Channel Champion Blog

RebatesSay the word “rebates” to 3 people and you’ll get as many definitions. However, in this instance we’re not talking about a cash-back incentive to buy your next car, rather an incentive program that rewards channel partners for achieving key milestones over a predefined period—usually sales goals applied quarterly period, but monthly or annual program periods apply as well. Hereafter, such programs will be referred to as channel rebates, or more simply “rebates”.

Channel rebates are a foundational lever for motivating channel partners. In a recent survey of channel marketers conducted by CCI, 62% of the respondents utilized partner rebates as an incentive tool. This is second only to Co-op/MDF program utilization at 78%, and well ahead SPIF programs offered to partner sales reps at 49% in third place. Despite the high level of utilization, there continues to be questions surrounding the effectiveness of rebates at generate incremental performance. In fact, rebate programs are often viewed as an entitlement programs.

If you are among those that feel that way, I have news for you: your program isn’t working—and it’s no one’s fault but yours.

Here are some trends and best-practices that will help get your program back on track. As usual, some are easy, some are hard. Some are thought-provoking, while others may be obvious. In any case, there are surely fresh insights somewhere in here for you:

Make your partners claim for rebates. Don’t just send your partners a check at the end of the program period. You’d be surprised how many partners don’t know why their getting a check….that is like handing out free tickets to a movie to people already standing in line. When this occurs, you’ve certainly reached the ultimate level of ineffectiveness.

Use the rebate as a pro-active sales and marketing tool, not as passive incentive. Don’t have your partners figure out if they made the goal or not at the end of the promotional period. Provide reporting tools and notifications throughout the program period that inform participants of progress to date, and be clear about what they need to do attain the stated goal by period’s end.

Considering assigning separate rewards to multiple goals—not just a single sales number. Perhaps unique goals can be assigned by product, attachment rate, solution type or other. Rewards would then apply to the attainment of each individual goal, rather than one aggregate assignment.

“Stack” awards to assure plus-up performance. If you’re lucky enough to have someone achieve their goal early in the program period, do you want them to stop selling and sandbag any additional sales opportunities for the next period? Of course not! Consider bonus rewards for incremental performance, such as 110% of goal.

Assure one version of the truth. It’s amazing to me how many manual processes are often involved in defining and tracking “actual” performance against goal. Partners have their number, vendors have another, and yet distributors may have another. There are modern POS systems that monitor sell-through data. Such cleansed data should be the foundation for both assigning goals and rewarding attainment. Both the “forecast” and “performance-to-date” valuations should be clearly communicated throughout the program period. Any discrepancies should be addressed well in advance of the final date when rewards are assigned.

Consider rewarding partners with soft funds as well as hard cash. Most rebate programs provide a straight cash incentive for goal attainment. Instead, consider apportioning a percentage of the reward value as soft funds that can either be applied as supplemental MDF allowances, or placed in a “wallet” for use over a variety of vendor sponsored programs—such as training and certification, offsetting costs for participation in events or marketing programs, etc. Therefore, rewards earned by the partner are then re-invested in mutually beneficial business-building activities.

Add non-sales performance goals to your rebate structure. Whereas most rebate programs center around attainment of sales goals, consider adding criteria that awards the partner for attaining important KPIs in other performance areas important for you. These measures can tie into accreditation levels or provide an excellent measure of evaluating partner potential and/or commitment. Examples include: attainment of a 30% close/win ratio for opportunities closed during the period, 70% utilization of co-op/MDF funds, achieving a 3.5+ scores on customer satisfaction ratings, utilizing less than 10 hours of escalated support time, etc. The opportunities here are endless. In fact, I consider this “the big idea” of this entry.

Was anything left out? Let me know your ideas.