Feature Article - July/August 2020

Ready for the Green Light

Channel Partner Incentives Set to Adapt in the New Normal

By Joe Bush


The COVID-19 pandemic has shaken up business operations globally, but when any sense of normalcy returns, the fundamentals of transactions should remain. People in the channel partner incentive program industry say they will be ready when their clients and prospective clients give them the green light.

"This crisis is likely to change the world of channel partners in ways that are hard to anticipate," said Ric Neeley, marketing director of incentive program provider Hinda Incentives. "But what is unlikely to change is that both sponsors and channel partners must re-evaluate what their customers value in this new world and find the best way to deliver that value. Non-cash channel partner incentives can then help change the behaviors of the people in the supply chain to deliver that value."

Channel partner incentive programs seek to spur sales or spark behavior, or both. A manufacturer or service provider who relies on distributors, dealers, installers and service technicians to maximize profit uses these programs to increase activity or change methods typically through a system of points that build toward reward levels.

Whether a company wants to build sales volume overall or for a new product, or wants more purchases to come through its e-commerce infrastructure, it needs to know how to best target those who can effect that change and what will drive that target to respond accordingly.

The approach to these programs has evolved over the decades. Recognition, plaques and vacation packages defined the beginning of channel partner incentive tactics, followed by points systems designed to give targets award levels and options, from products to travel to reinvestment in their

businesses.

The rise of the Internet and digital analytics has enabled customers to be better informed before buying, thus forcing sales teams to adjust their approaches. It also has enabled providers to use better segmentation and targeting, and more granular measurement of program tactics and strategy so programs can be adjusted midstream.

More recently, companies that design and help execute incentive programs have begun to function like marketing agencies, said Lincoln Smith, an executive with HMI Performance Incentives. The same tactics used for inbound marketing—researching target audiences to craft customized content to draw interest and activity—is being used to create tailor-made channel partner incentive programs.

"There are a lot of premium reps or product people for promotional giveaways, but organizations really need professionals to figure out what their goals and objectives are, what type of data should be collected, how it should be analyzed, who the audience is, what type of theme, what type of reward program, how do we make pivots," said Smith. "An agency to design and execute and adjust.

"Twenty years ago I probably would have been talking more about products. We're impartial toward the reward being delivered, we're more interested in what your goals are, what your objectives are, and how we are going to drive the business outcomes that are meaningful to your business."

Smith's company has a methodology with four phases: exploring, envisioning, execution, and evaluation. Exploring involves nuances like goals, objectives, how a client goes to market, who are the proper points of influence and what competitive programs exist.

"Also, what customers or which segments will be most meaningful to put your attention on," Smith said. "An organization should put a lot of time on the front end with a professional loyalty or incentive solutions provider to dive deep. Are all customers created equal? We know that's not the case."

Todd Eber is a marketing director for a supplier of equipment for many trades. Eber used a channel incentive program when he worked for a company he eventually bought, and which was bought by the company he works for now. The supplier in the past year began an incentive program of its own, due in large part to Eber's past experience and belief in the power of channel partner incentive programs.

He's used two different incentive program consultants, and said the decisions to pay for firms that specialize in incentive programs were based on a simple tenet: He wants his company to focus on what it does best.

"These companies are experts at creating customer engagement and interest," said Eber. "We have some intuitive ideas that make some sense, but when they're focused on this full-time all the time and with multiple programs throughout the country, they have a very good idea-generation part of their business that can really help customers have interest in something that you're doing.

"We've always wanted to pay a premium to make sure we have a company that is going to help us make this successful, not just help us do it. Businesses have so much going on and customer care is so critical, so we need those types of experts and partners that can focus on one area of something that we're doing and making sure we're the best that we can be at it, because left to our own volition we won't be the best we can be. We just know that, because we have too much going on."