Understanding and managing one of your most powerful tools for motivating channel partners
Rebate programs are a blessing and a curse for most organizations. While they are a powerful tool for driving desired partner behaviors, they can quickly become complex and difficult to manage.
Channel leaders want to know their rebate programs are motivating the right partners in the right ways. And often, their biggest challenge is finding the right level of investment that will optimize partner sales and marketing performance, without overspending. Many vendors now treat rebates as part of an integrated suite of incentives.
Channel Rebate Program Best Practices
Move Away from Revenue Attainment Rebates
While rebates for achieving overall quarterly revenue targets are still quite common, they are typically extended to remain at par with the competition. This type of rebate is increasingly replaced by programs with an emphasis on rebates that generate net new business, rather than repeat orders with existing customers. In addition, vendors will pay out for creating net new business in designated vertical markets, with pay-outs based on achieving revenue goals with net new customers, and rebates for adding value such as attach rate goals for services. Vendors will also pay out rebates for partners that achieve certain expertise and/or skill sets.
Use Clear Incentive Plan Terminology
Vendors must ensure they have well-defined and easy-to-understand channel incentive programs in place and that the terminology is clear and precise.
Rewards for reaching predefined revenue of performance objectives
Managed Business Objectives
Reward for achievement of specific supplier-defined objectives
Monetary rebates earned upon reaching specific goals or targets
Sales performance incentive funds earned by reaching specific sales goals
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. Record the partner’s acceptance of these terms and conditions, and keep partners informed on their standing against goals through interactive dashboards, and frequent online account statements.
Optimize Your Rebate Strategy
In today’s channel, the emphasis has shifted from pure rebate pay-outs to vendor support and vendor-partner collaboration. While cash is king for many channel partners, 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 the type of behavior you want.
The world of channel incentives and rewards management is complex and constantly changing. Are you keeping up with it all? Do you have a rebates framework in place with a systematic approach to incentive plan design? Download this eBook, Evolving Trends in Channel Rebate Programs. Learn how to supercharge your rebate program.