What is a Channel Partner Incentive Program?

A successful channel partner program can help organizations rapidly scale in new markets and deliver effective global product releases that have a huge impact.

But a poor channel partner incentive program or the lack of one can have a devastating impact on channel performance.

Understanding how a partner incentive program can be a key lever for growth and will give you a competitive advantage.

Who are Channel Partners?

When companies want to reach more customers in different markets, they team up with other organizations.

A channel partner is any company that partners with another organization to sell or promote its products. That means any service provider, BPO, distributor, reseller, agent, retailer, or vendor can be considered a channel partner.

Channel partners often have the expertise and developed resources to market products in their region, helping enterprises effectively reach new marketplaces.

As well as their local expertise and networks, partners can be a cost-effective way to expand. The best partners also bring their outside perspective to your business problems, which may spark innovation.

When they were first introduced, channel partner relationships were largely transactional. Now, more companies are seeking partner services that include influencer and retention programs.

What is a Channel Partner Incentive Program?

A channel incentive program motivates your partners to engage in productive behaviors by offering rewards that help them grow their own business and increase their income.

The program should encourage long-term partner loyalty and motivate them to favor your products over competitor brands.

There are many reasons organizations should invest in their channel incentive programs.

Most organizations will look to their program when launching a new product, angling to lift seasonal sales, or supporting large co-branded marketing campaigns.

Why are partner incentives important for your channel program?

Channel partners are an extension of your sales team. You can use incentives to drive revenue with partners like you would with your internal sales team.

When the partners have a few brands on their roster, an incentive can be the difference between a sale for your brand or a competitor.

The right incentive strategies implemented with a long view can build partner loyalty over time, and help your businesses grow together.

5 Benefits of a Partner Incentive Program

1. Increase sales and market share

The primary benefit of channel partner incentive programs is increased sales and market growth. Many partners will also sell competing products, encouraging them to show customers your product.

2. Increase brand awareness and customer loyalty

Working with a partner can increase brand awareness in existing markets or launch it in totally new markets. With increased brand awareness comes increased customer loyalty, as existing customers can justify their investment, and new customers have more trust in the brand.

3. Develop strong brand ambassadors

The right partner incentive program can turn vendors into brand evangelists and build a moat around the partners most important to your revenue.

If you design a program that helps you and your vendors grow, their loyalty will grow. That can even impact consumer behavior. If the local store only sells your brand and the local community respects that store, your brand benefits from that association.

4. Motivate your partners’ employees

Whether or not your partners already have an incentive program or variable compensation, your program can play a positive part in getting their team motivated.

Working on cobranded projects and special promotions with well-known brands can also be exciting for all employees, lifting engagement across the organization.

5. Increase innovation

Working with partners from other regions and specialties can bring a fresh perspective to your organizations’ products and workflow. Incentives that work with one partner don’t have a chance with another. Each new partner incentive is an opportunity to learn more about the market in that region and what motivates different types of companies overall.

Types of Channel Partner Incentives

Channel Incentives

The most common channel partner incentives are based on sales transactions.

Partners who always reach a certain sales volume or are regularly exceeding plan objectives should be rewarded. That could take the form of cash bonuses, gift cards, points-based rewards for travel or merchandise, and single-use or reloadable debit cards.

Rebates

Rebates are another major partner incentive type. The partner is offered a rebate incentive for hitting a certain sales volume, usually on a specific SKU or product line. They are typically used to generate demand but also to collect consumer data, by requesting the end-user submit information to claim the rebate directly.

Volume Discounts

Volume discounts are a simple and tried-and-true method of incentivizing partners. Using usage-based pricing is the easiest way to implement this in B2B SaaS or services. The more a partner purchases your product or service, the less they pay per unit.

Analysis can also help you identify and favor your top-performing partners to ensure they always get the best pricing and price-out unprofitable partners.

SPIFs

Sales Performance Incentive Funds (SPIFs) are a great way to motivate sales teams and a great way to encourage channel partners. They can be particularly useful for closing a revenue gap at the end of a quarter or during seasonal lulls.

There are lots of fun sales SPIFs you can run. If done correctly, they can bring huge returns. We always advise putting aside some of your incentive budget and planning SPIFs in advance to keep engagement high.

Referrals

Word of mouth is still one of the most powerful marketing channels available, and referrals are one of the few ways we can influence it.

Referral incentives could be for referring customers directly or referring other partners. They are also sometimes referred to as “deal registration incentives.”

Bundle and Warranty Kickers

Kickers are a great way to get your channel partners to think about the deal quality and upselling in negotiations. They can take the form of fixed bonuses or accelerators. Kickers are best used to improve deal terms by bundling products and warranties, increasing contract length, and encouraging upfront payment.

Training and Technology

Training and technology incentives are great to encourage partners to get further training in your product and services to be better brand ambassadors. The better partner employees know the industry problem and your solution, the better they’ll sell it.

The same goes for technology. You’ll get better results if you enable your partners to sell better by using your technology. Market Development Funds (MDFs) are another way to share the cost of brand awareness and other channel marketing efforts.

Retention Incentives

Partners can help with customer retention, and some specialize solely in it. These can be particularly useful for renewals season or when a competitor launches a new product.

Loyalty Funds

Partner Loyalty and Co-Op Funds are long-term incentive programs that encourage partner loyalty and help to build your relationship over time. These are particularly important for ensuring that your high-performing partners stay. Like top-performing salespeople, top partners are confident they can sell other products and won’t stick around for a bad deal.

Channel Partner Incentives Drive Growth

Incentives drive the world, and your channel partners are no exception.

A well-structured and data-driven channel partner incentive program can have a huge upside for the business. The challenge is coordinating the right tools, resources, and processes to execute without falling back on gut instinct to design your incentive strategy.

Few tools are purpose-built for channel sales incentives. Granted, few tools are built like Forma.ai.

About Forma.ai

Forma.ai is a Channel Sales Incentives and SPM solution that organizes and connects the data required for optimal GTM strategy and execution. Unlike other tools, Forma.ai is a model-based solution that allows your organization to strategize, motivate, and optimize both channel partners and internal sales outcomes from a single source of truth.

Our clients experience benefits through sales rep and channel behavior-driven top-line improvements and bottom-line savings through operational efficiencies.