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2019 Channel Incentive Planning: Achieving Growth & Transformation

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How do you choose the right channel incentives to match your strategy and accomplish your organizational goals? Is it science? Is it art?

In this presentation, Dan Overgaag, Principal for The Spur Group, Rod Baptie, Founder of Channel Focus/ Baptie & Co, and Steven Kellam VP of Global Alliances at 360insights shared and discussed a framework for how to choose and implement the right channel program to achieve transformational goals.

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2019 Channel Incentive Planning: Achieving Growth & Transformation

  1. 1. 2019 Channel Incentive Planning Achieving Growth & Transformation
  2. 2. Hello – A Brief Introduction of Your Presenters Rod Baptie Service Director, Channel Marketing Strategies Rod has been involved with hi-tech since 1984. Rod's introduction to hi-tech was the launch of dBase Ill and Framework in 1984 and during the 80’s, Rod was responsible for the successful launch of over 20 major technology companies into the European market. In 1993 Rod launched Baptie & Co, whose communities and events provide invaluable insights on the latest trends, sales, marketing and management issues through peer to peer interaction. Dan Overgaag Principal Dan leads The Spur Group’s channel management, sales transformation and business operations practices with over 10 years of industry experience. Dan has led several projects and strategic initiatives across channel management and channel incentives programs within technology companies such as Microsoft, Cisco and Google, He has also managed teams from 1-20 consultants focusing on driving efficiency within a tech company’s business operations. His process-driven, analytical approach has enabled companies to maximize their effectiveness and draw clear, actionable insights. Steven Kellam Vice President, Global Alliances Steven is Vice President of Global Alliances at 360insights. Steven has decades of channel experience and is a respected leader in incentives and marketing and has a comprehensive end-to-end understanding of what it takes for brands to succeed selling through complex sales channels.
  3. 3. AGENDA Current Challenges of Channel Marketers Introducing the 4C Channel Scoring Methodology Using the 4C’s to Segment Your Channel Introducing the Channel Incentive Planning Framework Using the Framework to Choose the Best Incentive
  4. 4. Key Channel Growth & Transformation Challenges Insights about how buyers want to purchase b2b offerings are essential for driving growth and go-to- market strategies aligned to the buyer’s journey Suppliers continue to struggle to apply incentives, resulting in a lack of effectiveness and ROI Incentives often focus on past performance, rather than on influencing future behavior Changing factors – such as new routes to market, emerging partner types and new technology offerings – are altering the way incentives are created and executed Many partner programs have not been transformed or adapted to expanded routes to market or to consolidate disjointed programs Suppliers must modernize programs and incorporate best practices Best-in-class b2b organizations struggle to establish channel partner programs that can support their channel strategy and growth objectives PROGRAM GROWTH ALIGNMENT LACK OF PROGAM TRANSFORMATION ALIGNMENT TO BUYER’S JOURNEY INCENTIVE EFFECTIVENESS NEW INCENTIVE METHODS
  5. 5. WHICH SOURCES DO YOU PRIMARILY ON TO DETERMINE YOUR BEST PARTNERS? A. PAM Report-outs B. Partner Scoring C. Revenue Attainment D. Last Year’s Best Partners
  6. 6. 4C’S MODEL
  7. 7. PARTNER SCORING METHODOLOGY The 4 C’s Revenue Capacity Sales Velocity CONTRIBUTION Skill Level CAPABILITY Market Focus COVERAGE Competitive Alignment COMMITMENT
  8. 8. SALES VELOCITY OF PARTNER Contribution 1 2 3 4 5 1 1 2 3 4 5 2 1 2 3 4 5 3 Frequency Sales Per Customer Yield Revenue Per Customer Reach Number of Customers 30% 20% 50% Score 2.2 Contribution Capability Coverage Commitment
  9. 9. SKILL LEVEL OF PARTNER Capability Score 1.7 Contribution Capability Coverage Commitment People 1 2 3Certified staff Benchmark Partner Actual Stacked ranking 20% Focus 1 2 3Product mix Benchmark Partner Actual Stacked ranking 50% Productivity 1 2 3$/staff Benchmark Partner Actual Stacked ranking 30%
  10. 10. Coverage Contribution Capability Coverage Commitment Needs partners Low investment Well covered H L L Numberofaccounts Average revenue per account Growth opportunity3 4 2 MARKET FOCUS OF PARTNER H Numberunpenetratedaccounts Score 1.8 Contribution Capability Coverage Commitment Small Large Market Size Medium Minor Major 80% Emerging 20% 3 11 2
  11. 11. COMPETITIVE ALIGNMENT OF PARTNER Commitment Growth Delivery Marketing Delivery Lead Delivery Pipeline Delivery Brand Delivery 1 20% 2 20% 3 20% 1 20% 1 20% Score 1.6 Contribution Capability Coverage Commitment
  12. 12. COMMITMENT COVERAGE CAPABILITY The 4 C’s With the ability to weight importance “C” weight “M” weight Metric Description 50% 30% Frequency # of transactions a partner completes in a yr. 20% Reach # of customers in the annual transactions 50% Yield Revenue of the partner per year 20% 70% Strategic alignment Partner’s % revenue of priority products sold 30% Cert. productivity Partner’s revenue divided by people certs +0.25 Bonus Strategic capability 1 Any specialized capability that is strategic +0.25 Bonus Strategic capability 3 20% 50% Market scale Revenue driven from multiple markets Market alignment Partner’s % revenue in priority markets 50% Segment scale Revenue driven from multiple segments Segment alignment Partner’s % revenue in priority segments 10% 50% Transaction growth Partner’s YoY growth in revenue by quarter Transaction recency YoY growth weighted by recent quarters 50% Certification count # of Certifications a partner has completed Calculate partners’ metric performance 1 Score partners at the C level 2 Index partners’ capacity 3 Rate partners into peer-level groups 4 Rank partners based on capacity rating 5 CONTRIBUTION
  13. 13. THE BASIC ALGORITHM The 4 C’s Revenue Capacity Score = 7.3 2.2 CONTRIBUTION 1.7 CAPABILITY 1.8 COVERAGE 1.6 COMMITMENT 50% 20% 20% 10%
  14. 14. Detailed, comprehensive scoring Capacity Rating # Partners Capacity Score Contribution Score Capability Score Coverage Score Commitment Score  14 1.2 1.2 1 1 2  128 1.85 2.5 1.7 1.6 1.6  473 2.2 3 2 2 1.8  2,955 3.2 4.2 2.8 3 2.6  248 3.6 5 3 3.4 3 Total 3,818 2.9 3.8 2.6 2.8 2.4 Partners Customers Deals All Up Revenue Enterprise Revenue MSB Revenue Capacity Rating # Partners % Partners # Customers % Customers # Deals % Deals $ Rev % Rev $ Ent Rev % Ent Rev $ MSB Rev% MSB Rev  14 0.4% 8,372 15.5% 21,572 18.7% 1,158,133,769$ 23% 1,015,388,277$ 25.0% 142,745,492$ 15%  128 3.4% 17,496 32.4% 41,858 36.2% 1,908,476,987$ 38% 1,620,004,259$ 39.8% 288,472,728$ 31%  473 12.4% 14,555 27.0% 30,228 26.2% 1,288,718,884$ 26% 1,030,307,983$ 25.3% 258,410,901$ 28%  2,955 77.4% 13,030 24.1% 21,070 18.2% 602,922,050$ 12% 389,681,814$ 9.6% 213,240,236$ 23%  248 6.5% 547 1.0% 834 0.7% 30,724,662$ 1% 10,204,992$ 0.3% 20,519,670$ 2% Total 3,818 100.0% 54,000 100.0% 115,562 100.0% 4,988,976,352$ 100% 4,065,587,325$ 100.0% 923,389,027$ 100% PARTNER SCORING + 4 C METHODOLOGY For Example: 4 and 3 partners tend to score better in Commitment 1 For Example: 4 partners reach the most customers in aggregate 2 For Example: 4 and 3 partners contribute more than 5 partners 3 Insights • Determine which investment area (sales, enablement, market development and loyalty programs) have best return • Size revenue bands to understand consolidation risk • Compare partner performance against similar sized partners • Stack-rank all of your partners Average Scoring by “C” Sales Distribution – How Sales are distributed across ratings
  15. 15. Coverage CommitmentCapabilityContribution IMPROVE ROI MODEL Setting The Table for Incentive Planning Medium investment High investmentLow investmentHigh investment Demand Generation Performance Attainment Capability Development Transaction Proficiency
  16. 16. WHAT IS YOUR GREATEST REAL WORLD CHALLENGE? A. Transaction Proficiency B. Capability Development C. Demand Generation D. Performance Alignment
  17. 17. LEVERAGING INCENTIVES
  18. 18. | ALIGNING YOUR INCENTIVE OPTIONS BRAND DISTRIBUTOR DEALER/PARTNER/VAR SALES ASSOCIATE X X X X Rebates Volume+Value Sell-Through Allowances SPIFFs Sales+Behavior Reward Points X X X X X X CUSTOMER X MDF+CO-OP X INCENTIVES CHANNEL
  19. 19. Core Incentive Planning Components What are you trying to achieve? Which channel segments are you targeting? What are the best incentive for the persona & behavior? What behavior needs to be influence? GOALS TARGET AUDIENCE INCENTIVEBEHAVIORS INCENTIVE PLANNING starts with a clear goal, a target audience and behavior, and a program designed to achieve the goal through behavioral change.
  20. 20. GOAL CONTRIBUTION: Transaction Proficiency WHAT SEGMENT OF YOUR CHANNEL? WHAT IS THE MOST EFFECTIVE INCENTIVE? WHAT BEHAVIORS NEED TO MODIFY? Improving Revenue Within the Channel Contribution Capability Coverage CommitmentThe 4 C’s Engagement Enablement Demand Generation Transformation Customer Success Sales Velocity/Growth Distributor Sales Associate Dealer/Partner/VAR MDF+CO-OP Value Rebates SPIFFs Reward Points Sell-Through Allowances Distributor Enablement Sales Associate SPIFFs Sales Velocity/Growth
  21. 21. GOAL CAPABILITY: Capability Development WHAT PART OF YOUR CHANNEL? WHAT IS THE MOST EFFECTIVE INCENTIVE? WHAT BEHAVIORS NEED TO MODIFY? Raising the Level of Competency across the organization Contribution Capability Coverage CommitmentThe 4 C’s Engagement Enablement Demand Generation Transformation Customer Success Sales Velocity/Growth Distributor Sales Associate Dealer/Partner/VAR MDF+CO-OP Rebates SPIFFs Reward Points Sell-Through Allowances Dealer/Partner/VAR Enablement MDF+CO-OP SPIFFs Reward Points
  22. 22. GOAL COVERAGE: Market Penetration WHAT PART OF YOUR CHANNEL? WHAT IS THE MOST EFFECTIVE INCENTIVE? WHAT BEHAVIORS NEED TO MODIFY? Creating Market Dominance (GEOs, Verticals, Products) Contribution Capability Coverage CommitmentThe 4 C’s Engagement Enablement Demand Generation Transformation Customer Success Sales Velocity/Growth Distributor Sales Associate Dealer/Partner/VAR MDF+CO-OP Rebates SPIFFs Reward Points Sell-Through Allowances Transformation Dealer/Partner/VAR MDF+CO-OP Rebates SPIFFs
  23. 23. GOAL COMMITMENT: Performance Attainment WHAT PART OF YOUR CHANNEL? WHAT IS THE MOST EFFECTIVE INCENTIVE? WHAT BEHAVIORS NEED TO MODIFY? Competitive alignment of the dealer/partner Contribution Capability Coverage CommitmentThe 4 C’s Engagement Enablement Demand Generation Transformation Customer Success Sales Velocity/Growth Distributor Sales Associate Dealer/Partner/VAR MDF+CO-OP Rebates SPIFFs Reward Points Sell-Through Allowances Engagement EnablementDealer/Partner/VAR Rebates SPIFFs Sales Velocity/Growth
  24. 24. WHAT TYPE OF INCENTIVE WILL BE MOST IMPORTANT FOR YOU IN 2019? A. Rebates B. STAs/ INSTANT REBATES C. MDF/CO-OP D. SPIFFS E. REWARD POINTS
  25. 25. CONCLUSION 1. UNDERSTAND WHO THE PARTNER IS 2. WHAT BEHAVIOR YOU ARE TRYING TO CHANGE 3. WHAT INCENTIVE WILL WORK BEST KEEP IN MIND THIS IS ITERATIVE
  26. 26. QUESTIONS? WE HAVE ANSWERS.
  27. 27. 28 Capacity planning CHANNEL STRATEGY REVENUEFLOW Recruit Develop GrowPrune Current Target Strategies Insight areas Recruit Add competitive partners • Replatforming solution campaign • To partner marketing Prune Stop investing in partners • Partner GTM • Partner business planning • Incentives • Next logical capability analysis • Partner business planning • Incentives Develop Add practice area to existing partners • Partner GTM • Partner business planning • Incentives Grow Increase velocity of selling partners
  28. 28. INDIVIDUAL PARTNER SCORING AND PERFORMANCE DASHBOARDS Partner management Management level Segment level Product level Contra consumption level Common data skewing by large partners AVOID Your entire partner ecosystem BENCHMARK A true comparison of partners across type, segment, geo and solution areas GAIN
  29. 29. Behaviors Incentives Address Revenue/ Performance Achievement Reward for reaching predefined revenue or performance objectives Enablement Reward for reseller on-boarding and achieving certifications within the desired timeframe Engagement Reward for reseller engagement in supplier programs Managed Business Objectives Reward for achievement of specific supplier defined objectives Price Management Credit or Subsidize resellers for discounting to meet competitive price pressures Customer Success Reward for resellers achieving customer success goals Deal Registration Reward for registering opportunities, deals, sales-accepted leads Local Marketing Reward resellers for engaging in market development activities Channel Transformation Reward for resellers transforming business models — adding value

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