Khali Henderson Blog: To Spiff or Not to Spiff
That is the question that came up Tuesday at CompTIA Breakaway 2010 during a session presented by the Channel Vanguard Council called, “Evolving and Implementing Compensation Plans."
The panelists – all from the IT channel – were of different minds on this question, but I thought the discussion interesting and worth circulating with the telecom channel.
Spiffs are given usually to partners by vendors/carriers to drive sales of their products and services through the partner’s direct sales force or subagents. The panelists generally agreed that they are effective in influencing sales behavior.
What was in question was whether they compromised the customer-driven solutions sale. Here the panelists also largely conceded this to be the case. Still, many of the continued to accept spiffs from vendors and offer them to their sales reps. Tech Data, a large VAD, however, eliminated spiffs three years ago because sales were too driven by vendor spiffs. Instead representatives are given incentives based on net new business to the company.
I’m not totally certain I understood this correctly, but I got the impression that one of the panelists played both sides – accepting spiffs as a company but not passing them through to the sales reps and instead offering its own incentives that were geared toward increasing company profitability rather than sales of a specific vendor's products.
If that is the case, then the vendor is paying spiffs on sales they would have gotten anyway and funding a program that rewards sales of competing products potentially.
So, do spiffs really work as the vendor intended? Would their money be better spent another way? Do spiffs undermine the overall sales strategies for multivendor/multicarrier channel partners? I’d love to hear your thoughts.