Are you researching sales channel incentives? If so you’ll want to achieve the best results for your time, money, creativity, and effort. At Ovation Incentives we’re experts in channel incentives, know exactly how to achieve channel incentive program best practices, and understand channel incentive management from end to end. Our popular channel incentives platform says it all. So let’s take a good, long, detailed look at the ins and outs of the best, most effective types of channel incentives, the channel incentive programmes that support them, and the intelligent channel incentive software that makes the magic happen.
What are Channel Incentives?
What is a channel incentive program? Channel incentive programmes are programmes that give incentives or rewards to sales teams and others who complete specific needs or milestones. They usually come with specific goals designed to increase sales, improve brand awareness, or enhance someone’s product knowledge.
Sales channel incentives are actually ways to influence and change someone’s behaviour. They persuade channel partners like dealers, contractors, resellers, and vendors to help meet your company’s business goals, whether it means boosting overall sales, selling more high margin products, even getting rid of old stock. As you can imagine, channel incentives are given to your channel partners. They’re always performance-based and can take the form of cash, vouchers, gifts or rewards that don’t involve money.
Why Businesses Need Channel Incentives
The importance of channel incentives is clear when you look at the numbers. More than 73% of trade takes place through sales channels. Imagine, for example, a car garage selling two different manufacturer’s vehicles. The garage employees don’t make the cars, they just sell them. And that means it makes sense to optimise the channel to persuade their salespeople to sell more of your car brand.
Channel incentives and incentives programmes are important because they make your brand stand out from the crowd, increasing your visibility. If you’ve incentivised a channel partner and your competitor, they’re selling loads of your products, and your competitor hasn’t bothered with channel incentives, you win.
Channel incentives are a simple way to incentivise and motivate indirect sales teams, for example third party sales people who sell your wares via an affiliate company. Incentivising others to sell your goods means you both increase revenue and drive sales volumes upwards – and when you get it right, all those extra sales made on your behalf are effortless.
It’s also good news for the channel partners you want to incentivise. It leverages the channel partner’s connections and market presence, giving them more valuable exposure. You can harness their brand’s credibility, important if you’re a relative unknown but they’re a household name. And it helps the business to achieve growth without having to employ more people. Shared marketing costs can make your campaigns so much more cost-effective, with a much better ROI. And it’s unavoidable when your main competitors already have fully-incentivised, keen, hard-working channel partners.
Types of Channel Incentives
There are all sorts of different types of channel incentives. Let’s explore the most popular ways to boost sales by supporting another company’s sales efforts. And here’s a list of five top channel incentives tips.
Channel Sales Incentives
Sales-based channel incentives are the most common type of partner incentive. They work by rewarding channel partner sales reps for sales volume, margin, product type, or even for exceeding goals around incremental growth. Channel sales incentives can take many forms including reloadable or single-use debit cards, gift cards used for short-term promotions, and points-based merchandise rewards. Travel incentives are in popular use for longer term, loyalty-driven sales channel promotions.
Sales Performance Incentive Funds (SPIFs)
Sales Performance Incentive Funds of SPIFFs are also called the Sales Performance Index Funding Formula. They’re a special type of channel sales incentive where sales reps are rewarded based on a percentage of the sales they make. The biggest difference is that channel SPIFFs are short term promotions targeting specific business initiatives. While a channel sales incentive program could be designed to achieve long term market penetration and build loyalty, channel SPIFFs are much better for targeting short term growth or to increase sales of a specific product over a short time. Channel SPIFFs are most often awarded using reloadable debit cards.
Value Added Reseller (VAR)
A value added reseller specialises in buying and reselling technology products with additional software or features above and beyond the standalone features the product usually includes. They add extra features and services to products and then resell them as a ‘turn-key’ solution, easily implemented into a current business process and instantly available for use once it has been implemented.
Market Development Funds (MDFs)
Market Development Funds of MDFs are resources, for example educational or financial resources given to your channel partners to help them with their sales and marketing. It may mean providing a clear list of the end-user benefits of the product or service for them to use in marketing materials, or a suite of professional images that they can use in printed and online ads and marketing campaigns to promote your wares powerfully and accurately.
Cooperative Funding (Co-op funding)
Co-op- Funding or co-operative describes what businesses do to help their channel partners meet their own targets and objectives. It usually involves your business handing over a percentage of your business’s sales and marketing budget to reward channel partners as they sell more of your products. It’s easy to see how rewarding buyers, dealers, installers and everyone else involved along the way for their loyalty to your brand and their continuing use of your products or services.
Channel rebates help channel partners reduce their overheads, giving them the encouragement they need to drum up extra demand and influence their buyers. Usually, channel partners are given rebates based on the size of the order or order frequency, and it’s usually intended for a specific product.
Deal Registration Incentives
Deal registration incentives reward your loyal channel partners for bringing new leads to vendors. If the vendor accepts the lead, your channel partner has a pre-agreed amount of time to close the deal before losing the incentive. Most businesses offer their partners extra points on the margin in exchange for registering deals. Also, most offer other bonuses and opportunity incentives to drive deal registration. This encourages others to close sales faster than they otherwise might, safely sealing the deal in a timely way.
Referral incentives reward partners for recommending and referring the right kind of buyers to your company. This usually involves points-based awards, gift cards, debit cards, and incentive travel programmes, all of which are a popular way to achieve more referrals from third parties.
Enablement and Training Incentives
Enablement and training incentives are also called behavioural incentives. They’re powerfully influential simply because they tap into people’s drive to reach their goals in life and at work. Sales enablement and training incentives give sales experts the tools they need to achieve closed deals. The better equipped someone is with all the facts, the easier they find the selling process.
Loyalty Incentives and Partner Retention
As you’d expect, loyalty incentives are all about the long-term. The aim is to sustain good, positive relationships with your channel partners. Because they help you sell your wares, they matter a great deal.
Partner retention and loyalty incentives are about building and maintaining the kind of good relationship that lasts and lasts. When you keep your top sales partners happy and satisfied, you solidify their loyalty. It’s not so much about growth as it is about keeping great relationships in the good condition they deserve to be.
Warranty Registrations and Bundling
Warranty registrations and bundling is all about taking positive action to increase the value of a sale to the manufacturer, for example by registering a warranty. When you bundle together a product and associated services, you maximise the value of each sale. Both methods boost your sales and also benefit the channel partner.
Activity Based Incentives
It’s possible to apply incentives to every sales-related activity. This means you can easily incentivise channel partner sales teams via things like valuable training, insightful product demonstrations, managing relationships and managing contracts.
How to Start Your Channel Incentive Programme
Are you interested in developing your own channel incentives programs? If so, get in touch with the team at Ovation for insight, inspiration and a discussion about the potential. We’re your trusted experts in everything to do with channel incentive management and channel incentive program best practices. You might even fancy giving our demo a go – click here to test-drive it.
Find out more about our brilliant channel incentives platform
Now you know what channel incentives are for, and what the most popular types are. Which type of channel incentives will suit your business best? Is it obvious or would you like some expert support? Our channel incentive software is an excellent starting point for your efforts, the ideal way to set everything up, keep it under control, and keep it working smoothly. If you already have a channel incentives programme in place, how confident are you about it? Click here to check.