Third party distributors or resellers are a vital route to market for many organisations. They allow organisations to reach final customers without extra investment in clicks or bricks and mortar. In some markets, the channel is the only human point of contact your end consumers have in the buying process.
The problem with channel sales is it is an incredibly competitive environment. You’ll be vying against competing brands and you can’t guarantee that your resellers will always make the extra discretionary effort to sell or encourage someone to switch to your brand and products or services. Will the third party accurately promote your product features? Do they accurately represent your brand?
For businesses who want to make more from their channel sales partners, incentives schemes are a strategic tool in the box – few need convincing of that.
The problem is that many channel incentives schemes end up being ineffective or fail entirely to deliver sales uplift or brand preference.
Why is that? Here are five things I think any marketer needs to be aware of:
1) Alignment – it’s surprising how often we encounter a channel incentive programme which encourages and rewards activity and behaviours which generate results the organisation isn’t anticipating. For example, a company looking to increase its channel sales conversion rate was rewarding for each referral, irrespective of any qualification criteria.
2) Design – When we talk to clients about a failing scheme we frequently find a very complicated structure. Common problems include onerous data entry requirements, claim forms which don’t suit the way the channel partner does business – paper in a digital environment or vice versa – or even the length of the validation process.
3) Communication – This can be a scheme which is hard to understand, one which is poorly launched – using the wrong collateral or targeting the wrong people – or simply one where there is no ongoing communication built into the scheme.
4) Reward choice – There can be two problems here: a poor reward choice which simply isn’t right for the target market or one whose value is too low so doesn’t ‘reward’ the effort or attract interest.
5) Timing – a lack of deadlines to focus on, whether these are monthly, quarterly or yearly, can lead to a lack of motivation for resellers to focus on sales of your product or service.
The last and perhaps biggest mistake is failing to realise that your reseller is a valued customer in their own right. That means accepting you are in a battle for their loyalty and engagement.
The easier and more rewarding the incentive scheme, the better job you will do of winning that all important discretionary effort which makes a difference between a new customer and one who choses your competitor.
I am the sales director at Edenred and I specialise in developing sales and channel incentives programmes for B2B and consumer brands. You can follow me on twitter at @ColinWHodgson
