Getting the funds you need to run and grow a channel organization can be a struggle. Often channel teams are the key path to much or all of a company’s revenue, yet are often woefully underfunded. You may be a superstar at partner marketing or sales strategy, but why do you often hear ‘no’ when trying to fund what you know you need to be successful? The good news is you don’t need to be a financial or legal expert to run and grow a program. But you do need to understand what to pay attention to, and how to measure it, and how to talk about it with the rest of the company.

1. Financial Best Practices for Channel Leaders
Laying the groundwork for intelligent growth and profitability

2. 2
PRESENTERS
Laz Gonzalez
Service Director, Channel Management
Strategies
SiriusDecisions
Debra Delaney
President & CEO
CCI | Global Channel Management
Steven Kellam
SVP, Sales & Marketing
CCI | Global Channel Management

3. 3
Introduction and
Table Setting
Overview of SiriusDecisions
Intelligent Growth Framework
Key Pillar 1: Leadership
1
2
3
4
5
6
WHAT WE’LL COVER
Key Pillar 2: Organization
Key Pillar 3: Skills
Key Pillar 4: Infrastructure
7
8
9
Key Pillar 5: Incentives
Wrap Up
Q & A

4. 4
SAFE HARBOR STATEMENT
Although CCI and SiriusDecisions possess extensive channel best
practices experience, we are not licensed legal or financial advisors.
Your company’s appropriate courses of action may differ from what is
presented herein, so always confer with your accounting and/or legal
team for clarification and guidance.

5. 5
 Finance and channel orgs often feel they are
speaking different languages
 Lots of confusion around best practices in allocating
marketing spend between contra and Opex funds
 Indirect model often not well understood by larger
company…often less well versed in financial and
regulatory context of indirect
 Global partners and operations introduce regional
variances and complexity
THE FINANCIAL DIVIDE

6. Intelligent Growth:
SiriusDecisions’ Guide to
Channel Growth
Laz Gonzalez
SiriusDecisions

7. 7
FIVE WAYS TO GROW
1 Entrance into — or expansion of — vertical, horizontal and/or
geographic segments using existing/new offeringsMarkets
2 Formal targeting of new buying centers and personasBuyers
3 Launch of new products/services, or enhancement of the
current portfolioOfferings
4 Purchase of other companies, or the incubation of new
business unitsAcquisition
5 Maximizing efficiency and effectivenessProductivity
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets

8. 8
THE GROWTH PILLARS: KEY ELEMENTS
The
introduction of
motivation that
will promote a
successful
initiative, or
the elimination
of motivation
that will
prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure

9. Leadership
Success Factors
• Compliance
• Alignment

10. 10
THE GROWTH PILLARS: KEY ELEMENTS
The
introduction of
motivation that
will promote a
successful
initiative, or
the elimination
of motivation
that will
prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets

11. 11
Marketing to Partners
 Describes programs suppliers use to raise
awareness and drive demand with their channel
partners
Marketing Through Partners
 Supplier created programs that partners execute
with their customers
 Often utilized in two tier or high touch channels
Marketing for Partners
 Campaigns that are focused on “feeding”
partners leads and opportunities
BALANCING DEMAND CREATION INVESTMENTS
SiriusPerspective: Using the TRED Model, we’ve collected spend data from suppliers
and Tier 1 distributors in 3 distinct categories:

12. 12
ALIGNMENT WITHIN CHANNELS: COMPARATIVE ANALYSIS
SiriusPerspective: As companies grow in revenue they shift in % of revenue through the channel
and diversify their marketing spend.
Channel
Marketing as
% of Revenue
Marketing
to
Partners
Marketing
thru
Partners
Marketing
for
Partners
$100M - $1B 2-4% 57% 35% 8%
$1B - $5B 3-5% 50% 40% 10%
$5B-$10B 1-4% 35% 54% 11%
$10B-$20B 1-3% 40% 45% 15%
Forcing suppliers to invest in
channel awareness programs
However, partner adoption becomes an
increasing problem (Industry Avg. 15-20%)
As companies
enter new
markets they
move from
supplier-led to
partner led
BENCHMARK SURVEY FINDINGS ( Companies >60% Indirect )

13. 13
1. What kind of company are you?
 Newer company valued on revenue growth? Tend to want to
limit contra revenue.
 Value company been around for a while? You're probably
more valued on net income/gross margin.
2. What are your near-term objectives?
 Trying to grow market share?
 Pushing a new product or product line?
 Integrating services/SaaS model
3. How does your customer buy?
 Are you selling something that is technically sophisticated, or
more of a plug and play or commodity offering?
ALIGNING CHANNEL PROGRAMS WITH YOUR LARGER ORG
Debra Delaney
CCI

14. Organizational
Success Factors
• Compliance
• Alignment

15. 15
THE GROWTH PILLARS: KEY ELEMENTS
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets
The
introduction of
motivation that
will promote a
successful
initiative, or
the elimination
of motivation
that will
prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure

16. 16
ORGANIZATIONAL OBJECTIVES
Key Decision:
What are the
desired outcomes of
launching a co-op/
MDF program –
both qualitative and
quantitative?
Grow
Channel
Sales
Build brand
awareness
Generate
end-
customer
demand
Reach new
customers
Increase
sales of
specific
products
Extend
resources &
budget
“Jump-
start” new
partners
Win higher
channel
mindshare
TIP
With focus, spend can
be more targeted and a
key set of metrics can
be focused on.

17. 17
COMPANY COMPETITION MARKET/
ENVIRONMENT
SiriusPerspective: Building a sound go-to-market strategy starts with building a snapshot
of the organizational needs which can be used to plan an incentives strategy.
PRODUCT
 Price
 Complexity
 Whole product
 Lifecycle stage
 “Channel Ready”
 Objectives
 Financial
 In-house capabilities
 Current Channels
 Marketplace Positioning
 Sales Channels
 Geo Coverage
 Economic conditions
 New technologies
 Laws and regulations
 Taxes, tariffs, etc.

18. 18
DETERMINE HOW FUNDS WILL BE EARNED
Key Decision: Which model will be used: MDF, co-op or a combination of both?
Co-op Hybrid MDF
Co-op = Earned Accruals
Co-op is advertising and
promotional allowances
granted to partners
based on a percentage of
past sales.
MDF = Discretionary Accruals
MDF is issued based on the
expected results of the
planned marketing activity, in
terms of generating demand in
“new” market segments.
Hybrid = Co-op & MDF
Traditional marketing
activities are funded with
co-op, while other
activities are funded
through MDF.

19. 19
LEVEL OF FUNDING
General Guidelines
 Accruals range from 1% to 6% and two-thirds of programs are between 1.5% and 3%
 Variances in marketing accruals (whether earned or discretionary) are based upon the competitive environment and
established industry practices, as well the type of partner organization the program is designed to address:
Key Decision: What level of funding is appropriate?
Partner Type % Applied to Incentives Types of Funds
Solution Provider 2-5% MDF
Distributor
1% to 6% based on performance in
specific categories(avg. 2.5%)
MDF / Rebate
Volume Reseller 2.5% % Rebate
OEM 5% MDF
Global Alliances Variable Investment
Resellers
1% (Tier 2)
2% (Premium)
Contra-Incentives

20. 20
SAMPLE DISTRIBUTOR MDF PROGRAM ACROSS 5 SUPPLIERS
Supplier Base
Pre-
Approval?
Claiming
Required?
2-Year
Change
1-Year
Change
Performance
Incentive
Funded
Headcount
Supplier A 1.7% Yes Yes None None
2-4% based on product
and calendar
Revenue and
product type tied
Supplier B
1.3%
Blended
Yes Yes 30% -15%
1.3% ($500K cap) on
growth partners; .16%
($300K cap) on overall
$1.3M
Supplier C 1% Yes Yes None None
1% of supplier branded
product excl. renewals
$400K
Supplier D 1% Yes Yes None None
3% on commercial; 5%
on enterprise
$1.5M
Supplier E 0.45% Yes Yes -50% -10% N/A $525K

21. 21
ORGANIZATIONAL COMPLIANCE: RELEVANT U.S. GUIDELINES
 Financial Accounting Standards Board (FASB):
“Dotted line” to SEC, oversees standards of financial
accounting and reporting.
 Sarbanes-Oxley Act of 2002:
Requires internal control report in companies’
annual reports.

22. 22
FASB: CONTRA VS. OPEX
Must meet all 4 of these to be Opex:
1. The payment covers a service by the partner that is a benefit to you.
2. The benefit is clearly separable from the sale of the product.
3. The benefit could be purchased by you from a source other than the partner.
4. You have obtained proof of performance to reasonably estimate true cost.
 Advertising (Print/Web)
 Broadcasting (TV/Radio)
 Catalogs
 Direct Mail/email
 Telemarketing
 Trade Shows
MARKETING EXPENSES
 Certification
 Training*
 Seminars
 Demo Equipment
 Funded Headcount
 Recruitment
CONTRA-REVENUE

23. 23
CONTRA REVENUE VS. EXPENSE MODEL EXAMPLES
Example
Contra
Revenue
Marketing
Expense
(OPEX)
Re-classify
1) Allowance granted: No POP required 
2) Reasonable claim: POP required &
submitted 
3) Reasonable claim: POP required but not
submitted  Yes, from
expense
4) Claim for $10K is reasonable 
5) Claim for $10K is 2 times market value, but
is still approved
$5K $5K Yes

24. 24
Key SOX Elements
Sec 302 Corporate responsibility for financial reporting
Sec 404 Internal controls assessed
Sec 409 Public disclosure
Sec 906 Certification of financial reports on periodic basis
KEY SOX RULES, GOALS Overall Control Objectives
All reporting is accurate and
free of material omission.
All matters communicated to
executives in a complete and
timely fashion.
All transactions are captured,
reported per GAAP and SEC
rules.
Assets are compared to
accounting records.
All assets are safeguarded

25. Skills:
What’s Needed?

26. 26
THE GROWTH PILLARS: KEY ELEMENTS
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets
The
introduction of
motivation that
will promote a
successful
initiative, or
the elimination
of motivation
that will
prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure

27. 27
 Use ROI Data. Use ROI data to determine what types of activities to do more of and which
to do less of, as well as determine which partners to work with.
 Pre-Packaged Plays. Offer pre-packaged marketing campaigns that are available for
partners to co-brand and customize for execution at the local level.
 Partner Education/Certification. Train partners on marketing, how to implement the pre-
packaged plays and use the tools to generate better results.
 Concierge Services. Offer partners access to marketing experts who can assist with
everything from campaign decisions to marketing plans.
 Partner Incentives. Need to motivate partners to use supplier marketing tools through
incentive rewards/points.
 Channel Account Manager Training and Incentives. Train and compensate the field to
become as involved in marketing plans as they are in sales planning.
SKILLS: ENABLEMENT & EASY PARTNER EXPERIENCE

28. 28
 Critical to keep your program simple.
 Partners are ‘free agents’ these days –
have more options than ever before.
 If you aren’t easy to do business with,
they will find someone who is.
K.I.S.S. SKILLS
CCI 2015 SURVEY
“Complex or cumbersome
processes for partners”
sited as #1 challenge

29. 29
EXECUTION SKILLS: PARTNER PAYMENTS – THEN AND NOW
Traditional
Payment method: Checks
Payment time lag: Months
Payment method: Wire transfers, ACH,
rechargeable debit cards
Payment time lag: Weeks—3 or less is
best practice
New Standard
 Motivate partners’ behavior – quick
reinforcement means repetition
 Happy partners – "Cash is King"
 Loyal partners
 Faster
 More reliable & secure
 Less admin for you (printing, mailing)
 More convenient for partner
Benefits

30. 30
FOR REWARDS, PAYING SOONER IS CHEAPER
Incentive Intelligence, “Motivation, Incentives and What Wimpy Knew“ http://www.symbolist.com/blog/2008/07/motivation-ince/
“Temporal Discounting”
 We tend to prefer smaller rewards received
sooner than larger rewards offered later.
 The further out in time the award date is, the
greater that award value has to be in their mind.
Example:
Roughly, $300 awarded in 3 weeks has same
impact as $600 after 6 weeks!

31. 31
ENGAGEMENT SKILLS
Partner-centric vs. Program-centric Approaches
Improve ease of
doing business
with you. Better
partner
experience /
loyalty
More complexity
for finance group to
deal with
Partner-Centric
Pay out earnings in partners’ various native currencies.
Company covers fluctuations in exchange rates.
Usually much
easier sell to the
Finance team
“Ugly American”
effect…can alienate
global partners
Program-Centric
Pay out earnings in a single currency…usually US dollar.
Onus on partner to convert to their currency.

32. 32
 Tying budgeted to actuals is table stakes.
• Question is: how easily can you do that?
 ROI is king.
• Not easy to measure, but worth it.
 Work on the skills to make the right ‘bets’
• Scorecarding partners to minimize financial risk,
maximize return/incremental revenue
• It’s quality of partners over quantity of partners
ACCURATE AND PREDICTIVE MEASUREMENT SKILLS
Making the right partner ‘bets.’

33. 33
TRULY CONNECTING THE DOTS
Partner
Scorecarding &
Benchmarking
Joint Business
Planning
Joint Marketing
Planning &
Approvals
MDF Fund
Allocation &
Distribution
Marketing
Campaign Execution
Deal Registration
Point of Sale Data
Creation, Collection,
Scrubbing
Systems of Record –
Partner Info &
Outcomes
ROI Measurement
& Predictive
Analysis
Partner
Investment
Lifecycle
Think PEM:
1) Planning
2) Execution
3) Measurement

34. Infrastructure
Success Factors

35. 35
THE GROWTH PILLARS: KEY ELEMENTS
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets
The
introduction of
motivation that
will promote a
successful
initiative, or
the elimination
of motivation
that will
prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure

36. 36
DEFINITION AND MEASUREMENT
Reasons to Establish and Measure Results:
 Can prioritize and revise offerings according
to their effectiveness
 Makes it easier to internally justify budgets,
programs and value; provides proof that
programs are working
 Holds partner more accountability for results
© 2013 SiriusDecisions. All Rights Reserved
Key Decision: What steps will be taken to define success and
ensure ROI visibility on MDF spend?

37. 37
ROI OPTIMIZATION
 LACK OF RESOURCES. The majority of partners are small to
mid-size businesses with busy people stretched across multiple
vendors and products, with limited time and money to build
effective marketing campaigns.
 LACK OF KNOWLEDGE AND SKILL. Most partners do not have
a high-level of experience and skill at demand generation. Yet,
most partners are given a portal, an instruction manual and
practically no guidance about how to make use of the
marketing tools and funding suppliers provide them.
 LACK OF INCENTIVE. Many supplier programs do not provide a
clear vision of “what’s in it for me”.
Reasons for ROI Optimization:
Key Decision: What steps will be taken to optimize ROI on co-op/MDF spend?

38. 38
KEY METRICS
 Approved Marketing Plans. Make the creation and approval of comprehensive marketing plans the
foundation for receiving co-op/MD.F
 Establish KPIs. Assign standardized metrics to each activity type.
 Set Minimum ROI Requirement. Require partners to estimate the results of their activities when requesting
approval for projects and establish a minimum bar for approval.
 Tie to Reimbursement. Require that partners review and report results as part of the claiming process.
 Link to Deal Registration. To gain better visibility into activity results, position MDF as a tool to drive deal
registration and make MDF approvals contingent on deal registration.
Marketing Activity KPI Examples (Beyond Sales Results):
Activity Metrics
Emailing Marketing  Click-through rate
 Conversion rate (% that take action)
 Bounce rate (% of total emails sent that could not be delivered)
Events  Number of attendees
 Cost of attendee
 Number of registrations
Telemarketing Campaign  Number of calls made
 Cost of follow-up/lead
 Number of meetings secured
 Response rate = # of response / sales # of total contacts

39. 39
STANDARD TOOL FUNCTIONALITY
PROGRAM AUTOMATION Partners can make requests, update
them, respond to inquiries, and view
their MDF account balance and history
through the portal
 Supplier can approve MDF requests,
assign them or request additional
documentation
 Automated email notifications and
reminders are sent
 Issue funds and set fund expiration dates
via the web interface, CSV or our API
 Account balances and reimbursement
statuses are tracked
 Documents such as receipts or backup
documents for reimbursement can be
attached

40. 40
MEASUREMENT
Unmatched visibility into:
 Operational KPIs
 Personal to-do lists for
partners & staff
 Partner scorecarding &
benchmarking
 ROI measurement and
spend justification
INTEGRATION
Easy integration and data
exchange with other systems
via connectors and APIs.
ERP CRM MARKETING
TRAINING MRM PRM
BEST PRACTICES
 Strategy Best Practices & Benchmarking
 Operational ‘Do’s and Don’ts’
 Global Monetary & Currency Expertise
 Compliance with local laws and customs
CONFIGURABILITY
 Customization through configuration
 Adjust settings and workflows with
limited developer involvement.
 Scales easily as you scale up or down

41. 41
USER SPECIFIC VISIBILITY IS KEY

42. Incentives
Success Factors
• Incentives options guide
• The shift to discretionary
funding

43. 43
THE GROWTH PILLARS: KEY ELEMENTS
Intelligent Growth: SiriusDecisions’ Guide to Growth Through New Markets
The introduction
of motivation
that will
promote a
successful
initiative, or the
elimination of
motivation that
will prevent it
IncentivesSkills
The ability of
employees to
support the
initiative
Functional
executives
willing to
publicly
support the
initiative, then
reinforce this
support
through
consistent
action
Leadership
The creation or
alteration of
disciplines that
affect the
ability
to drive the
proposed
initiative
Organization
Processes,
tools and
metrics that,
when deployed
correctly,
enable
initiatives
Infrastructure

44. 44
INCENTIVES CHECKLIST
SiriusPerspecitve: Before implementing an incentives program make sure to cover all bases and
ensure your incentives program mirrors your company’s over-arching strategy
1. Program Objectives
2. How Funds Are Earned
3. How Much Is Earned
4. Program Eligibility Requirements
5. Eligible Activities
6. Success Definition and Measurement
7. ROI Optimization
8. Program Management
9. Program Automation Vendors

45. 45
CO-OP FUNDS VS. MDF: NOT THE SAME!
MDF
These funds are usually given proactively to select
partners at the vendor’s discretion based on the
partner’s alignment with the vendor’s strategic goals.
PROS CONS
• Funds can be distributed
dynamically to address the
changes in the market
• Used for activities
categorized as “contra
revenue” expenses
• Multi-level pre-approved
process
• Can expose vendor to
litigation if partner access
to funds is not properly
tiered
CO-OP
Also known as “trade promotional allowance programs”
where partners accrue credits for marketing spend
based on sales performance.
PROS CONS
• Easier to plan programs in
advance and requires
minimal pre-approval
• Suited for qualifying
marketing expenses
• Can be seen as an
entitlement by marketers
• Harder to control or change
the distribution of fund
throughout the program
period
• Requires heavy proof of
performance and
administration

46. 46
SPIF & REBATE, LOYALTY, AND SALES CONTESTS
SPIF & REBATE
SPIFs and rebates are the simplest
sales incentives to develop and deploy.
Sell X to get $Y
PROS CONS
• Used for short
sales-cycle
products with
highly competitive
environment
• Minimal
infrastructure with
quick results
• Less effective with
long sales cycles
• Might require
1099 compliance
LOYALTY
Designed to build relationships, loyalty
sales incentive programs reward
behaviors with a long-term duration.
Sell X, do Y, earn points toward Z
PROS CONS
• Supports both
long- and short-
term objectives
with no need to re-
launch for each
tactical element
• Easy to model over
time and reward
budget is
predictable
• Longer planning
process to support
both long- and
short-term
objectives
• Requires
technology,
management, and
communications
SALES CONTESTS
Rewards are won by a limited number
of participants and have an element of
chance.
Sell X or do Y to win a prize
PROS CONS
• Fixed reward
budget
• Can be overlaid
with SPIF and
loyalty programs
to generate more
involvement
• Subject to local
laws and classified
as “sweepstakes”
• Less motivating
and less effective
for long-term
programs

47. 47
 Maximizes incremental ROI
• Increasing pressure from CMO and CFO to track the money.
‘Prove the ROI!”
• MDF can be targeted at partners who show signs of
greater sales growth
 Loyalty effect: keeps partners engaged
• You’re mutually participating in growing the business
 Avoids ‘fat cat partner’ bias…
• Co-op can become an entitlement over time that favors
incumbent leaders
• Money can be focused on achieving very strategic objectives,
which may not align with your current top revenue partners
 Technology move to the cloud
• Shift to from 1-time install revenue to cloud/subscription revenue
• Demands cultivation of next generation of channel partners
SO WHY THE SHIFT FROM CO-OP TO MDF?
channel
technology

48. Summary
and Q & A

49. 49
TOP TAKEAWAYS
How you run
incentives is
just as
important as
whether you
run them.
IncentivesSkills
Do a skills
assessment…
does your
team have
the collective
know-how?
Lead with a
balanced
approach to
partner
engagement
Leadership
Ensure
organizational
alignment &
compliance
Organization
Use of best
practice
processes,
channel- grade
technology,
and the right
metrics is key.
Infrastructure

50. 50
Laz Gonzalez
laz.gonzalez@siriusdecisions.com
Debra Delaney
debra.delaney@channelmanagement.com
Steven Kellam
steven.kellam@channelmanagement.com
THANK YOU. QUESTIONS?
More resources available at:
channelmanagement.com
siriusdecisions.com