Channel Incentive Usage Study

A study conducted by Channel Management Solutions yielded several important findings for channel partner incentive programs.  Below is a summary of the study’s valuable findings.

What are the different channel incentive program types?

1. Co-op / MDF – reimbursement for sales and marketing efforts designed to incent channel partners to advertise / promote the vendor’s brand and products.
2. Reseller Rebates – rewards paid to reseller companies for achieving sales goals or other targets specified in advance of a program period.
3. SPIF Programs – Rewards paid to individual sales reps employed by the reseller for selling the vendor’s brand over competitive products.
4. Opportunity Management – cash incentives or special discounts directed to resellers for registering sales activity in advance of completing sales transaction.  This incentive provides the vendor insight into sales engagements early in the process with the goal of attaining pipeline visibility, minimizing channel conflict, or to encourage “hunting” vs. “farming” sales behaviors.
5. End User Rebates – rewards for purchasing a product offered to the consumer.  Such incentives may be rewarded instantly (acting as a discount at the time of purchase) or reimbursed after the transaction was completed though a claiming process.
6. Trade-In Rewards – an incentive for purchases that requires a physical return of goods in advance of reward issuance.

 Key Findings:

• Co-op/MDF programs are the most widely utilized programs, followed by Sales Performance Rebates; while Rebates directed to end users to incent product purchase are the least utilized.

• The use of financial incentives is supported by relatively modest budgets.  Most vendors allocate 10% or less of their entire channel budget to incentive programs.

• In terms of programs that are most valuable to the channel’s success, the importance of Incentive Programs is second only to Sales and Marketing Training, followed by Opportunity Management and then Co-op / MDF programs.

• Channel partners believe that Incentive Programs are the most significant programming offered by their vendors and perceive Sales and Marketing Training as a much less valuable tool.  Co-op / MDF, Vendor Sponsored SPIF Programs and Volume Rebates rank as the most important vendor-provided incentive programs.

• Co-op / MDF programs have evolved from the traditional reimbursements to channel partners for advertising and marketing activities, and have grown to include business development, training and other activities that focus on closing sales or customer relationships.

• Social media is used sparingly in channel incentives, though it is gaining some popularity, most partners report they do not use social media to build business.  60% of responding vendors do not support their partners for social media.  For those that do, it is primarily only to supply content.

• According to vendors, the main area of Co-op / MDF programs that needs the most change is improving analytics and ROI.  While according to channel partners, vendors should focus on simplicity and expediency in administration.

• 60% of vendors are performing joint marketing planning with their partners, primarily with their top-tier partners.  Almost 25% of vendors plan to adopt a structured planning process.  Joint planning provides many benefits to the vendor, including:  increased goal alignment, economies of scale, reduced bottlenecks at critical juncture in channel marketing activity and advance notification of spending.

Find out how FUSION can improve your Channel Incentive Program. View our Case Studies to learn about our extraordinary, financially-responsible solutions that move your brand, your people, your customers and your bottom line!

“Channel Incentive Usage Study:  Within the B2B Technology Industry.”  Channel Management Solutions, CCI, Inc., 2011.  www.channelmanagement.com.