A channel incentive programme offers dealers and reseller partners a reward that motivates them to demonstrate specific behaviours or achieve particular goals. And there’s no doubt that channel partners are precious to many vendors and manufacturers; in fact, channel incentive programmes can generate more than 75% of vendors’ revenue according to a report by Deloitte.
Why implement a channel incentive programme?
Tactical incentive campaigns are an excellent way to shape behaviours among your channel partners. And this doesn’t have to be limited to behaviours that drive sales.
As well as improving sales, effective programmes can help vendors create better distribution channels, reduce costs, improve partner relationships, create loyalty and create a stronger, more profitable brand. For example, motivating channel partners to learn about new products.
Different types of channel incentive programme
It’s important that vendors who want to develop profitable sales channels implement an incentive campaign that helps them achieve their goals. Consider the different types of channel incentive campaign programmes that are available:
1. Club approach
A club approach is used to recognise and reward top performers. These programmes often have names such as ‘Presidents Club’ OR ‘Masters Club’ that are used to depict honour and prestige. They also enable members of the club to become role models for their lower performing peers and to aspire to become a member of the club.
2. League tables
Just like sporting league tables, incentive programme league tables are an excellent tool for showcasing performance against peers, colleagues and competitors by clearly illustrating who is in the running for a qualifying place and a reward. League tables encourage those not performing to change their behaviour and impact their performance, and you can band your dealership staff in any number of ways, for example, geographically, by historical performance, or like for like achievements/potential.
Participants in a commit-to-win programme declare in advance what performance increase they believe they can deliver and commit to achieving this. The higher they aim, the bigger the reward they receive if they are successful.
4. Points programmes
A programme where ‘points mean prizes’. Channel partners can earn points for achieving pre-determined criteria, i.e. 100% sales achievement vs. target = 1000 points. They can then use points to ‘purchase’ their own gift
5. The escalator
Building on points-based programmes, the escalator gives participants the opportunity to significantly increase their ability to earn rewards. Points are awarded for the achievement of specific thresholds and higher levels of points are awarded as higher thresholds and targets are achieved.
6. Most improved
The 80/20 rule tells us that 80% of sales will come from just the top 20% of performers. So if you want to motivate those below the top 20% a ‘Most Improved’ incentive will specifically recognise those who show strong improvements, rewarding individual growth and commitment, which can be a significant motivator.
7. Most consistent
A ‘Most Consistent’ channel programme rewards those who might not be the best of the best but deliver a consistently high-quality service or results. Many vendors rely on these people for the majority of their sales, and this is an excellent way to show that you appreciate their commitment and effort.
In addition to the options above, vendors also need to consider whether their programme will be:
- open-ended – rewards performance for all who achieve the targets regardless of other competitors’ performance or
- close-ended – rewards a specific number of overall winners only, regardless of dealerships staffs performance.
Channel incentive programmes require careful planning before rolling them out to partners. A successful channel campaign is a win-win for both vendors and their partners, and can create a virtuous circle where both are motivated to collaborate to achieve goals and improve performance.
Watch video: How to improve the effectiveness of your channel incentives >>