Feature Article - July/August 2020

Ready for the Green Light

Channel Partner Incentives Set to Adapt in the New Normal

By Joe Bush

The final phase is evaluation, and it's ongoing throughout the life of the program, said Smith. Eber said one of the major changes in the time between his experiences with channel partner programs is the rise of data gathering and analysis.

Eber said he recently did a review with the incentive program advisor of the first 90 days with the new incentive program.

"This is all based on their decades' worth of experience in the industry, to say, 'OK, you're early in the program, here's where our other customers would be from a benchmark perspective, here's some things you're doing well, here's what we can do better, and here's how we should do it.

"The analytics that come with these partners and their platforms; we can measure engagement in a variety of ways real time, updated daily all the time, and tweak our reporting. For the first 10 years before the online element, our ability to measure engagement was very archaic. Now you can look at all types of elements of their behavior, purchase behavior, interaction with the site: Are you pulling in pieces and events and behaviors from your omnichannel experience? Are they buying online? It's really a game changer. We have customers very engaged, not very engaged and stratifications in between, and then different tactics that you can go after each of those categories and measure that success."

Neeley said a program's budget is also vital to determining strategies and tactics. Sponsors with a closed-end budget or one where you can only spend a fixed amount regardless of results limit themselves to competitive rules structures: structures in which the participant must compete against others for a limited number of awards.

While competitions work well with salespeople, by their nature you have winners and losers, said Neeley. An open-ended budget or one that rewards based on performance maximizes participation. This allows you to set individual goals with a certain award for hitting the goal.

"A competition might require a participant to achieve a 5% increase just to compete with others for a few awards that they may or may not receive," he said. "An open-ended program might require a participant to increase sales by 7% to earn a specific award and keep them growing with a bigger award at a 10% gain and a huge award for 15% growth."

Neeley offered a real-world example to illustrate an incentive program from start to finish. The client was a construction equipment company that was the market leader with the highest total sales in the industry. Its brand name was equated to quality and superior performance, but in one product category, it was No. 3. It had entered that category a little later than its competitors, and that had cost it share.

It marketed through an exclusive dealer channel, and ran an annual travel program for top dealer principals and operated a quarterly sales incentive program for dealer sales reps based on product sales. Reps earned points redeemable for awards in a catalog. The company's goal was to increase market share in that product category.

Neeley's company started by looking at the people who could impact growth the most.

"The channel reps would have the greatest impact on share in the shortest time by selling the category to the end user, but by showing the dealer principals how important the category was, the client could gain the principals' backing to drive the reps' sales efforts," said Neeley. "We started by adding market share of the target category as one of the principals' goals for earning the trip. This got their attention and gained their immediate support."

Next, Neeley's firm developed a communications and training plan for the channel reps to improve their awareness of and skills in selling the product. The program offered reps points for creating a list of target customers for the product, more points for a proposal, and even more points for product sales.

"This combination of top-down pushes from the principal, knowledge-building of reps, reinforcement of the activities that generated sales, and then earnings for each unit sold moved them from third place to second in just 18 months," Neeley said.

Eber said if he bought another company, he'd use incentive programs again. His current company's program is focused on aggressive sales growth from partners and encouraging them to use its e-commerce platform. He said results thus far for his current company show three to four times growth for enrolled customers, and while he isn't sure yet of ROI, he said there's a clear difference between customers who are enrolled in the program and those who aren't.

For companies that haven't yet begun an incentive program, Eber suggests using an adviser, one that has at least two important areas of expertise: technology and merchandising.

"You have to have a partner that has a good technology piece of their business and their platform has to be user-friendly because ultimately that's where they'll transact," Eber said. "That's where they load points, that's where customers go to see their activity, that's where they go to redeem their points. It's also the marketing engine of communicating directly with the customers with updates and tracking and promotions and learn-and-earn opportunities.

"They have to have a very strong merchandising arm. The catalog of tangible items needs to be rich, deep, current and create interest so there's value there. They almost act as a travel agency to a certain extent. They're coordinating travel and events, they create the packages, they manage the pricing and the flow. They set up all the buying relationships. That's a big element. If you're going to do all that in-house that's a pretty expensive endeavor."

Smith said while the post-COVID future is uncertain overall, there should be comfort in fundamentals and hard work.

"Budgets have been slashed, profits slashed, but there still is a place for these business initiatives to help drive results," he said. "The organizations that understand that this is a lever they have, properly designed, it can make a big impact on their business. Stay super close to your top customers—what they're feeling, what their needs are. If there's anything that will be shifting at all, we want to be on top of it. Make phone calls every day to your top customers and let them know we're here for them. Communication needs to go up—focus on the top 20, and show them the love."