by Martin McNally
Director of Product Management, CCI

The saying "the buck stops here" has always been relevant in business. Embarking on a new channel incentive program is a prime example. There must be ownership. Decisions must be made and accountability must be accepted. The stakes are high, as a well deployed program involves multiple partner organizations, thorough communication, strong execution from all parties, and measurable data.

As the owner of a channel incentive program, you know the program is needed. Moreover, you've designed the program to be compelling to your partners with the eventual result of enhanced bottom lines for both you and them. Correct? Confident? To be convinced of a successful return on your investment, leave no stone unturned in its definition.

Program definition - not to mention results - benefits from a thoughtful analysis on your current goals as well as a careful review of history. Know your true needs - and that of your partners. Identify a program structure that will support those objectives and drive value through your demand chain. Do your goals align with corporate, partner and customer needs? What feedback do your partners have on your current and prior channel programs? What marketing activities or initiatives are generating the greatest ROI? Are you utilizing any market research? Are the reward and its value aligned to the desired behavior of your partners? Will your new program 'meet' or 'beat' competition, thereby winning valuable mindshare of the partner community? Will the program structure and operations generate actionable data?

This is just the beginning. A myriad of other considerations await and the synergies among them will actually help slay these dragons instead of overwhelm you. Once the program is defined, you'll see your vision deployed into an operable, measurable initiative. As you come full circle and obtain program and partner performance data with which to optimize the program, be sure to revisit all the points evaluated during design so you stick to your objectives - or intentionally reset them. Now is no time to "pass the buck."

by Martin McNally

Director of Product Marketing, CCI

Channel sales and marketing is one of many business functions for whom incentive programs are commonplace. They are an expected ingredient of the model. But just having one is not enough: It has to hit all the right notes to generate desired results. The design of an incentive program must focus on the goal. Consider how the incentive program will help achieve the business objective. Just as important: What's in it for the channel partner?

In designing an incentive program, identifying the behaviors to incent is half the equation. Those parameters focus on the business - activities, dates, funding allocation, etc. Part of the program design must also focus solely on the channel partner. Incorporating enticing rewards is where you can forge the best likelihood for success. Consider what will compel your channel partners to be active participants in the incentive program. Include desirable rewards that will generate activity by channel partners and thus achieve results for channel marketers.

A wide range of reward models are available to channel marketers to fit both your program financial model and partner composition. Choose a reward that truly has value to your channel partners and don't be reluctant to experiment and mix it up. Nobody will say no to money, though some may view that approach as too predictable and therefore uninspiring. Points-based models can make thing interesting, as redemption can be available for a myriad of merchandise, events or other experiences. The partner may very well gain something that they would not otherwise acquire. (Points-based incentive programs work well for ongoing programs, as opposed to transactional programs, though that's another angle to pursue.) It may also be appropriate to hold the reward close to the vest and offer soft funds only. This too can be appealing to the channel if subsequent co-op/MDF marketing activity is likely. It always feels good to have a credit on the books, so to speak. And don't forget about stored value cards, another reward vehicle that can feel like "money in the bank."

Whatever reward you choose, know that although reward fulfillment is the last step in an incentive program cycle, it may be the first consideration of your channel partners.

So while everyone else has a top 10, I decided to go one better...behold:

The 11 Deadly Sins of Channel Incentive Program Planning

Why to I refer to them as "deadly sins?" Because violating any one of these can diminish the effectiveness of your program and waste time and money. Yet, I often see more than one of these sins violated in the manufacturers rush to put a program in place-and then wonder why the program didn't work as well as they hoped after the fact.

11. Not targeting the right level of the demand chain. Incentive programs can target the consumer, the reseller sales rep (and/or sales engineer), or the reseller entity. Any one or combination of these may be viable depending on your objectives. Targeting any one has different merits, and challenges.

10. Not having the appropriate terms and conditions in place--or, "Ts & Cs" if you prefer. This is an official legal document that defines the eligibility, terms and parameters of the program which participants must agree to early in the process-not merely marketing hype that provides a program overview.

9. Not requiring acceptance and understanding of the aforementioned Terms & Conditions. Such acceptance should be done via positive acknowledgement in advance of participation.

8. Having overly complicated business rules to earn the reward. Like all things in life, "KISS" is the guideline here (Keep It Simple Stupid). Program understanding should be both compelling and easy to understand for those of us with a short attention span.

7. Ambiguous proof-of-performance requirements. In this case, by "ambiguous" I refer to "difficult to validate" through other means. The bigger the reward, the more there should be an audit trail in place that validates the transaction details.

6. Not validating that the program is actually "legal" in all the jurisdictions targeted. Many countries and even some states regulate how program may be conducted (or not). This topic could fill a book. If you're planning a global program, this can get real complicated in a hurry.

5. Not targeting the right channel segment or partners. Surprising as this sounds, I can't tell you how many programs "required the ‘buy-in' from X partners" to be successful, only to find after the fact that those very partners don't sell the particular product or the program didn't correlate with their go-to-market strategy. Many resellers may not even permit vendor-developed SPIF programs as it interferes with their own sales policies and practices.

4. Not considering advanced registration. If it is expected that more than one claim may be submitted by any one participant, then pre-registration offers many advantages. Among them, advanced registration provides metrics on participation levels early in the program period, and streamlines the claiming process for the user by not having to re-key personal information with each transaction among them.

3. Stacking incentive programs. A lot has been written about how many vendor companies have as much as 40-50 different promotions and incentive programs targeting the same partners concurrently....need I say more to justify why this qualifies as a "deadly sin?"

2. Thinking short-term and not optimizing your investment. Many programs are launched to attain a tactical need supporting a short term sales goal. Websites are built, infrastructure is put in place. The program is then dismantled after the program period is over in a few months. Then, six months later, the whole thing has to be rebuilt when a new tactical need is established. This lengthens time to market, is inefficient, and often doesn't leverage any of the key learnings from the prior program. It's most efficient to construct a single conduit that may conform to your promotional needs as they occur.

And the #1 reason why incentive programs fail.....

1. Ill-conceived communications strategy.....yep, you heard it right. As hard to believe as it is, in the post program analysis we conduct we find that the number one reason participants don't support the program is that they didn't know the program existed or didn't effectively understand the program attributes and how it fits with their business model. So, for instance, it's not enough to tell your primary contact about the program when it's a SPIF program targeting reseller sales reps, you have to make sure the reps themselves know about the program and understands the benefits to them.

So, these are the facts kids---I can't make this stuff up. Each one has enough content behind it to support an article on its own. In the meantime, if I've missed one or if one of you would like to share your horror stories, we'd love to hear it.

Craig DeWolf is Vice President of Sales and Marketing for CCI.

Craig's extensive experience spans over 20-years, across a variety of industries and distribution models. This background has given Craig an excellent perspective of the issues facing marketers and their distribution partners, and the solutions that will make them mutually successful.

The CCI Sales Performance Rebate Application was designed to reward a manufacturer's channel partners for achieving specific sales targets during a pre-defined time period. Version 2.0 enhances the original version by providing greater flexibility to adapt business rules in support of complex multicurrency and multilingual program and channel structures -- allowing manufacturers to modify existing programs and create new reward programs on-demand. Plus, in addition to cash rebates, rewards may take the form of loyalty points, MDF funds, other "soft" incentives, or any combination thereof. "In this economy, we are seeing a growing interest in incentive management solutions for manufacturers to maintain sales momentum within a target range through their sales channels." said Craig DeWolf, Vice President of Sales and Marketing at CCI. "Motivating and rewarding partners to achieve sales goals and real-time ability to track progress towards those goals is more vital than ever for our clients. The CCI Sales Performance Rebate Application will enable channel marketers to manage very complex reward scenarios for their partners with greater ease and improved flexibility."

The CCI Sales Performance Rebate Application accommodates multi-tiered channel models offering differing reward structures. This allows manufacturers to set individual sales goals by partner, as well as provide additional rewards for incremental attainment. Rewards may be configured across a combination of variables, including: reseller classification, sales period, specific products sold, units (value or quantity), and reward type (cash rebate or other). Additionally, rewards may be "stacked" allowing any partner to work toward multiple rewards simultaneously. Partners can then benefit from combinations of awards such as a tiered reward structure or the assignment of different rewards per product line or product type.

"This Sales Performance Rebate Application is an integral part of a comprehensive incentive solution suite CCI offers manufactures to motivate each level of the sales and demand chain", says Mr. DeWolf. "Depending on our client's objectives, they can combine stretch goals with end-user rebates, opportunity management programs and other incentive types to help assure an efficient and active sales pipeline. And because CCI offers both professional and administrative services, we can provide clients with an end-to-end solution including front end program design, and ongoing program management, including compliance auditing, reward distribution and user support."

Like all CCI solutions, the Sales Performance Rebate Application runs on the CCI SPECTRUM Platform, so reporting and business process for all incentive programs may be managed through a single interface. Management can easily keep track of current and prior reward earnings for their partners through in-depth reports and handy dashboard tools. Partners can track progress through their own set of reports allowing them to quickly access up to date information on sales targets, attainment to date, rewards earned and their requirements to reach the next earning level.

For more information, please visit: http://www.channelmanagement.com/solutions_incentive.html
http://www.channelmanagement.com/solutions_incentive_salesperform_app.html

Click Here to download the data sheet.

It amazes me how often manufacturers come out with new incentive programs which are only "Stacked" on top of existing programs to provide added discounts to the partner. This might be OK as long as you're accounting for them and the actual cost of sale is profitable. So, you don't think this is happening to you? Take this test:

First: Do you offer 2 or more of the following channel programs:

• Co-op/MDF
• Performance Rebates (or "stretch goals" as we refer to them)
• Channel SPIFs or other loyalty program to sales reps?
• End user trade-in
• Leads
• Opportunity management tied to incentives for closed sales
• Champion employee reimbursement programs
• Training and certification
• CAM or SE sales support

If you're answer is "no", you're done with the test (and you're missing out on some real opportunities-but that's another entry)

If your answer is "Yes", then proceed through the following questions:

1. Can you isolate the cost of all these programs to individual resellers?
2. Are you able to compare those costs with the revenue they generated?
3. Do you have an established set of guidelines and best practices for each individual program? IF so, are they practiced throughout your channel organization?
4. Are you able to evaluate the impact of each program on sales or the reseller's growth over time? (as measured in isolation, or relative to their "Peers")
5. Do you know how your partners perceive the effectiveness of these programs on their business?

If you answered "no" to one or more of the above, you have a real opportunity to improve the efficiency and effectiveness of your channel investment--the technology does exist people. But, don't worry, you're not alone. As a result, I've heard of many instances where resellers make more money "buying" rather than selling some products by selling it at their "cost" then making up the margin through other incentives. In the meantime your cost of channel sale is so high that you're forced to lay-off staff in this economy. Is that really a win/win scenario? I enjoy "stiring the pot" with these blog entries, so whether you agree or not, I'd love to hear from you either way.

Flexible Rebates:
Not merely "one size fits all" but multiple rebate programs tailored to partner tier, selling capability, and product category. These are programs that can run concurrently, each with their own shelf life and business objective (hopefully to create incremental revenue for the manufacturer!). They can change in mid-stream as business conditions and consumer responses change.

Branded SPIFs:
SPIF campaigns are the most direct route-to-market for influencing channel sales behavior. Many principals in partner organizations are reluctant to have their sales reps participate in these programs because of a perceived lack of control over the sales cycle. But successful SPIF programs engage their principals for buy-in well before the launch, aligning common business objectives between manufacturer and partner. Reloadable debit cards are a popular way to remit rewards and are literal "in-pocket" reminders of the manufacturer's branding and goodwill.

Banking Points:
The awarding of points can be understood as payment in a "currency" scaled to the measurement and performance standards set by the manufacturer. Points can be exchanged for tangible rewards: cash, vacation trips, furnishings, etc. They are often tied to incentive programs in which the manufacturer-partner objective is not revenue oriented. We know of one company program which remits points or dollars directly to their channel partners when they reach 100% of goal or above, and for those partners under 100%, the program "banks" points/dollars in partner accounts specifically for co-marketing activities.

Business Planning:
Manufacturers who understand the value of long-term investing in their channels will sometimes offer funding over a protracted period in return for a strategic business plan submitted by the channel partner. This funding is used by the partner for development purposes such as infrastructure, personnel, education, and training. The amount and type of funding is often tied to the actions and commitments by the partner to increase and accelerate manufacturer sales within an extended timeframe, usually in months or fiscal quarters. Within the past year, we have seen a number of companies making a conscious shift away from funding "one-off" partner marketing activities and toward strategic marketing campaigns which are part and parcel of annual partner business plans.

Advancing and diversifying in these areas will keep you ahead in partner mindshare and prove to invigorate your channel programs. It's a brand new year-- time to get inspired!

Michael DeBarros is the Business Development Manager at CCI. He is a veteran of 22 years in technology sales and has held channel management positions at two leading software companies. Michael's experience in working for both partners and vendors offers unique insight into today's channel challenges.

Don't hand out free tickets to people already standing in line.

Many incentive programs result in rewarding people who would have bought/sold anyway, so all you're doing is reducing margin and showing no incremental gains.

Define who really controls the sale/purchase and reward that level.

There are at least 3 levels to consider: The customer/end user, the sales rep, or your partner company. Rewarding one or more than one can all be effective, but be sure the level you are targeting will be most effective at otherwise changing behavior. After all, it doesn't matter how much you reward a sale if the customer isn't buying, does it? Understand who controls the sale/purchase of your product and focus on that level.

Don't forget the communications!

From my perspective, most programs succeed or fail not in the design, but in the execution. I have seen some great programs that have really compelling graphics and slick prizes, but have failed because their partners and other stakeholders either didn't know of the program, thought it was too complex, not relevant to their needs, or details of the program simply got lost in the clutter with the barrage of messaging directed to potential participants from all sides. Decide who needs to be involved to make the program a success and focus on them to make sure they embrace the program.

Equip your stakeholders for success.

Don't forget the basics, make sure your partners have the sales tools and product understanding to make your program a success. A sales incentive won't drive sales without a compelling value proposition.

KISS

The old adage: Keep It Simple Stupid applies. Don't make the participation cumbersome- keep the rules basic, and make sure the program is easy to understand and to participate.

Any one of these tips above can be fodder for future entries, so stay tuned.

Craig DeWolf is Vice President of Sales and Marketing for CCI.

Craig's extensive experience spans over 20-years, across a variety of industries and distribution models. This background has given Craig an excellent perspective of the issues facing marketers and their distribution partners, and the solutions that will make them mutually successful.