When it comes to building an incentive program that functions through a manufacturing or distribution channel, there are a number of unique channel incentive pain points that can prevent the program from truly being successful.
These challenges can crop up from a variety of different sources: some might be internal, others external. Some challenges may be sales-related, while others arise within the marketing department. Some can be addressed with broad strokes, and others may require a more precise solution.
Wherever the problems arise, it’s important to identify what issues you may be in store for when launching or maintaining a program and what it is exactly that makes these issues so challenging.
I spoke with some of our clients, who were kind enough to offer up the top 4 channel incentive pain points that they’ve encountered over the years. Here they are.
1) Maximizing a Partner Program Budget
It’s no secret that squeezing the most out of your incentive budget is a constant concern, whether you’re dealing with direct sales or operating a channel program. When old incentive methods produce mixed results and returns, it may be time to shift gears and start thinking outside the box for new ways to stretch every dollar you have.
Cumbersome program administration, coupled with challenges tracking ROI often leads to inefficiency and internal dissatisfaction with a company’s rebate, spiff, and promotions programs. Moreover, companies often suffer from internal bandwidth challenges by mismanaging their human resources. They place over-qualified employees in charge of small, underwhelming incentive programs, and the talents of these employees are left unused.
The simple solution is to simply make the budget match the buy-in. Of course, easier said than done, but with proper data analysis and reporting in your program, you should be able to accurately attribute ROI and see net gains.
2) Re-Inventing The Wheel Every Quarter & Year
With that in mind, it’s easy to see how the pressure of finding new ways to do things can become a serious channel incentive pain point. The need to innovate goes hand-in-hand with the struggle to maximize your budget, and questions abound: What are we going to do this quarter? How are we going to spice things up? Should we reward for A or for B? What should the reward be this month? What is our competition doing right now?
Forging ahead with this “reinvent the wheel” strategy can yield as many peaks as it can valleys, as many failures as triumphs. The trick, then, is to use your tools properly, and to learn to recognize the truly utilitarian from the simply novel.
In other words, find what works for you and stick to it. If you know your participants are big sports fans, the campaign you can run each year can involve a sports theme, or sending them to the game of their choice.
Now this doesn’t mean only doing the same promo year over year. You’ll want to spice it up every now and then. Maybe one year you could send them to the Big Game in February. Just make sure to measure your ROI against the increased cost.
3) Rewarding the Right Person at the Right Tier (The Point of Influence)
With an incentive program targeting direct sales, you know exactly who to reward. This can be one of your biggest channel incentive pain points. Identifying, tracking, and incentivizing the point of influence (in many cases a VAR salesman or sales engineer) becomes more challenging the further down the channel you go.
One strategy to combat this problem involves automated tracking & approval, in conjunction with claims and workflow solutions. The key is rewarding the right person in the channel, while not overwhelming them with paperwork.
You can also rely on the data captured by the enrollment process to glean more information about these points of influence. It doesn’t have to just be at enrollment, either. Find other exchanges that you can turn into opportunities to get more info on your partners.
4) Balancing Regional and Global Strategies
As your channel clientele expands to include companies with international capabilities, balancing your respective regional and global strategies becomes critical.
Can you provide consistent solutions to these companies even when each region has their own budget constraints and might work with 5-10 different vendors? Can you manage these obstacles and still maintain flexibility with the programs?
Most importantly, how do you measure the success of these efforts when so many variables are in play? If clients want the capability to roll up all regional programs into one global bunch, can you offer real-time reporting in terms of the program’s global and regional impact on sales and market share?
There’s a lot that goes into a channel incentive program, and a lot of pain points that you might encounter. The four challenges I have highlighted here are by no means the only obstacles that will be faced when coming up with an innovative incentive solution, but they are the biggest problems that our clients have faced.
But the first step of succeeding is knowing what can go wrong, and now that you have an idea of what’s common, you can be better prepared while setting your program up. Hopefully this will help you avoid these challenges in the future!
If you want to learn more about what makes a channel incentive program successful, download out guide: The Definitive Guide to an Effective Channel Incentive Program.