Channel Management: A Guide to Finding Your Point of Influence

Part 1: Introduction

As a manufacturer, your channel is full of people who could have a significant impact on your success. You could be calling on…

• • Your indirect sales team
  • Your distributor sales reps
  • Your distributors’ customer
  • The installer, the architect, the end user

It’s easy to get distracted by all the options. But it may also be too narrow to focus on only one segment of these channel partners, or Points of Influence (POI). So, what should you do? With so many participants in your channel, the process of down-channel mapping can become . . . complicated.

But it doesn’t have to be. With this channel blueprint, you can begin to narrow down the most cost-effective POIs.

We’ll use this chart to help show who makes up the channel and where the opportunities are.

So, with that in mind, let’s start by understanding who these particular POIs are at each rung of our channel. Then, we’ll dive into the challenges that you face in reaching them. Finally, we’ll share strategies for how to address these challenges.

Part 2: Understanding Your Point of Influence

Free Download: Guide to Effective Channel Incentive Programs 

Optimizing your channel ecosystem begins by answering one simple question. Who are your points of influence (POI)?

What Is a Point of Influence? POI for Short

A point of influence (POI) is an individual or group of individuals located within your go-to-market channel. They influence the flow of your products downstream to the end-user. They affect the success of your sales and marketing efforts.

For example, let’s look at a typical building materials / construction channel.

The goal is to grab more of their mindshare (and wallet share). To do this, you’ll need to consider what motivates them. Help them, help you.

Salesforce research found that B2B buyers prefer manufacturer partners who understand their business goals. These manufacturers should be willing and able to provide a strong partner experience.

The more personal and granular you can get with your partner knowledge, the more you can add value to their side of your business. This will improve your relationship with them.

POI #1: Manufacturer

Who’s the target audience?

At the top of the channel, we have you, the manufacturers. Your first line of POIs are your salespeople or Manufacturer Reps (MFG Reps).

Sales reps are a captive audience—they’re your employees, after all.

MFG reps work for independent agencies. These are “middlemen”. They serve you by making introductions and connections between your product and the customer. MFG reps are well-connected, using their existing relationships to grow your business.

What’s their influence?

Let’s keep it simple: your direct sales reps are the ones selling your products for you. There’s no one else competing for their time (beyond, say, their family), and they’re focused on you and your products.

This singular focus is their strategic benefit. If they’re good, they’re valuable, easy to reach, and cost-effective.

Where they’re limited is in their reach. They have opportunities to sell down to the third rung of your channel, but most of the time they’ll sell to your distributors in Rung 2.

Manufacturer reps influence your business through their relationships down-channel. Their wealth of experience with these partners requires less cold calling. They may even have more built-in credibility than you or your direct sales team.

Their currency is manufacturer mindshare. This can be valuable when trying to enhance your channel partnerships.

POI #2: Distributor

On the second rung of the channel, we have major distributors / wholesalers.

Who’s the target audience?

There are a few potential cohorts in a distributor target audience. These are:

• • Principals (owners)
  • Branch Managers
  • The Sales Organization
    • Inside / Counter salespeople
    • Outside salespeople
    • Business Development Reps (BDRs) / Customer Experience (CX) teams

What’s their influence?

With distributor principals, they’re motivated by growing their business. For this reason, small rebates/SPIFFs that don’t move the needle much won’t have a big impact on them.

As the leaders of their businesses, they have a strong influence on the flow of products. They can mandate sales of certain brands.

These POIs don’t want to be skipped over or gone around when it comes to any sort of channel incentive. You’ll need to get their approval for anything related to targeting their employees.

A branch manager’s main objectives are to meet their sales goals and achieve their KPIs. They act as “mini-principals” for their particular location. These POIs can be important for particular geographies.

They tend to appreciate programs that boost morale for their location. Provide them with opportunities to recognize their branch and its employees. Do this through incentives that feature unique and differentiated experiences or team building.

Counter / inside salespeople tend to be among the lowest-paid cohort at this rung of the channel. For this reason, they’re motivated by their paycheck, and anything that can increase or add to it.

In many ways, they are the face of the branch, and thus play an important role in your product sales. With expertise in specific niches their role is consultative by nature. Within their niche knowledgebase, what they say goes at the customer level.

This group is ideal for a “sell this, get that” type of incentive. They can be particularly useful in pushing a particular product amongst competitor products.

Outside salespeople deal with larger orders and accounts but have a similar relationship to your products. They have relationships with contractor principals. This puts them in a unique position within your channel.

Like most outside salespeople, their paycheck and commission are what drive them. Use healthy competition to provide a variety of potential sales incentives.

BDR / CX is an emerging title within the distribution industry. They work on contacting smaller accounts. They try to develop these “house accounts” into bigger accounts.

These people will be responsible for making a coherent branded experience for the customer. A paycheck motivates them as well. Programs that target specific behaviors around training can be a good place to start with these early-career folks.

POI #3: Dealer/VAR/Contractor

At the bottom of the funnel, we have smaller market dealers or general contractors. These are the players who put your products into the hands of their employees and the homes of end-users. This rung marks the end of your channel sales process.

Who’s the target audience?

The target audience at this level is often the principals of these smaller firms. They are the techs who are buying your products ad hoc to fill in the gaps of a given job. They are architects who spec your products into their jobs.

What’s their influence?

Contractor Principals are the owners of a given dealer or contractor. They have a lot of say over their purchases for their jobs and buy from 4-8 distributors at a time. This means that they have a lot of discretion in the way they buy.

Reaching them often means building mindshare and rewarding them as easy as possible.

Architects are usually only employed for bigger commercial or industrial projects. They are looped in on jobs by a general contractor.

They have to get down to the product level for their design specs, often. They could have more influence over these purchasing decisions than the principal, sometimes. This is the case if a product has to be designed or “spec’d” in.

Techs are contractor employees who work for the principals. While they don’t have much of a say over large purchase orders, they can be influential with smaller purchases like parts and supplies.

In these cases, they may not even have to check with their principals before making a purchasing decision.

Part 3: Identifying the Challenges of Each POI

Free Download: Guide to Effective Channel Incentive Programs 

The challenge is that you can find these POIs throughout your channel. Often, they’re only indirectly involved with you. In fact, mapping a complex channel may feel like you’re playing some form of the game Six Degrees of Kevin Bacon.

With a clearer picture of who your POIs could be, you’ll have to consider what’s stopping you from incentivizing them.

As you look to expand your influence down your channel, you’ll bump up against a variety of challenges. These can range from pricing and the commoditization of product offerings to a lack of visibility and data on partner behaviors.

Regardless of the POI you’re trying to influence, answer these questions before you move forward with your channel strategy:

• What kind of support, promotions, or incentives are you currently offering, based on your partners’ market routes?
• What more do they need from you?

As you begin to answer these questions, various challenges will emerge. These challenges may be unique to the POI that you’re trying to motivate. You can find them throughout the channel ecosystem. Let’s take a look now at some of the most common ones and see how and where they might manifest:

Challenges with Collecting Data and Insights (Rungs 2/3)

Collecting data and insights on product sales is a challenging task. It gets harder when dealing with the lowest rung of the channel.

Contractors, installers, techs, and architects are often difficult to gain insights from. It takes a lot of heavy lifting on their end. It may be necessary to work with distributors and dealers to gather the necessary data secondhand in the form of a report.

Getting these reports from distributors is a little easier. But the downside is that this approach may result in a loss of the holistic view of the invoice. This may lead to less actionable data. It may also lead to increased workload for your distributor partners, which can lead to pushback. The last thing you want is for someone to tune you out because it seems too hard to work with you. More on this in Challenge 3.

Your CRM might not be able to capture basic customer contact information either. An integrated system between ERP, CRM, and marketing technology is rare among manufacturers. Investing in advanced systems that distribute leads and manage loyalty programs is a tall order. Especially when you’re so far from the end-user.

Even at the level of distributor salespeople, you may not have clean data on who these folks even are. Distributor principals can act as a barrier to their employees. This can limit your access to important POIs. Make sure your strategy involves pitching the benefits to the principal if you’re targeting people below them at their company.

Challenges with Business Intelligence and Analyzing Data (Rung 3)

Collecting data can be an issue. But you may also struggle with your business intelligence and analysis of the data. Having it doesn’t guarantee that you’ll have the ability to use it well.

You have to synthesize some combination of demographic information. Look at historical sales data, buying behaviors, and more nuanced psychographic data. You need to create strategies around this information and make determinations about what to do with it.

These determinations can include:

• • Better pricing strategies through a clearer understanding of the “price waterfall”
  • Decisions around marketing spend
  • Product positioning
  • When, how, and if to bundle
  • Ways to take share from competitors
  • Identifying pricing zones of competitors

Having a data architecture that captures and structures information is crucial. Segment the data to understand commonalities within the data. Look at buying behaviors and your customers internal hierarchy. Understanding these aspects leads to better targeted marketing.

Challenges of Administrative Burden on Channel Partners (Rungs 2/3)

Your partners will need to get proof of purchase from contractors or submit them themselves. This can provide valuable information. But the reality is that it can be time-consuming. It’s a burden for both contractors and distribution partners to manage. It often involves manually submitting these invoices.

It’s easy to understand how this program may create more problems than it solves. Contractors will have to take time out to spend effort and energy gathering and providing receipts.

The extra administrative task can strain their resources. This could divert their focus away from core activities, ones that make them money, and cause frustration in the process. More likely, they won’t do it at all.

It’s the same for distribution partners. Gathering and inputting dozens or even hundreds of documents is boring and can cause errors. Additionally, the burden has potential second-order effects on the customer experience.

If the process is too complex or time-consuming, contractors may become frustrated. You’ll deter them from participating at all. This will lead to delays in data collection and undermine the entire data set. Stalling like this can devalue your program and can put a strain on channel relationships.

Challenge of Capitalizing on Breakage without Creating a Negative Customer Experience (All Rungs)

Strategically, it’s important to understand breakage and how to use it to your advantage.

What is breakage? Breakage are points (or rebate dollars) left on the table by the participant. Let’s say your participant has a bank of 1,000 points, but they never use them. That’s breakage.

It’s smart for your program to account for there being some breakage. It’s how you can make up for lost margin. The challenge to avoid is making the hurdles to earning rewards too difficult. You’ll lose a lot of people if you’re making it too hard to earn or redeem points or rebates.

If you chase people off with a bad experience, they’re not likely to come back.

Here are some quick tips on how to structure your program to have the right amount of breakage:

• • Expect a maturing program. Breakage tends to decrease with time. People earn more, bank points, then spend it.
  • The value of the point matters. Points equal in value to a dollar tend to lower redemption rates because their banked points grow slowly. Think how nice it is to have 10,000 points in the bank.
  • Think about timing. If you’re setting goals, you can distribute points upon goal-achievement. If there’s a learning element, when a new certification drops. Big banks of point earning tend to raise redemptions.

In summary, mitigating breakage is all about finding a happy medium. Find balance between labor and reward.

Challenge of Partnering with Distribution while Maintaining Loyalty and the Perception of Manufacturer Value-Adds (Rung 2)

Collaborating with distributors means you may have to share some of your value-add and loyalty among your customers. This can dilute your influence. It can be beneficial to partner with a strong distributor. This approach may not be applicable to all your partners.

Think about how you can provide value back to your distributors in exchange for sharing their data with you. You may find this is a bit of a tightrope to walk.

As you generate excitement at the field level, be mindful of potential administrative burdens. This requires a hand-crafted pitch. Highlight the benefits of what you’re offering and address the concerns of both the distributor and their customers.

This balance may result in a compromise with your data collection. On the one hand, you want to gather as much data and intelligence as possible. On the other, you ignore the operational limitations of your partner at your own peril.

In the end, you may have to refine your approach on a case-by-case basis. Base this on the unique dynamics of each of your distributor relationships.

Challenge of Keeping Engagement and Mindshare High (Rungs 1/2)

Of all the challenges, one of the more daunting is maintaining channel engagement. Networks of indirect participants can be difficult to find a one-size-fits-all solution for. Each one has their own priorities and loyalties. Capturing mindshare can be a problem.

On the one hand, your salespeople may need continuous support, training, and incentives to stay motivated. Pursuing new opportunities is rapidly evolving in this technological and economic environment.

On the other, your manufacturer reps often support many clients. Without having an inherent loyalty to any particular one, this can create a serious mindshare problem.

At the distribution rung, you may find yourself contending with a sea of competitors.

• • What makes you and your offerings stand out?
  • What is going to move the needle?
  • What will nudge a distributor’s salespeople to push your product over a competitor’s?

Without product training or knowledge, your business may be at the mercy of customer discretion. Especially without your own relationships, customer service, and incentives.

In industries and product lines with a lot of discretion, you will need to differentiate. That goes beyond mere pricing. You’ll need to find innovative ways to promote the unique features and benefits of your brand. You’ll also need to communicate these value props all the way down your channel.

Having efficient rebates and leads is a top concern of channel partners. Make sure to offer them through your loyalty and engagement strategy, too. It will be necessary to go beyond table stakes and drive more targeted behaviors.

Part 4: How to Reach and Influence Each POI

Free Download: Guide to Effective Channel Incentive Programs 

Once you understand the barriers preventing you from maximizing your channel, you can start thinking about how to solve these. The strategies below offer a unique approach. Use them to reach and motivate various Points of Influence throughout the channel.

MDF and Co-Op Influences Distribution Principals (Rung 2)

Use MDF and Co-op funds to gather data and influence distributor principals.

With care, you’ll be able to avoid the typical 25%-50% of these funds going unused on average. There’s often a disconnect between what channel partners could be doing with them, and what they are doing with them.

Maximize the impact of these funds on your distributor POIs by focusing on ideation and promotion strategies. Use campaign management tools to manage and track the outcomes of your MDF and Co-op programs.

Also, integrate these tools into an on-demand system. You can do things like…

• • Coordinate multiple marketing initiatives
  • Maintain running lists of promotional ideas and strategies
  • Empower your distributors to execute on these activities while spotlighting your products

It’s also essential for you to articulate the value proposition of utilizing these funds. Emphasize the benefits they bring to both you and your distributors. Some of these benefits include:

• • Joint marketing campaigns that promote limited time offers on popular product lines
  • Joint events or trade shows. Showcase products, share industry insights, and foster networking among key stakeholders
  • Joint training initiatives. Getting their sales team up to speed on new product launches and specs.

As a supplement to these funds, rebates are also a common strategy. They’ve become table stakes if you want to be competitive in your channel. That’s because of their low mindshare and (usually) heavy administrative lift. You’ll want to be selective in who you offer them to. The hurdle of submitting should be data submission. Gain as much as possible from the invoices or reports that you need to dish out rebates.

With this data, you should be able to:

• • Benchmark market pricing trends for your own products
  • Better understand the customers’ average total costs for the work they’re doing
  • Quantify the ratios of accessories to core product sales
  • Identify what percentage of the bill is your products versus other categories you aren’t participating in

To ensure accuracy and prevent rebate overpayment, you should install check-and-balance methods. These can help you identify anomalies in the data.

You’ll also want to optimize your systems to better process the data. Avoid redundant requests for information from customers. This will enhance the customer experience and reduce your own workload.

The data you collect will support your ability to make decisions. You can now make strategy and market pricing. You can align your programs with this strategy. You can identify which customers are true partners as opposed to “cherry-pickers”.

Training/Enablement Programs Influence Distribution Sales (Rung 2)

Training and enablement programs empower distributor sales reps. They arm them with the resources to become more knowledgeable about your products and services.

These programs consist of comprehensive learning modules. These modules cover various aspects of your products, including:

• • Features
  • Benefits
  • Competitive advantages

You can always get more detailed. For example, if you produce industrial equipment, your program may provide training on…

• • The technical specifications
  • Maintenance procedures
  • Industry-specific applications of your products

Equip sales personnel with detailed product knowledge. It will enable them to…

• • Address specific customer inquiries
  • Handle common objections
  • Position the products as effective solutions to customer needs

Enhance your programs by adopting a data-centric approach. Incorporate data analysis and insights into the training curriculum. This will provide your sales personnel with a deeper understanding of…

• • Market dynamics
  • Customer preferences
  • Competitive landscape surrounding your products

For instance, you can share market research findings, customer feedback, and sales performance data. This will illustrate real-life scenarios and highlight the unique selling points of your products.

This data-driven approach does two things. It helps strengthen the sales team’s product knowledge. It also helps them tailor their sales pitches to resonate with real-life needs and preferences.

An incentive goes a long way with these types of programs. Replace boring product videos with point earning opportunities like quizzes and certifications. It’s a proven method to increase certifications.

Finally, it’s important to leverage technology when implementing these programs.

For example, interactive e-learning platforms can offer engaging and self-paced learning experiences. This allows sales personnel to access training materials anytime, anywhere. Virtual training sessions via video conferencing platforms can enable you to provide…

• • Real-time demonstrations
  • Role-playing exercises
  • Interactive discussions with sales teams located in different regions

Incorporate gamification elements such as quizzes, leaderboards, competitions, and badges. These can boost engagement and motivation among sales personnel. It encourages them to take part in the learning process and internalize what they’ve learned.

Traditional Sales Incentives Influence Manufacturer Salespeople (Rung 1)

Traditional sales incentive programs play a crucial role in influencing your salespeople. They help drive their performance and foster a results-oriented culture.

To achieve this, you’ll need to create a well-structured sales incentive. It should set clear targets and reward participants based on their individual or team achievements.

One of the best rewards for recognizing your top achievers is a President’s Club-style program. This program should feature a group incentive travel reward as the end result. It’s the most powerful reward because it generates experiential memory value.

Other structural components might include…

• • A tiered commission structure
  • Performance bonuses
  • Embedded sales contests with attractive prizes

Align incentives with sales objectives to stimulate healthy competition. This will encourage your salespeople to go above and beyond and drive revenue growth.

Traditional Loyalty Incentive Influence Manufacturer Reps and Dealers (Rung 1 / Rung 3)

Traditional loyalty programs can be powerful tools for influencing and motivating, too.

Audiences within your down-channel ecosystem include…

• • Manufacturer reps
  • Dealer principals
  • Dealer architects
  • Dealer technicians

For manufacturer reps, loyalty-based incentive strategies are particularly effective. Their mindshare is being split amongst many competitors.

These programs foster a strong sense of commitment and advocacy towards your brand. They provide exclusive benefits: access to training resources, marketing support, and preferred status.

It’s crucial to focus on establishing communication channels and feedback systems. This will ensure you understand these individuals’ needs, challenges, and motivations.

When it comes to dealer principals, a loyalty program should do all the above. It should also provide robust opportunities for data extraction and business intelligence.

It’s important to distinguish between the data that’s necessary for your channel strategy and what’s “nice to have”. The latter might be beneficial for you. But it may end up creating an excessive administrative burden for your down-channel partners, though.

The data you analyze will depend on your size, scope, industry, and partner relationships. Take the data points you collected from contractors or dealers and supply them to your MFG reps or internal sales reps.

Some possibilities might include:

• • Product preferences and buying patterns of contractors and end-users. -> Useful for cross-selling, upselling, pricing sensitivity, and general product development.
  • Effectiveness of existing discounts and rebates. -> Useful for marketing and communications strategies with dealers.
  • Sales performance of down-channel partners. -> Useful for providing targeted support and establishing incentives

Well-designed loyalty programs are a great vehicle for achieving all the above. They can help provide a holistic view of your product journey. They help you understand what’s working for your partners down-channel. They identify what problems remain and where your strategic gaps are.

The last thing you want is to waste resources on a channel participant who doesn’t influence the sale of your product.

Targeted Sales Incentive Influence Distributor Principals or Salespeople (Rung 2)

Targeted sales incentives play a crucial role in influencing distributor principals and salespeople. They focus on specific product categories or SKUs.

For example, offer increased commission rates or bonuses for achieving sales targets. This could be down to a particular product category. These types of incentives benefit specific sales goals. They also increase mindshare and engagement.

To ensure the effectiveness of these targeted incentives, manufacturers are adopting data-centric approaches. There is value in having segmented, comprehensive data sets. They provide deeper insights into their down-channel ecosystem.

Manufacturers can understand which product categories or SKUs are performing well. They can also see which ones need more focus by analyzing…

• • Sales data
  • Customer preferences
  • Market trends

This data-driven approach enables them to make informed decisions. They can then divide resources and tailor their incentive programs.

By leveraging data, you can track and test the impact of targeted sales incentives. You can track sales performance, identify trends, and measure the effectiveness of your programs.

This data-driven evaluation allows manufacturers to…

• • Assess the ROI of their incentives
  • Identify areas for improvement
  • Make adjustments to maximize the effectiveness of their programs

Additionally, manufacturers can segment their distributor network based on various criteria. Look into sales volume, geographic location, or customer preferences. This customizes the incentive programs to suit the unique needs of different distributors. It will also help foster stronger partnerships and drive sales growth.

Part 5: Putting the Channel Incentive Program Together

Figuring out who the point of influence is and what opportunities there are to grow is only the first step of the process. The next step is determining goals.

If you need an in-depth guide to standing up a Channel Incentive Program, you can download our eBook, The Definitive Guide for an Effective Channel Incentive Program.

If you’re ready to start the channel program conversation, book some time with us here.