At a recent conference, I noticed an industry shift that is about to become a movement: Some Value-Added Resellers (VARs) are choosing to become a new breed of “consultants.” These born-in-the-cloud progenies have shifted allegiance from the vendor with the highest sales incentive program to the end-user client who is willing to pay for their unbiased expertise. This simple shift in the reseller’s role is going to change the future of channel incentives for these VARs.
As systems and networks become more complex, customers don’t just need a salesperson, they need a consultant — and are more than willing to pay a fee for this expertise. Therefore, some resellers are starting to be paid by the customer, not the vendor.
And therein lies the problem for the vendor that has relied on straightforward sales SPIFs. Accepting sales incentives makes the reseller/consultant look like he or she is no longer unbiased — and perhaps can even be “bribed.” It might not be actual bribery, but it does create a dilemma: How can a vendor keep this new breed of VAR engaged?
What’s a Vendor to Do?
The switch won’t happen overnight and it won’t eliminate the need for a traditional sales commission model. But vendors have the opportunity to keep these new reseller-consultants loyal by incenting them in different ways. In particular, ways that don’t present an ethical conflict.
So, what’s the new incentive strategy if you take away sales incentives? Here’s the answer: Incent the behavior. I’ve written at length about layered incentive programs, and it bears repeating.
A foresighted vendor has a great opportunity to become its resellers’ trusted advisor and reliable source for industry knowledge. Offer strategic business services that support their end game, such as:
- Custom demos
- Sales training
- Product training
- MDF for marketing materials
- Opportunities to attend conferences
- Speaking engagements as industry experts
- Deal registration
The real key to keeping resellers engaged is not only offering tools that help them build their businesses, but also incenting them for participation. So instead of offering incentives for closed sales, give layered and bundled behavior-based incentives. It’s a more effective way to spend your budget, while still retaining loyalty from this new breed of VARs.
Your Ace in the Hole
To be truly effective, your incentive program needs to be fast, flexible and measurable. Find a channel provider you can trust with incorporating and delivering behavior-based incentives. Look for one with a flexible platform that can deftly handle complex grouping and tiering, along with monitoring and reporting performance metrics that will help you measure the engagement of your channel program.
Dan Hawtof is Vice President of Business Solutions, Global Channel for Blackhawk Engagement Solutions, a global leader in customized incentives and engagement solutions. For more than 25 years, he has been involved in almost every aspect of the channel.
