Are your channel rebate programs motivating the right partners in the right ways? With 80 percent of the typical high-tech company’s revenue coming from the indirect channel, rebate programs are a powerful tool for gaining market share, boosting sales and recouping revenue. But if your programs are like most, they are difficult to manage–especially those with complex criteria.
High-tech manufacturers spend billions of dollars annually on channel partner incentive programs but often struggle to find the right level of investment that will optimize partner sales and marketing performance, without overspending.
The right rebate program can stimulate sales behavior that will enable you to reach revenue goals and reward your partners for a job well done. Selecting the right partner goals and rewards while managing your program budget is often a delicate balancing act, requiring real-time monitoring and on-the-fly variations. In order to gain realistic expectations of your program function, you need a way to model and analyze rebate scenarios prior to launch.
So how can you ensure you get the most out of your incentive programs? Let’s talk about some best practices:
1. Move away from revenue attainment channel rebates
While rebates for achieving overall quarterly revenue targets are still quite common, they are typically extended to remain at par with the competition. Consider replacing these with programs that emphasize generating net new business, rather than repeat orders with existing customers.
2. Use clear incentive plan terminology
Ensure your channel incentive program is well-defined and easy to understand with clear and precise terminology. If it’s too complex or has too many terms and conditions, participation will suffer.
3. Clearly communicate objectives and benefits
Plainly communicating objectives and benefits using clear and precise incentive terminology is crucial. To ensure partner engagement and compliance, you should clearly communicate the target, rules of engagement, promotional periods, and possible earnings by partner type before the start of each quarter. Be sure to record your partner’s acceptance of these rules and terms and conditions. Keep partners current on their standing against goals through interactive dashboards, and frequent online account statements.
4. Optimize your channel rebate strategy
In today’s channel, the emphasis has shifted from pure rebate pay-outs to vendor support and vendor-partner collaboration. Cash may still be king for many channel partners, but there are non-cash rewards that many organizations find useful. The fact is that cash has a limited value in promoting loyalty at the company level, whereas non-cash programs allow you to target your incentive budget to the promotion of your products and solutions. Partners will use the dollars to generate more demand—and that’s exactly what you want.
Let’s face it. Incentives are a big expense. In fact, they’re usually a high-tech company’s largest marketing expenditure, averaging 3 to 5 percent of revenues in indirect channel incentives. With this much on the line, you need to make sure you’re getting adequate ROI on all your programs. Vistex is here to help you make sure it all adds up to more profit.