Most channel marketers have a dysfunctional relationship with layered incentives. They know that incenting sales-driving behaviors, such as training and product demo, can make a partner feel more personally invested in selling their products. At the same time, they fear what they see as the cumbersome process of providing incentives for anything but straight sales.
In my 25-plus years in the channel, I have seen channel marketers employ a lot of creativity in the name of avoiding layered incentives. Most end up with one of two types of programs.
The overdone program – These marketers pour untold energy into building the most robust portals for partners to interact with, creating modules, training, campaigns, assets and materials galore.
What they end up with is a program that, from the partner’s viewpoint, requires too much effort to interact with for too little payoff. Even if the payoff is actually pretty good.
The underdone program – These vendors are sticking to a straight, no-frills, incentives-for-sales model. There’s usually a lot of information on their portals. But they haven’t put effort into ensuring the information is easy to get to, and that the user gets something of value in return for completing the activity. These vendors are effectively reducing the partner-vendor relationship to a transaction. Sell this, get that. It functions, but it isn’t sticky, and it does not change partner behavior. It’s a short-term answer to a long-term challenge.
Overdone or underdone, you’ve spent a lot of time on something that didn’t turn out right.
Reality Check
Your program isn’t the only one out there. Your partner has anywhere from three to 23 other vendors in the consideration set, all with their own programs and portals, offering their own incentives. Time is money. If your program demands too much effort, your partners are going elsewhere. And if your program is too lean and mean, they may come back from time to time, but your brand isn’t going to remain top of mind.
The Program That’s Just Right — Logic tells you partners will engage with the programs that offer 1) attractive incentives, and 2) easy-to-navigate portals that deliver relevant information. The best-performing programs achieve a balance between effort and reward. They incorporate layered incentives that get partners to perform non-sales behaviors that lead to more sales. And they do it in a way that requires portal interaction that doesn’t feel like a waste of time.
Creating effective layered incentives is a little like following a recipe. The ingredients are important, but so are the proportions. In the same way you would adjust the ingredients in a recipe to suit the tastes of the people who will be eating the end product, you will create your layered incentives with an eye toward the needs and motivations of your partners.
The first step, however, should always be the same: Start by identifying which non-sales behaviors it makes sense to tie to sales incentives. In a recent article, I outlined a process for pinpointing the best non-sales behaviors to focus on, taking your sales process into account. But if you need a short-cut, there are two behaviors you can start with to net a noticeable impact on sales:
- Training – The expression may be trite, but it’s true: Knowledge is power. It’s far easier to sell a product when you can speak about it with confidence. By all means, offer a straight sales incentive. But offer a richer incentive if the partner completes one of your training courses beforehand. As you continue to tie incentives to training, you’ll see a correlating increase in sales performance (as long as your training modules are effective).
- Product demonstration– Being able to tell a prospect what a product can do for them may get your partner in the door. But nothing sells like first-hand experience. Tie your sales incentive to delivery of a product demo, and see the effect it has on close rates.
Let Go
I mentioned earlier that the inclination to avoid layered incentives lies in the perception that they are inherently cumbersome. It’s a false perception, though, because it’s the way you handle layered incentives that makes them either simple or cumbersome. If you’re still trying to manage your channel incentive program via spreadsheet, then yes, it’s cumbersome.
The best thing you can do — for your partners, for your bottom line and for your sanity — is to let go. Hand over the task of incorporating and delivering layered incentives to a channel solutions provider with a platform capable of handling them. The right provider will be able to execute your program the way you want, plus:
- Manage and develop your channel partner database
- Eliminate the manual processes that can result in costly errors
- Provide ongoing reporting that shows where you’re program is working, and any opportunities for refinement
- Deliver fast payment of incentives to effectively tie the behavior to the reward
- Offer strategic assistance with program development and marketing.
The proof of the pudding is in the eating
This is one case of a real-life have-your-cake-and-eat-it-too scenario. You can offer a channel program that leverages layered incentives to create real engagement and generate increased sales, and hold onto your sanity in the process. But the only way to find out is to try it for yourself.
Dan Hawtof is Parago’s EVP, Corporate Business Development, Products & Solutions. For more than 25 years, he’s been involved in almost every aspect of the channel. He’s been affiliated with large enterprises and small startups, working in every department, from sales and strategy to product marketing and management, and more.
