Emerging Trends in Channel Incentive Programs

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CCI’s SVP of Sales and Marketing Steven Kellam was joined by PartnerPath’s CEO Diane Krakora to present the recently released 2015 Channel Incentive Benchmark Study. They delved into the results of the study and its relevancy to channel vendor programs in the software, hardware, and telecommunications industries.

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  • Slide 26 - I've been pushing customer events and workshops across Middle-East and Africa because nothing beats getting our sales guys to meet the partner's funnel. This also gives the prospects direct access to us and plus gives them the confidence that the vendor supports the partner.
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  • Slide 12 - Spot on regarding complex processes. we have recognized that and launched a new initiative Value4Partner with the explicit purpose to cut by 50% the cost of doing business with us.
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Emerging Trends in Channel Incentive Programs

  1. 1. Emerging Trends in Channel Incentive Programs Key Take-Aways from the 2015 Channel Incentive Benchmark Study
  2. 2. 2 PRESENTER Steven Kellam SVP, Sales & Marketing CCI | Global Channel Management Diane Krakora CEO PartnerPath
  3. 3. 3 After all, we are in the incentive business… PRIZES TODAY!
  4. 4. 4 Respondents: Who We Surveyed Optimism Varies by Industry Vendors React to Industry Challenges An Overall Lack of Access to Information Partner Programs That Grab Top of Mind 1 2 3 WHAT WE’LL COVER Digging Deep into MDF/Co-op Rebates: An Opportunity Squandered? The Well-Rounded SPIF The Automation & Integration Lag Our Conclusions 4 5 6 7 8 9 10
  5. 5. 5 What would you like to change about your MDF/Co-op processes? 1. ROI (1, 4, 5) 2. Improve partner marketing efforts (2, 3) 3. Pay faster (6) HOWEVER - IF YOU ONLY PAY ATTENTION TO ONE SLIDE 41% 40% 37% 32% 23% 23% 22% 21% 21% 18% 18% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Improve Data Analytics and ROI measurement Improve marketing execution by partners Improve marketing support/program planning Overlay/ tie back sales data to Co-op/MDF spend Closed loop process tied to POS data and/or deal registration Faster payment process Improve Partner support and issue resolution Integration with CRM system Revise guidelines to better reflect company goals Global standardization Streamline administration Other
  6. 6. Who We Surveyed
  7. 7. 7  Industry • Software • Hardware / Devices • Telecoms • Smaller %: Pharmaceutical, Health Care, Insurance, and Non-High Tech Manufacturing  Job Functions • Heavy on Channel Marketing, Channel Sales, also Channel/Sales Ops and Execs  Seniority • Nice mix of Manager, Director, VP, C-level WHO WE SURVEYED Hardware 23% Manufacturing 22% Software 20% Other 18% Telecom 18% Breakdown of Respondents by Industry Primary Job Function Within Organization n Channel Marketing (28%) n Channel Sales (23%) n Executive Team (CxO) (14%) n Other Role (13%) n Purchasing (10%) n Product Development/ Technical (3%) n Sales Engineer (3%) n Finance (3%) n Sales Operations (3%) 48% 26% 12% 10% 4% Position Level n Manager (48%) n Director (26%) n Vice President (12%) n Program Support/Coordinator (10%) n C-Level (4%)
  8. 8. 8  Size of Channel: Primary Categories by Annual Channel Revenue • < $100 million - $25% • $100 million to $499 million – 15% • $500 million to $999 million – 29% • > $1 billion – 31%  Really nice mix WHO WE SURVEYED n Less than $100 million n $100 million to $499 million n $500 million to $999 million n $1 billion to $2 billion n Greater than $2 billion 25% 15% 29% 23% 8% Approximately how much revenue goes through your channel per year (in $US)?
  9. 9. Optimism Varies by Industry
  10. 10. 11 2015 GROWTH PREDICTION  Hope springs eternal  Double-digit growth plan is the norm  Software vendors are the most bullish about growth this year 0% 10% 20% 30% 40% 50% 60% About the Same Higher Percentage of Total Lower Percentage of Total As a percentage of total company sales, how do you envision your channel sales revenue will change in 2015 vs. 2014? 36% 57% 6% 0% 20% 40% 60% 80% Software Industry Lower Percentage of Total Higher Percentage of Total About the Same
  11. 11. Vendors React to Industry Challenges
  12. 12. 13 #1 pain point for 2015: Complex or cumbersome processes for partners  Has been the number one for challenge for partners for the past 3 surveys  But what does it really mean?  Lots of talk from clients about this… “partner experience” initiatives, etc.  The key is…what are you going to do? TOP CHANNEL CHALLENGES What are your channel team’s biggest challenges? 1. Complex or cumbersome processes for partners 32% 2. Helping partners migrate to new business models (cloud, etc.) 28% 3. Ineffective sales and marketing capabilities from channel partners 28%
  13. 13. 14 Top overall pain points over the years:  2010: Poor analytics & ROI tracking  2012: Sales and marketing readiness from channel partners  2015: Complex / cumbersome processes for partners Top 2015 challenge by industry:  Software: Help partners migrate to new business models (cloud, etc.)  Hardware/Devices: Inefficient access to data/analytics tracking for program measurement  Telecom/Cable: Complex or cumbersome processes for partners TOP CHANNEL CHALLENGES (CONT.) Pain Points
  14. 14. An Overall Lack of Access to Information
  15. 15. 16 Which of the following percentages show the amount of individuals who believe they do not have enough data to manage their channel well? a) 10% b) 25% c) 40% d) 60% AUDIENCE PARTICIPATION
  16. 16. 17  40% of vendor channel professionals say NO • Do I get the data I need? • Do CAMs share enough info?  Channel marketing very dissatisfied with info sharing  VPs perceive a data access problem most DATA ACCESS & INFORMATION SHARING True 60% False 40% My channel team members have adequate access to the program and partner data we each need to make informed decisions on a daily basis. True 54% False 46% Channel team member access to information by department. True 73%False 27% True 55%False 45% Channel Marketing Channel Sales (CAMs, etc.) Executive Team True 32% False 68% Vice Presidents
  17. 17. Partner Programs That Grab Top of Mind
  18. 18. 19 INCENTIVE TYPES RANKED BY IMPORTANCE Incentive Programs Ranked by Importance (1 being most important and 5 being least important) 1 2 3 4 5 Don’t Offer Deal Registration 26% 14% 15% 14% 10% 20% Rebates 25% 14% 21% 15% 9% 17% Co-op/MDF/Joint Marketing Planning 21% 33% 16% 11% 7% 11% SPIFs 12% 17% 17% 16% 18% 21% Referral/Influencer Rewards 11% 15% 20% 19% 14% 22%
  19. 19. 20 However, most vendors don’t have time or headcount for the majority of partners. LOOKS LIKE A WHOLE LOT OF PLANNING GOING ON 1% 7% 22% 29% 28% 13% We don’t have a joint marketing planning process. Don’t Know More than 50% 20-50% 11-20% 1-10% 0% 5% 10% 15% 20% 25% 30% 35% PercentageofPartners Vendors What percentage of partners are involved in your joint marketing planning program?
  20. 20. 21 Filtered by industry:  Software: heaviest joint planning  Hardware JMP is much more exclusive LOOKS LIKE A WHOLE LOT OF PLANNING GOING ON 0% 8% 32% 28% 32% 0% 0% 10% 20% 30% 40% 3% 6% 6% 21% 47% 18% 0% 10% 20% 30% 40% 50% 1-10% 11-20% 20-50% More than 50% Don’t Know Don’t have a JMP process 1-10% 11-20% 20-50% More than 50% Don’t Know Don’t have a JMP process 1-10% 11-20% 20-50% More than 50% Don’t Know Don’t have a JMP process 0% 8% 17% 21% 25% 29% 0% 10% 20% 30% 40% Software Hardware Telecom Vendors Vendors Vendors
  21. 21. Digging Deep into MDF/Co-op
  22. 22. 23 Which activity does not qualify as OPEX? a) Trade Shows b) Advertising c) Demo Equipment d) Direct Mail/Email AUDIENCE PARTICIPATION
  23. 23. 24 FASB rule 01-9: Classification of Marketing Expenses (must meet all 4 criteria) 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 OPEX VS. CONTRA REVENUE Sales Development Fund or Marketing Development Fund? Marketing Expenses:  Advertising (Print/Web)  Broadcasting (TV/Radio)  Catalogs  Direct Mail/email  Telemarketing  Trade Shows Contra-Revenue:  Certification  Training  Seminars  Demo Equipment  Funded Headcount  Recruitment
  24. 24. 25 Do you offer MDF/Co-op funds? Filtered by channel size:  Always ‘yes’ when >$1B  Often ‘no’ when <$100M. MDF/CO-OP FUNDS Yes 77% No 23% Organizations that offer MDF or Co-op funds, filtered by channel size. Yes 59% No 41% Yes 89% No 11% Yes 100% No 0% Less Than $100 Million $100-$999 Million More Than $1 Billion
  25. 25. 26 Filtered by industry:  Software: More alternative routes to market  Hardware & Telco: More physical constraints and commoditization MDF/CO-OP FUNDS Yes 67% No 33% Yes 89% No 11% Yes 79% No 21% Software Hardware (High-Tech) Telecommunications
  26. 26. 27  Key theme: getting reps into the same room as prospects  Social media scores low – why?  Enablement on the rise – increase in more complex sales MOST IMPORTANT REVENUE-DRIVING ACTIVITIES 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Customer seminars/ road show/ floor day/ webinar In-Person Events: Industry Conferences, Workshops, etc. Funded Headcount/ Brand Champion expense Demo Equipment Sales and technical training /certifications Online webinar events Email marketing Outbound Sales Calling/Telemarketing Product Catalogs Newsletter/email campaigns Online Advertising Co-branded merchandise/ Promotional Items Thought Leadership content development Print Advertising PDF Collateral/Case Studies, Pre-recorded sales/marketing videos Direct Mail Public Relations Website Development and management Social Media Enablement/Syndication Broadcast Advertising Other For your MDF/Co-op program, which reimbursable activities that you currently offer to your partners do you think represent the MOST significant contribution in building business for you and your partners?
  27. 27. Rebates: An Opportunity Squandered?
  28. 28. 29 How does the IRS define a SPIF (as opposed to a Rebate)? a) Reward for selling something b) Reward for buying something AUDIENCE PARTICIPATION
  29. 29. 30 Do you offer SPIF, Rebates, or Loyalty Rewards? Filtered by industry:  73% say yes  Hardware vendors – heaviest reliance on reward incentives  Software vendors the least  Still a lot of old school rebates out there OFFER SPIF/REBATE/LOYALTY REWARDS Yes 73% No 27% Yes 52% No 48% Yes 90% No 10% Yes 64% No 36% Software Hardware (High-Tech) Telecommunications
  30. 30. 31 OFFER SPIF/REBATE/LOYALTY REWARDS Do you offer SPIF, Rebates, or Loyalty Rewards? Filtered by channel size:  97% ‘yes’ when >$1B  50/50 when <$100M Yes 50% No 50% Less Than $100 Million $100-$999 Million More Than $1 Billion Yes 79% No 21% Yes 97% No 3%
  31. 31. 32 Rebates most common Easy to administer Easy to get CFO approval Treated as a discount Limited impact in shaping pre-sales behavior, since received AFTER sale Don’t reward the actual sales guy who made it happen Become an addiction/entitlement, so hard to turn off MAIN REWARDS FOCUS FOR 2015? 2% 7% 18% 25% 49% Other None of the above Loyalty SPIFs Rebates 0% 10% 20% 30% 40% 50% 60% + + _ _ _ _ What form of reward did most responders prefer?
  32. 32. 33  A mix of both is best practice – hard to do  Use of an application is pre-requisite for targeting individuals  Filtering by industry: • Company-level rewarding is highest in hardware • Software companies showed a balance of doing both TARGET REWARDS AT COMPANY OR INDIVIDUAL LEVEL? 0% 10% 20% 30% 40% 50% 60% 70% 80% At the company level. At the individual level (the specific salesperson, sales engineer, marketer, etc). How do you target incentive reward payments to partners?
  33. 33. The Well-Rounded SPIF
  34. 34. 35 What are the SPIFs for?  Sales is #1  Move to behavior modification  Filtered by industry: ARE ALL THE EGGS IN ONE BASKET? 0% 10% 20% 30% 40% 50% 60% 70% What are the MOST effective SPIF rewards you offer? 47% 19% 13% 19% 22% 13% 6% 0% 10% 20% 30% 40% 50% Hardware 80% 20% 25% 20% 5% 10% 5% 0% 20% 40% 60% 80% 100% Software 60% 20% 25% 10% 30% 15% 15% 0% 10% 20% 30% 40% 50% 60% 70% Telecom
  35. 35. 36 How do you pay partners for rewards programs?  Cash still king  Filtered by industry: • Telecoms most open to non-cash • Software most into cash • Very cool travel and merchandise on the horizon HOW DO YOU PAY FOR REWARDS? 0% 10% 20% 30% 40% 50% 60% 70% Cash (checks, wire transfers, ACH, etc) Gift Cards Reloadable Debit Cards Credit Points Redeemable in Travel and Merchandise Catalogs How do you pay partners for rewards programs? 0% 20% 40% 60% 80% n Credit Points Redeemable in Travel and Merchandise Catalogs n Gift Cards n Reloadable Debit Cards n Cash (checks, wire transfers, ACH, etc.) 0% 20% 40% 60% 0% 20% 40% 60% Software Hardware (High-Tech) Telecommunications
  36. 36. The Automation & Integration Lag
  37. 37. 38 Is your MDF/Co-op program run on an automated system?  Overall: about half use an automated system  Filtered by channel size: • <$100M – 13% automated • $100M to $499M – 50% automated • $500M to $999M – 43% automated • $1B to $2B – 29% automated • >$2B – 67% automated MDF/CO-OP: SPREADSHEETS OR AUTOMATED? Automated System 48% Spreadsheets 46% Not sure 6% Automated System 50% Spreadsheets 50% Not sure 0% Automated System 43% Spreadsheets 52% Not sure 5% Automated System 29% Spreadsheets 71% Not sure 0% Automated System 67% Spreadsheets 33% Not sure 0% Automated System 13% Spreadsheets 80% Not sure 7% Less Than $100 Million $100 - $499 Million $500 - $999 Million $1 - $2 Billion Greater Than $2 Billion
  38. 38. 39 How do you manage your SPIF and Rebate programs?  Filtered by channel size: • <$100M – none automated • $100M to $1B – half automated • >$1B – 40% automated SPIFS & REBATES: SOFTWARE OR SPREADSHEETS? How Do You Manage Your SPIF and Rebate Programs? n Automated – tool runs calculations and generates payment batches. n Spreadsheets – manually calculated and paid. 38% 62%
  39. 39. 40  Overall 37% say their MDF system IS NOT integrated with other internal systems  Filtered by channel size: • <$100M – about half integrated (53%) • $100M to $1B – about half integrated (55%) • >$1B – 70% integrated SYSTEM INTEGRATED WITH OTHER SYSTEMS? 0% 5% 10% 15% 20% 25% 30% 35% 40% If your MDF/Co-op system is integrated (automatically shares data) with other internal systems, which ones is it integrated with? n Not Integrated n PRM/Partner Portal n CRM n Don’t Know n ERP n Deal Registration System n Learning Management System (LMS) n Other
  40. 40. Our Conclusions
  41. 41. 42 Key take-aways:  Some old habits die hard… • Use of volume rebates • Complexity for partners • Check payments • Limited access to information  Growing awareness of the importance of partner experience  Telecoms slowly but surely gaining on software and hardware in channel maturity  Cloud models are now core to all tech channels IN CLOSING Key Take-Aways
  42. 42. 43 Steven Kellam SVP, Sales & Marketing CCI | Global Channel Management steven.kellam@channelmanagement.com www.channelmanagement.com Diane Krakora CEO PartnerPath dkrakora@partner-path.com www.partner-path.com THANK YOU! QUESTIONS?

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