You’ve probably got a wallet full of rewards cards tracking points for your favorite coffee, clothing, book purchases and more. The concept of offering rewards in exchange for business isn’t new. But most manufacturers have failed to make the leap in logic that running a loyalty program (rewards to individuals) is not all that different from running a company-level incentives program.
The reality is that the goals of individual and company level incentives programs are similar enough to consider an integrated approach. In a business-to-business relationship your incentives programs are both structured to drive incremental channel revenue and profit, speed new product adoption with your partners, help in establishing competitive differentiation, increase partner loyalty and “share of wallet,” and ultimately, strengthen your relationship with your channel partners.
The most obvious benefit of an integrated approach is the overall cost-effectiveness achieved as a result of increased efficiency in programmatic operation, particularly with streamlined administrative needs.. An integrated approach also enables you to align global strategy across multiple regions while still allowing for local implementation. With a single global strategy in place however, it is possible to unify disparate audiences toward common goals.
My favorite approach – and benefit – of an integrated approach however is the ability to take advantage of a single, common points-based currency across your incentive programs. Programs that are points-based enable spending on non-cash rewards. While “cash is king” for many channel partners, there are non-cash rewards that many organizations find useful, including:
- Pre-packaged marketing plays
- Demo units
- Training and certification
- Marketing support, and
- Travel and gas vouchers
Cash has limited value promoting loyalty at the company level. For example, it isn’t always used to promote your products over those of a competitor. And normally, cash is used to pay for operations costs, not in generating more demand for you products and solutions. The bottom line is that cash – and the source of it – is often forgotten after the money is spent.
Non-cash programs at the company level target your “incentives” budget at promoting your products and solutions. Partners use the dollars to generate more demand – for your offerings. Non-cash rewards also motivate specific company behavior and help you establish a unique, competitive advantage. The spend of points-based company level incentives enables ongoing ROI measurement and insight that is completely lost when you pay out cash incentives. And finally, by integrating a points-based, company-level incentive program with a points-based, loyalty rewards program, you vastly improve administrative efficiency.
A single points-based incentives program – one that combines your individual rewards program with your company-level incentives program – offers unparalleled benefits to both manufacturer and partner.
During these difficult economic times, a priority for our clients is the accurate measurement of performance—which requires that we be smart about spending for the best return.
Time and again our clients experience major challenges measuring channel investment because of “dirty,” fragmented and incomplete sales data being reported. Measurement and decisions require solid sales data. To this end I am especially pleased with our recently announced, strategic alliance with Channelinsight.
Channelinsight offers a number of solutions to the sales and inventory data challenges that plague so many technology vendors’ channel sales reporting. The combination of Channelinsight’s cloud based, sales management solutions and hawkeye’s channelConduit programs empower our clients to measure and take action with unprecedented confidence. Our aligned services ensure:
• Targeted partner programs are developed and managed using validated and accurate data
• Analytics driven incentives and rewards programs can be accurately assigned and measured
• Payments are accurate and secure
As 2011 is begins to wind down, our channel-savvy team at hawkeye is determined that our clients come out of the gate strong in 2012—this year more than ever. Click here to receive your free copy of our newly published whitepaper, New Economy Incentive Programs—Maximizing Value and Motivation, where we present three new best practices for developing compelling and effective channel partner programs for the new year—new economy.
I encourage you to visit www.Channelinsight.com to learn more about improving data accuracy and then head over to their blog at www.optimizingthechannel.com. The folks at Channelinsight have some smart views—I particularly enjoyed Mark Geene’s October 13th post Making Channel Sales as Effective as Direct Sales.
We’re also currently working with our new partners at Channelinsight on a joint webinar to be presented in January. Check back soon for the announcement of the date and time.
I hope you’ll be able to join us.
The questions that are among the most consistently asked of the channel professionals at hawkeye are often tied to MDF and co-op fund utilization. From a foundational level of understanding metrics to a more complex level of application analysis, there is much room for error and confusion. However, we have identified two mutually exclusive categories that account for almost all under-utilization that occurs with MDF and co-op programs.
The first category is fairly straight-forward, and involves under-consumption of MDF and co-op dollars by partners. Under-consumption translates to lost opportunities for both you and your partners.
If that doesn’t sound like you, you may fall into the second category, which essentially boils down to vendors leaving their channel partners wanting more support. Partners have identified 3 top reasons for MDF under-utilization:
- Complexities and administrative burden
- Long delays in approvals and payment
- Unfamiliarity or unawareness of the program
While knowing the problem may be half the battle, reaching a solution is what you really care about, right? Here are some ideas for improving utilization:
Being a data-driven organization, hawkeye has a firm belief in utilizing analytics. Learn how to use data to improve your MDF by creating a baseline for measuring partner sales over a period of time. This is essential for tracking growth and identifying problems. With this, are able to begin gathering ROI data on programs and to track activities from beginning to completion. Lastly, offering execution services often results in a drastic change, because it addresses the issue of providing support for partners.
The key to a successful MDF program is in ensuring that you and your partners have a solid foundation to build from and structured, data-oriented strategy to build with. Communicating expectations in a structured way is essential for maintaining an open and successful relationship with partners. Once this has been established, an MDF program has the necessary footing to provide value to both you and your partners.
Rewards Programs and MDF/Co-op Programs serve different purposes, but the more I speak with clients and present solutions to real-life issues, the more I think that these programs have significant overlap. Let me explain.
- Some Rewards Programs target the company to incent and reward specific behaviors that have value to the vendor and their partners.
- MDF and Co-op programs target the company and make funds available to be used in co-marketing activities.
Given that both programs are targeting and driving company level behaviors how do you use that intersection to your benefit? Let’s look at some facts:
- According to a recent CMP Media article, every year 25 percent of the $1 billion in MDF available to the channel goes unclaimed.
- Based on historical information in our running rewards programs, breakage associated with a Rewards program runs between 5 and 10%.
- There are many reasons why companies do not take advantage of your programs—ease of use, not enough funds/points to make a difference, awareness or the fact that the partner company doesn’t know the best way to use the funds.
- Partners not using your programs to the fullest are not going to be as successful selling your products and services.
One method to address these issues is to create a way for the Business Owners/Managers to use funds in some way that is program neutral—no matter where the funds are earned, they can have access to campaigns/tools/resources with proven value to both you, the Vendor and the Partner company. So how can you make this work? Read more…
The topic of measuring ROI on channel MDF/Co-op programs is one that surfaces in almost every conversation with channel clients. Inevitably, when I discuss this subject with other solution providers like hawkeye, the conversation starts with how to measure and shifts to how to improve MDF/Co-op programs.
Here are 3 practical ways to measure ROI on channel MDF/Co-op programs:
1. Ask – Establish the metrics based on the type of activities that will be funded and ask the partner to provide results after the project has been executed. Consideration: Metrics are only as good as the partner provides, so reserve the right to audit periodically and reward good behavior.
2. Data Analytics – Measure sales for partners over a period of time. Compare participating and non-participating partners to eliminate environmental factors and determine the net uplift in sales for participating partners.
3. Offer Execution – Execute the project/campaign on behalf of the partner, and utilize one of many great tools to close the loop, track the lead, etc.
When MDF/Co-op activities are measured against clear and established metrics, improvements can be very specific, as they are based on real success or failure.
If you would like some MDF/Co-op improvement suggestions based on best practices with Fortune 100 technology clients, we have published a white paper that outlines practical guidelines to improve the impact of MDF/co-op programs. You can get it here.
Social media tactics are becoming an established (not just alternative) marketing channel, and partners need help. MDF/Co-op programs are intended to fund a partner’s marketing activities where the vendor’s product/service is jointly marketed with a partner’s product/service. There is:
- A shift in the types of marketing activities that partners need to be successful
- An increasing number of pre-packaged, time-tested and proven social media solutions/services available from suppliers
Be a hero to your partner community, and offer compensation through your MDF/Co-op programs for social media efforts, or better yet, connect your partners via your MDF/Co-op program to be pre-approved suppliers of social media services. Read more…
