as:

  • How to project revenues
  • How to manage cash flow
  • How to re-design sales compensation

Third: Decrease partner effort to increase loyalty

Ease of doing business in the transition and cloud model is about delivering a consumer like experience.  You must decrease partner effort to increase loyalty.  Vendors who do the best in engaging their partners will be the ones with long-term advantages.  Consider these as ‘table stakes’ in the simplification landscape:

  • Unified login with simplified password policies
  • Simple registration and activation processes
  • Clear rules of qualification and engagement
  • Consistent validation and claim procedures
  • Ensure terms and conditions are clear and meet all local, legal, and tax requirements

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About the Author

Claudio Ayub

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.

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