Best Practices To Follow For Successful Channel Incentive Programs

As B2B industries evolve, the significance of channel incentive programs in driving partner engagement and loyalty has never been more crucial. Channel incentive programs offer numerous benefits, such as competitive advantage, increased revenue, and stronger channel ecosystems.

However, creating an effective and efficient incentive program that delivers tangible results requires a strategic approach. More and more companies are setting aside a one-size-fits-all program model in favor of a more goal-focused and tailored strategy that is proven to both increase partner loyalty and drive higher sales performance. 

In this blog post, we’ll explore best practices for designing a channel incentive program that yields higher partner satisfaction and maximizes ROI, including

• Using goal-focused rules structures
• Focusing on reach, not exclusivity
• Leveraging data and analytics
• Creating an integrated communication strategy
• Providing diverse and valuable rewards and benefits

Establish Goal-Focused Rules Structures

Channel incentive programs that are well-designed are proven to increase revenue along with channel productivity.  Across the board, top-performing companies favor goal-based structures in their B2B loyalty or channel incentive programs. A recent IRF study revealed that 91% of top-performing manufacturing companies automatically provide sales incentive awards based on achievement of pre-determined goals. This further supports that incentives should be awarded based on objective qualifications.

Tips For Creating Goal-Focused Rules In An Incentive Program

• Determine your sales and business objectives
  
  • What is the purpose of your program? What actions do you want channel partners to take? What specific results or goals are you looking to achieve from implementing this program? Getting these critical questions answered will set the foundation for determining your channel incentive program objectives and goals.
    
    
• Utilize historical data
  • Gathering historical data helps to create clearly defined program goals, objectives, and ways to improve program processes. Historical data will show you past goals that weren't met or gaps in sales performance. Your historical data should include more than just sales and revenue records; you should also include personnel data, along with available training and educational materials. 
    
    This can help you identify connections between cause and effect for particular problem areas. For example, you could discover that the lack of knowledge guides or training for a specific product resulted in channel partners being too unfamiliar with that product and thus negatively impacted that product’s sales. With this historical data in hand, you can develop solutions in your new incentive program that specifically addresses problem areas.

Focus On Program Reach, Not Exclusivity

Your company likely has several target groups among your channel partners - distributors, dealers, sales reps, vendors, end customers, and more. While past trends were to exclusively reward big spenders, a 2020 study from the Incentive Research Foundation revealed that top-performing manufacturing companies also prioritize reach - they reward all participants while at the same time recognizing top performers.

Channel ecosystems are growing and changing. In addition to each channel partner possessing its own culture, business models, and processes, new buyers are emerging with evolving demographics, behaviors, and journeys.

A channel incentive program that only awards the top spenders doesn’t account for the efforts and actions of the middle-tier spending partner group – even though this group contains enormous potential for future growth. One industry study revealed that a 5% performance improvement from middle-tier performers can yield significantly more revenue when compared to a 5% improvement from top-tier performers. 

Successfully reaching and engaging all incentive program participants requires modifying the program experience to allow for more customized rules instead of using a standard one-size-fits-all approach. A customized partner experience allows you to create tailored earning rules, promotions, and rewards for channel partners based on specific segmentation data or demographics, such as product, product categories, geographic region, and past sales performance. 

Leverage Your Data And Analytics Tools

It’s important to not create reports for the sake of reporting but to utilize data to optimize your sales performance and to make more strategic decisions. A good channel incentive and B2B loyalty program can consistently capture accurate POS sales data and then structure the data into easily understood formats. This allows you to gain insights into customer buying behaviors, patterns, and usage, and actively use that data to grow your business. 

While more B2B companies are beginning to shift to automated systems, a majority still run on manual processes and spreadsheets, which causes delays and errors. Your channel incentive platform should be capable of integrating with different IT systems and compiling business data from channel partners and end customers into easily understood formats. 

Your loyalty and incentive program should also make it possible for your partners to access usable business data on their end. Providing your channel partners with tailored analytics dashboards and reporting further helps them improve their own sales planning and business decisions, which makes your program more valuable to them. Providing partners with earnings and planning tools also encourages partners to actively use and engage with your channel incentive program regularly, which is one of the steps for building long-term relationships. 

Create A Thorough And Consistent Communication Strategy

Clear, consistent, and targeted communications play a critical role in driving channel incentive program performance. The more knowledgeable your participants are on topics such as:

• Program status and benefits
• Goal progression
• Exclusive offers or deal opportunities 
• New product launches or updates

--the greater their participation will be in the incentive program.

In order to develop an effective channel partner communication strategy you need to be able to segment your user base and create personalized messaging based on specific audience groups within your incentive platform. This ensures your program users receive relevant, useful communications rather than just generic messaging.

Incorporating cross-channel communication capabilities within your incentive program also helps deliver more personal value for users; leveraging channels like email, print, SMS messages, push notifications, and social media enables you to reach partners and customers at the right time and channel they prefer. 

Provide A Variety Incentive Program Reward Options & Benefits

Recognition and rewards are powerful intrinsic motivators that solidify customer relationships.  Like with benefits, implementing a mix of rewards helps to appeal to a wider variety of customers. While not every customer is the same, each wants to feel recognized and appreciated.

Channel incentive programs can provide many reward options such as points, rebates, market development funds, merchandise, free products, pricing discounts, and more. While each program's rewards and incentives will depend on the company and audience, offering the right rewards can help deliver real and emotional value to customers. 

The Value of Flexible Rewards and Benefits

While some debate over what performs better, tangible or intangible rewards, one important factor is flexibility. Top companies emphasize flexible rewards because individuals respond more positively to personalized and relevant rewards. While costs might be lower for standard options, personalized rewards resonate better and longer with high-performers. 

Another thing to keep in mind is that B2B selling often includes multiple stakeholders. You may have to work with a purchaser, managers, and other roles; each with their own priorities, preferences, and expectations. Ideally, each person you work with realizes and understands the value your company and your rewards program provide. Popular program mechanics such as tiering, badges, rewards, gamification, and their associated benefits such as access to exclusive events and co-marketing resources offer them more value than a simple discount. These rewards or benefits provide a more personal, value-add to each interaction that incentivizes different stakeholders and motivates them to stay loyal customers. 

Make Your Channel Incentive Program An Engine For Growth

Creating an effective channel incentive program is a rich blend of strategic planning and insightful execution. By centering your program on goal-focused rules, expanding its reach beyond just top-earners, harnessing the power of data, fostering communication, and offering enticing rewards, you can elevate partner satisfaction and see a significant uptick in your return on investment. Whether you're starting fresh or seeking to amplify your current strategy, these best practices lay the foundation for a robust channel incentive program that resonates with your channel partners.

Ready to catapult your channel incentives to new heights? Reach out to us today and uncover the tailored strategies that can revitalize your program, delivering measurable results and forging stronger partner relationships.