With all the talk about incenting behaviors and not transactions, both at the partner-company and partner-individual level, are partner rebates still relevant?
We estimated that vendors will spend over $70B in channel back-end discounts and rebates in 2018. Rebates are a significant portion of this spend, and there is no reason to believe that this volume of rebates will see a decline anytime soon.
POS-based, claim-based, and/or MBO-based rebates are a powerful motivator for channel partners, made even more powerful, when they are an element of a strategically developed channel incentives strategy. However, while overall rebate program spend may stay the same or even increase, the purpose and structure of rebate programs is changing due to the rapidly growing impact of the Cloud, Internet of Things (IoT), and Artificial Intelligence (AI).
In recent years, vendors have become more discerning about the partner behaviors they want to influence. This trend has been driven by the need for partners to change their business models and acquire new skill sets as vendors launch cloud and IoT solutions and services. While rebates for achieving base quarterly revenue targets are still quite common, they are only extended to remain on par with the competition. We expect this type of rebate to disappear and be replaced by programs with an emphasis on rebates that generate net new business, rather than repeat orders with existing customers.
For example, vendors will pay out for creating net new business in designated vertical markets, pay outs based on achieving revenue goals with net new customers, and rebates for adding value such as attach rate goals for services.
Vendors will also pay out rebates for partners that achieve certain expertise and/or skill sets. Examples include a deep knowledge of, and a customer base in, a certain vertical market or a skilled engineering staff focused on the configuration and integration of IT and IoT solutions.
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