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?
- 2019 Top Performer Studies
Learn about non-cash rewards strategies and tactics used by top performing companies, providing benchmarks and best practices for firms serving three distinct market segments:
o Manufacturing
o Technology
o Financial Services - IRF 2019 Trends Study
Stay current on industry trends. The study highlights ten key trends for 2019 and their implications for workforce engagement, incentive travel and recognition. -
Designing for Successes: Effective Design Patterns for Channel Programs
Noteworthy design elements for effective non-cash channel recognition and reward programs. - 2017 IRF Incentive Benchmarking Survey (slide 34 – 53) and Ten Things Top Performing Companies Do Differently White Paper
Learn from companies that have successfully designed and delivered channel partner programs. Use benchmarks to compare your performance and set goals. - ROI Incentive Programs: A Case Study for Channel Sales Success
Read this step-by-step account of how a company redesigned its channel partner program, resulting in a 32% increase in revenues. - Channel Incentive Travel: A Case Study
This study provides a better understanding of what a channel incentive program is, and important considerations for implementing the incentive travel program from the perspectives of the company and its participants. - Striking The Balance: The Integration of Offsite Business Meetings and Incentive Group Travel
Combining offsite business meetings with incentive group travel provides opportunities to leverage the presence of the organization’s top performers and partners with senior executives. This study provides insights on how to design these trips so that impactful discussions can be had in which executives learn from top performers and reward earners feel more valuable and engaged.
Thank you to our Research Advocacy Partner