IRF Toolbox
Strategy, Design and Management of 

CHANNEL PARTNER 

Incentive, Reward and Recognition Programs

What is a channel partner?
  • A channel partner is a company that partners with a manufacturer or producer to market and sell the manufacturer's products, services, or technologies. This is usually done through a co-branding relationship.
  • Channel partners may be distributors, vendors, retailers, consultants, systems integrators (SI), technology deployment consultancies, and value-added resellers (VARs) and other such organizations.
  • In a channel incentive program, the “sponsoring company” (often a manufacturer) is one that relies on dealers or channel partners to sell its products or services. Dealers in turn rely on the sponsoring company to provide products, which meet the demands of their customers.
Who is using non-cash channel partner reward programs?
  • According to a recent marketplace study conducted by the Incentive Federation, non-cash channel reward programs are used by 43% of all businesses.
  • IRF case studies have shown that non-cash channel programs can increase total revenues by 32%, increase market share by 30%, and increase net operating income to 19% of revenue.
  • Top performing companies are statistically much more likely to use their non-cash rewards and recognition programs to reward their channel partners (81%).
What are the objectives?

The top business objectives for channel rewards and incentive programs in the United States in 2019 for organizations over $1 million in revenue focus on behaviors that drive bottom-line success:

  • Product or brand awareness (71%)
  • Sales and market share (67%)
  • Customer loyalty and satisfaction (55%)
What are some best practices in designing these programs?
  • Strong focus on goal-based structures such as sales quotas in their program structures
  • Multiple award types in a single program are very common. Over 80% of U.S. firms use more than one award type. U.S. businesses with channel incentive programs use:
         o Gift cards (63%)
         o Merchandise (51%)
         o Award points (43%)
         o Trips and travel (30%)
  • The vast majority of top-performing organizations either have multiple programs designed and managed under a common purpose (48%) or a single program for the entire company (42%).
  • While the product and interest in travel were important parts of program satisfaction, so were fairness and an opportunity to bond with leadership.
How do I measure success?
  • Tangible benefits: In channel partner incentive programs, almost 70 percent measure firm’s revenue from increased product sales, while 75 percent track new customers, 50% track increased market share.
  • Intangible benefits: While harder to measure, intangible benefits – such as culture, collaboration, and teamwork – are a critical component of the most impactful programs.
What do top performing companies do differently than other companies?
  • Prioritize participant benefits when selecting rewards
  • Budget based on operating income vs. gross margin
  • Have clear, concrete qualifiers, with no tiers or segment adjustments
  • Prioritize reach over exclusivity
  • Include programs in broader corporate communications

Where can I learn more about channel partner reward programs?

Thank you to our Research Advocacy Partner