Top 10 Tips

FOR IMPROVING ROI FROM YOUR CHANNEL INCENTIVE PROGRAMS

In a recent proprietary survey conducted by CCI of channel marketers across the globe, the number one initiative expressed by responders was to “improve the ROI reporting and analytics of channel promotions and programs.” This eBook presents practical tips to optimize ROI and gain key insights that will improve program effectiveness and efficiency. The tips presented here can be applied to all types of channel incentive programs, including: Co-op/MDF programs, Sales Performance Rebates, SPIF programs, Deal Registration programs, and more.

eBook from CCI: Channel Management Solutions

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 2

Contents
3…......... Tip #1: Define the Required Metrics in Advance 4............ Tip #2: People “Do” What Gets Measured – So, Measure 5............ Tip #3: Tailor Programs for Each Partner Segment 6............ Tip #4: Use Partner Participation Levels to Measure Partner Potential 7............ Tip #5: Partner On-Boarding: Remember “What’s In It For Me?” (WIIFM) 8.......... 9.......... Tip #6: Utilize a Comprehensive Communications Strategy Tip #7: Minimize Complexity

11.......... Tip #8: Recognition is as Important as Reward

12………. Tip #9: Pre-Test Whenever Possible

13……….. Tip #10: Use Joint Marketing Planning to Better Align Your Programs with Partner Goals
www.channelmanagement.com

1 2 3 4 5 6 7 8 9 10

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 3

Tip #1: Define the Required Metrics in Advance
A mistake that many marketers often make is the attempt to glean key insights about their channel incentive programs only after the program has been launched. Postponing the identification of essential program metrics will likely result in the absence of critical puzzle pieces during the program’s lifecycle because the data required was not initially captured at the partner or program level. However, this process can be simplified if the KPIs (Key Performance Indicators) are defined in advance, along with the sources of data needed to measure them. This is one of the most important steps in program design, as specific systems and processes will be required to aid in information capture such that metrics can be measured at key points in the program lifecycle. Marketing 101 dictates that all marketing activities should have measurable goals. Consider program goals to be “Strategic Metrics”—those measures which determine if the program is a success or not (e.g., “increase sales by X%”). However, what’s trickier are the metrics one must analyze that help determine why a given program succeeds or fails. These are the “Tactical Metrics.” It’s these tactical metrics which are often not adequately thought through in advance of the program—but are indeed often the most important. The insights they yield represent the foundation for your best practices, provide benchmarks for forecasting the outcome of future programs, and identify areas of improvement as the program evolves. Examples include: Number of partners participating, reasons for non-participation, average level of participation, etc. This would also include the relative program performance between sales territories and partner segments—which leads us to Tip #2…...

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 4

Tip #2: People “Do” What Gets Measured – So, Measure
As previously discussed, every program has its stated goals. Additionally, every channel program requires that stakeholders at every level execute their role faithfully to assure overall business goals are met. Programs, like partners, have a lifecycle. From program launch, to partner acceptance, to implementation, and through evolution, stakeholders at every stage play a role in its success. These stakeholders include your Sales/Channel team, distributors, partners, resellers – and even reseller employees such as Sales Reps and Sales Engineers. Expectations and outcomes should be monitored at every level and for each role of influence. After all, it is the performance at the individual partner level that contributes to the overall goal of the program. And every stakeholder between you and the partner has a role in driving partner commitment and participation. Therefore, the tactical metrics for the program should be defined for each phase of the program, and tailored to each stakeholder role in your demand chain. Today, common reporting capabilities enable each role to preview their performance versus goal, as well as relative to their peers (e.g., other territory managers). This “unspoken pressure” alone can help contribute significantly to the success of a program at any stage. It is these metrics that best represent the tactical metrics expressed in Tip #1, and further reinforces the rationale for defining them upfront in the program’s design, versus attempting to gather the information after the fact when the numbers have little influence on driving the outcome.
Participan ts by Region Rewards by Product

Claim Submittal Trends

Top Performer Leader-board

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 5

Tip #3: Tailor Programs for Each Partner Segment
Channel models are more complex than ever. By definition, your programs should support the go-to-market strategies (“GTM”) for all participants targeted, but it is exactly the differences in their GTM strategies that justify them as distinct channel segments —and new segments seem to be popping up all the time. No one program is going to be a perfect match for each segment. Therefore, stop thinking of your programs as being a homogeneous, one-size-fits-all program. Instead, vary key elements of the program to accommodate the needs of each segment (such as reward structure or administration) — or, even exclude some segments entirely. In addition, your program goals and all associated metrics should be further defined by each segment. Since the metrics captured to evaluate program performance originate at the participant level, rolling up performance data to the segment level should be relatively easy. When evaluating the program, take time to understand who the top performing participants were in each segment and why, as these are the behaviors you want to clone. Equally important, however, is your understanding of why under-performers (or nonperformers) are rated as such — often, it’s the insight from underperformers that drives program evolution for optimal program effectiveness.

Segment 1 Program A Program B Program C Segment Objectives Partner Metrics Partner Metrics Partner Metrics Segment 1 Business Objectives

Segment 2 Partner Metrics Partner Metrics Partner Metrics Segment 2 Business Objectives

Segment 3 Partner Metrics Partner Metrics N/A N/A Segment 3 Business Objectives

Segment 4 Program A Objectives Program B Objectives Program C Objectives

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 6

Tip #4: Use Partner Participation Levels to Measure Partner Potential
What is “out” is categorizing partners simply by volume — often characterized by medallion scores of gold, silver, and platinum or similar. This concept is based on the Pareto Principle (aka: “the 80/20 rule”) and is best used alone by companies and products who are in mature industries and selling through mature channels. But that describes fewer and fewer channel marketers as we continually evolve our products and channel models. That being the case, progressive channel marketers are seeking ways to identify partners outside the top 20% who demonstrate the most potential for growth. Therefore, what is “in” are the many ways that measure partner potential based on partner engagement. As it applies to your incentive programs, partner engagement is defined as “meeting or exceeding a predefined level of participation,” or other metric that helps to define competence. Even better is to index the performance of the individual partner to the predefined minimum threshold to simplify relative performance. The result is the foundation for much of the content that many incorporate into a partner scorecard—the at-aglance dashboard that indicates partner performance across a number of dimensions. Partners that meet or exceed minimum thresholds are candidates for further development and investment. Clearly, this principle can be applied to all channel program components (training & certification, support, etc.) — not just incentive programs. Sample benchmark performance levels for various incentive programs that reflect partner engagement:      Meet or exceed X number of new deals registered per quarter, or $Z dollars registered Meet or exceed Y% win ratio of new deals registered Meet or exceed V% utilization of co-op/MDF accruals Number of salespeople registered for SPIF/Loyalty program Average sales by registered salesperson exceeding $T

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 7

Tip #5: Partner On-Boarding: Remember “What’s In It For Me?” (WIIFM)
On average, resellers work with more than 15 different vendors—all of which are expecting to be top-of-mind in the partner’s day-to-day routine. The reality is that resellers don’t have the luxury of learning every nuance of every program, or every program change that often occurs as the program evolves. The fact is, marketers make too many assumptions about the perceived value of a product or program from the perspective of their channel partners. Most programs fail due to poor execution—not design. And the biggest single failing with execution is in communications, defined as relevant and compelling content, information access, and frequency. This tip addresses the first point, communication relevancy. All program communications need to be expressed in terms that partners will embrace most—with “why sell” and “why buy” content that clearly establishes the business benefits of a given program (or technology). As it relates to your channel incentive programs, your partners are only interested in messages that address one of the following areas: Increased profitability, more sales from existing customers (or improving customer relationships), or increasing their customer base. As such, all your channel communications must reinforce one or more of those points.

As it relates to your channel incentive programs, your partners are only interested in messages that address one of the following areas: Increased profitability, more sales from existing customers (or improving customer relationships) or increasing their customer base.
www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 8

Tip #6: Utilize a Comprehensive Communications Strategy
This tip addresses the other communication challenges introduced in the prior point. When launching programs or making substantive changes to existing programs, many marketers rely on the basics when informing the partner universe: Posting a notification on the extranet and/or conducting e-mail blasts. Like all of us, your partners are bombarded with messaging from a variety of sources (including your competition). They don’t have your partner extranet memorized—and when they are in it, it is likely that they only have a defined task in mind. Don’t assume they read every “what’s new” posting. Recently, 1:1 phone conversations with key non-participants of a particular program uncovered that the primary reason for non-participation was lack of awareness. Eligible partners did not even know that the program was offered, essentially validating that a comprehensive communication approach is required to capture partner attention.

Here are some ways to address the communication breakdown:  Identify key partners who will be most impacted by the program (or vice-versa) and “heavy up” communication efforts with them—even 1:1 communications, if appropriate.  Utilize proactive acknowledgement if possible. For instance, consider advanced registration for most programs—or even a “no thanks” acknowledgement just to be sure that the message was received and understood.  In marketing-speak, it’s not just reach to consider, as frequency should be more of the focus.  Channel communications should be like any other campaign plan, utilizing multiple communication channels. To that end, the current trend is to support this kind of news through social media, including the communities you have set up for your partners on LinkedIn, Twitter, Facebook, and others.

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 9

Tip #7: Minimize Complexity
Minimizing complexity addresses both program design and program administration, as follows: Program Design: Keep the barriers of entry to a minimum. While your incentive programs are principally designed to modify behavior, don’t expect giant leaps in behavioral modification, as interest will wane and participation will drop. For example, sales contests which award prizes to only the top X% of participants will likely result in the same winners every period, and yield a large cast of unmotivated participants who feel that they will have no chance of winning. Conversely, setting a threshold that will encourage marginal improvement from a broader range of participants will likely yield better results overall and encourage participation from a broader range of partners. Program Administration: Overly complex administration for vendor programs is one of the biggest criticisms expressed by channel partners - both in CCI proprietary studies as well as a separate study conducted by Forrester Research (B2B Channel Incentive Programs in the Technology Industry, Forrester Research 2009). The Forrester study points out that of the 11 leading technology vendors surveyed, each has 2-3 separate programs targeting the same group of partners. Further, any one partner can easily be a participant in programs offered by multiple vendors—requiring them to administer 10-20 separate programs or more. The fact is, most partners don’t have the administrative staff to manage such programs on an ongoing basis. Therefore, programs that are easy to understand and administer facilitate and encourage continued partner participation. Internally, excessive administration within your own organization is both inefficient for you and cumbersome for your partners. Simple examples of how you can streamline program administration and reduce overall program complexity are provided on the following page.

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 10

MINIMIZE:
Approval processes: Do you really need an approval process consisting of more than 2 steps? Or, do you simply need “access to data?” In essence, it really comes down to the difference between approval and simply being informed. Lengthy payment and reimbursement processes: While this process applies to all your incentive programs, it particularly applies to your co-op/MDF reimbursement. Best practice is that reimbursement is completed in less than 30 days. Your partners will thank you. Complex program guidelines, rules, and regulations: While structure is important, cumbersome guidelines and processes are the #1 issue voiced by channel partners in a recent CCI survey. Lack of program understanding and/or too many regulations results in partner frustration and program non-participation. Escalation processes: The escalation path for program-related issues should be easily accessible and clear for all partners. Channel Sales Managers (or Channel Account Managers) seem to be managing more partners than ever as marketers attempt to trim costs. Therefore, consider outsourcing level 1 support for many of the more common partner issues. CCI performs this task by providing partner support for both marketing and reward programs on behalf of our clients.

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 11

Tip #8: Recognition is as Important as Reward
While salespeople appear notoriously greedy and motivated purely through their incentive and compensation packages, they are also extremely prideful and therefore equally as motivated (if not more so) through recognition. As channel incentive programs are designed to influence a broader audience group than just sales personnel, this appreciation for recognition applies to all potential participants. Recognition among peers is a dominant motivator in our daily lives (whether attending high school or in our adult work life). Numerous psychological studies have shown that the pursuit of recognition can be the principal motivator behind the extra effort required to attain the next tier. Finding and recognizing leadership in our own champions helps to communicate and reinforce best practices, and establishes a threshold of outstanding achievement that we all want to be a part of. To further the good news, there is generally no such thing as too much recognition — and it is often free. So unlike other reward types, recognition can be incorporated into your strategy with minimal impact on your budget. In channel programs, recognition can take many forms: Leader boards on program extranets, partner communities, partner conferences, and even through social media outlets. Use the leaders as a model for “best practices” to be shared among peers. Benefactors of the recognition will likely be proud of their successes, and as a result be more than willing to share how they got there.

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 12

Tip #9: Pre-Test Whenever Possible
Within the B2B channel marketing landscape, there is a tendency to design and launch programs universally across all partners. Conversely, consumer marketers routinely employ test-evaluate-evolve methodologies in advance of a broad-scale roll out. Pre-testing programs usually occurs within sales territories where participating territory managers are potentially program champions and will help ensure its success and/or provide constructive feedback on results. In other cases, the test group may be limited to specific channel partners or segments. In any case, there is a caution: the RobinsonPatman guidelines enforced by the Federal Trade Commission (FTC) considers incentive programs to be a disguised discount. If abused, your company can be subject to indictment for unfair trade practices due to pricing discrimination. Therefore, be sure to consult your counsel before you proceed with a test strategy. However, when executed properly the benefits of pretesting can far outweigh the risks.

Evaluate administration and communication processes: As stated earlier, most programs fail in execution. Pre-testing allows marketers to evaluate every component of the administrative and sell-in process, including messaging, business processes, partner acceptance, and more.

Minimize risk and control costs: The risks of some incentive programs are open-ended in that the cost of the reward payout may not necessarily be proportionate to a corresponding increase in sales activity to offset the reward expense. Good examples of this are end-user purchase rebates or SPIF programs (Sales Promotion Incentive Fund) paid directly to sales representatives for selling a particular product. While well intended, often these types of incentives reward recipients for sales performance that would have otherwise occurred without the incentive—like handing out discount movie tickets to people who are already standing in line. In this case, testing allows you to evaluate the risk/reward in advance.
Help project outcome on larger scale: What is learned in the pre-test will provide the foundation for projecting key program components on a larger scale. This can include reimbursement costs, redemption rates, and participation rates. Going back to Tip #1, this is a good reason to define all the metrics in advance, as they are used as a foundation for best practices and providing the insight to forecast future programs (or evolve current programs, as would be the case here).

www.channelmanagement.com

CCI eBook: 10 Tips for Improving ROI from Channel Incentive Programs 13

Tip #10: Use Joint Marketing Planning to Better Align Your Programs with Partner Goals
The process of Joint Marketing Planning (JMP) with partners has increased dramatically in the last few years—and for good reason. The JMP process combines the vendor’s product and industry savvy with the partner’s go-to-market insights to develop an efficient and effective sales and marketing strategy that works to mutual benefit. Inherent in the process is the notion that every partner is considered individually, with a tailored mix of channel marketing programs, training, and program support. Outcomes are jointly established and agreed upon, and execution is tracked throughout the plan’s lifecycle (usually quarterly or annually). It is within this JMP process that the partner’s predisposition to participate in a program may be identified. For example, specific requirements for MDF funding, expectations for opportunity management, and acceptance of other incentive programs like SPIF or sales performance rebates are identified and documented. Armed with this insight, channel marketers can better forecast program participation, expenses, sales, and other important business outcomes. Despite all these worthwhile benefits, the primary barrier to adopt a JMP process has been the high level of 1:1 interaction required to conceive, modify, and approve plans for individual partners. It is because of its labor intensive nature that the JMP process has predominantly been confined to only the top-tier partners whose revenue justifies the means. However, as previously stated, the real opportunity is in extending this process to high potential partners whose current volume may not have otherwise justified the high-touch process. The good news, however, is that online tools can help extend the planning process to a broader range of partners—even unmanaged partners. Partner principals can complete the planner on their own through formatted templates, while modifying and approving the plans can occur within the tool, or supplemented with collaborative interaction (teleconferencing, in-person meeting, or simple phone call). CCI provides a separate eBook addressing the contemporary planning process entitled “Improving ROI on Channel Investments through Joint Marketing Planning” available at http://www.channelmanagement.com/resources.
About CCI CCI delivers comprehensive incentive solutions to optimize sales channel performance. For more information, visit www.channelmanagement.com or contact us at info@channelmanagement.com.

www.channelmanagement.com

Sign up to vote on this title
UsefulNot useful