Do Channel Partner Incentives Really Work?
By Mike Spellecy
The overwhelming majority of manufacturers rely on independent channel partners to sell and move their products through the sales channel. Realizing these channel partners have the ability to also sell competitors’ products, many companies turn to incentive programs as a method for gaining mindshare and increased loyalty to their products and services. But do these programs really work?
The answer is a resounding "Yes!" According to the 2013 Maritz Channel Market Study, which surveyed more than 1,000 sales professionals from a variety of industries, the opportunity to earn rewards and incentives has a significant impact on a channel partner’s sales effort and loyalty to the sponsoring company. The numbers speak for themselves:
- More than two-thirds say rewards and incentives are extremely important to their job satisfaction.
- More than 75 percent of managers, owners and sales representatives report manufacturer-sponsored reward and incentive programs have a high influence on their willingness, interest and energy to sell that manufacturer’s products and services.
- More than 80 percent agree that the opportunity to earn rewards and incentives from manufacturers strengthens their ongoing relationship with the sponsoring company.
Even so, it’s never been more difficult for manufacturers to maintain the attention of their channel partners. The study revealed that 70 percent of participants were offered multiple incentive programs from manufacturers, channel loyalty partners and employers. In fact, nearly one out of every four respondents had the opportunity to participate in six or more manufacturer-sponsored programs.
Clearly, incentive programs in the channel have a considerable impact on a business’s sales strategy and building brand loyalty. However, to ensure channel partners remain loyal and resistant to competitor offers, you need to develop a compelling program that takes into account the individual preferences of partners. As you work to implement or revitalize a channel partner incentive program, here are a few key things to keep in mind.
Focus on the Individual
Our study revealed that approximately seven out of 10 individuals believed manufacturer-sponsored incentive opportunities should be based on personal performance as opposed to team performance. For many channel partners, it can be frustrating to put forth extra effort only to feel undermined by team members not performing up to par.
The most effective channel incentive programs — and the ones that command attention — take into account individual motivations, individual communication preferences and an ongoing awareness of an individual’s performance.
Clearly Communicate the Basics of Your Program
It’s important to ensure that your channel partners can easily understand what you want them to do in your program. While this may seem intuitive, our research found that this is an area of improvement for many existing rewards and incentive programs.
To illustrate, we asked, “Regarding communications, if you could design your own program, what would make it meaningful, memorable and motivating?" Here are some of the verbatim responses:
- Clear, concise communications/simple and easy to understand
- Open and honest communications
- Personal/directed to a specific person
- Regular/frequent communications, preferably on a daily or weekly basis
- Initial in-person meeting, followed by written electronic communications
Make Sure Your Incentive Is Perceived As Being Worth the Effort
If a sales representative thinks that the award he or she earns for the task you’ve outlined isn’t worth it, the level of disengagement will be substantial. Also, if your reward appears to be beyond reach, your program can actually become counterproductive.
The good news is that the majority of respondents we surveyed (roughly 75 percent) agreed they had a fair and reasonable opportunity to earn rewards and incentives, but you should still evaluate the perceptions of your program on a regular basis.
In short, channel partner incentive programs work. And they work much better if you focus on the individual, clearly communicate about your program and select appropriate rewards and incentives. Is your program incorporating these foundational elements? Please feel free to share your company’s story in the comments below.
Mike Spellecy, vice president of solution thought leadership for Maritz Motivation Solutions, is responsible for solution consulting with a particular focus on channel loyalty and sales incentive solutions. With more than 30 years of experience, Spellecy helps clients achieve objectives by developing programs that create a win-win for sponsoring companies and the people who impact results. He has contributed to the development and delivery of points of view and performance improvement programs for such companies as Konica Minolta, Cisco, AT&T, HP, Dell, Anheuser-Busch/InBev, Shell, Comcast, HON, Kimberly Clark Professional* and Honda.