In an effort to generate business and drive revenue in a challenging economy, vendors are making significant changes to their channel incentive programs, with an eye to generating results today instead of tomorrow, according to one analyst firm.
Laz Gonzalez, research director, channel management strategies with SiriusDecisions, says while vendors have traditionally employed a range of incentive programs geared towards short-term, medium-term and long-term results, his research indicates vendors are diverting more of their incentive spend towards programs designed for immediate results.
“They’re using incentives much more to create demand and influence partner behaviour, with a heavy emphasis on the latter,” said Gonzalez. “They’re using incentives in a much more point-based approach and allowing multiple channel partners to participate.”
Overall, vendors aren’t cutting their spending on incentives, but they are reallocating the dollars within their broader incentive budgets.
“I’m not seeing it reduced, but I am seeing more companies trying to energize their channel at a lower cost of sale than a direct model,” said Gonzalez. “Those companies making a shift towards an indirect model are fueling those efforts through incentive programs more than before.”
Increasingly, says Gonzalez, vendors are using incentives to move their partners towards a common target, and to achieve specific goals, such as raising awareness of a product or solution, encouraging training and certification of a new product, or encouraging penetration of a specific vertical or geography.
“It was a lot more broad-based before, while now it’s a sharper focus by the manufacturers,” said Gonzalez.
Vendors are also trying incentives to the level of commitment each partner is willing to make to the vendor and its solution set, such as the number of sales and technical staff with certifications the partner has on staff. The greater the commitment, the greater the incentives.
While that has always been the case to a large degree, Gonzalez says what’s changing is vendors are no longer necessarily tying incentives to partner program tiers. Rather than wait for a partner to graduate within the program, he says vendors are making greater incentives available immediately to partners with the potential to move-up, in essence helping the partner boost itself up in the program.
If a partner can demonstrate commitment to the vendor, there may the opportunity to negotiate improved incentives ahead of qualifying for the traditional higher program tiers.
“Manufacturers are making immediate funds available to partners without a history of accrual. They might have programs that reward partners for continued success, but at the same time they’re making incentive dollars available up front,” said Gonzalez. “There’s certainly a sign of economic strain here. They don’t want partners to have to shell-out the cash up front.”
Vendors are also getting smarter about what other vendors are doing around incentives, says Gonzalez, which means it’s not really possible anymore for a partner to play one vendor off another.
“Vendors are starting to become savvy about what partners receive across different vendors,” said Gonzalez. “The opportunity to play one vendor off another is minimized by the vendors seeking and learning what each other are doing.”
Rather, in order to maximize your incentive potential in today’s economy, Gonzalez says the opportunity for partners is to focus on a vendor and add value to the full range of products and services they offer.
“Partners should look to maximize the value they bring to a vendors products, and those that do will weigh heavier in the type and amount of incentives they qualify for,” said Gonzalez.
Recent news on incentives:
Cisco offers more incentives for data centre partners
Avaya offers incentives to woo partners from ailing Nortel
Sage makes major channel program changes
HP Canada rolls out new SMB Elite channel program
VMware adds incentives to partner program
