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The New World of Channel Incentives

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Starting with MDF programs, we'll identify the key challenges and highlight success criteria of traditional incentives. From there, we'll drill into why it's not just necessary, but imperative, that your incentive programs evolve beyond historical funding programs to the “new world” of channel incentives.

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The New World of Channel Incentives

  1. 1. The New World of Channel Incentives
  2. 2. © 2016 SiriusDecisions. All Rights Reserved 2 Presenters Steven Kellam President CCI | Global Channel Management Kathy Contreras Research Director Channel Marketing Services Sirius Decisions
  3. 3. © 2016 SiriusDecisions. All Rights Reserved 3 Agenda A Review of the Basics – MDF Best Practices • Key considerations for MDF/co-op programs ▶ necessary fundamentals • Defining success measurements ▶ key metrics • How to optimize ROI ▶ program considerations and best practices New State of Channel Incentives • Where incentives are headed ▶ thinking beyond MDF • A good place to start ▶ partner types/personas, partner journeys, etc. • Keys to future success ▶ considerations and strategies for success
  4. 4. MDF/Co-op Program Best Practices
  5. 5. © 2016 SiriusDecisions. All Rights Reserved 5 Sirius Perspective: Understanding common challenges associated with MDF and co-op programs is important to strong program development. ROI Optimization Challenges: • 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. • Complexity of Process. Clear processes with simple rules, difficulty of processing, speed of payments (30 days or less), access to information (online status/tracking and updates), etc. • Lack of Incentive. Many supplier programs do not provide a clear vision of “what’s in it for me” or a clear understanding what is required/involved for program success. Common MDF/Co-op ROI Challenge
  6. 6. © 2016 SiriusDecisions. All Rights Reserved 6 SiriusPerspective: Provide partners with pre-packaged plays that offer very well defined definitions of cost, duration, what’s included, estimated results, etc. for optimal results. Prescriptive Marketing Programs: Menu-Based Plays Play Type Pay-Per-Click Ads (PPC) Ad Retargeting Multi-Touch – Email/TM Social Media Syndication Database Builder Appointment Setting VIP Roundtable* MDF Cost (Example in US Dollars) $500 $TBD $1,200 $TBD $2,000 $2,500/4 Appts. $4,000/8 Appts. $10,000 Duration 30 Days 30-45 Days 60-90 Days 60 Days 15 Days 30 or 45 Days 6 Weeks What’s Included • Keyword List Building • AdWord Placement • Inbound Support • Biweekly Reporting • Web Tracking • Customized Ad • Landing Page • Bi-weekly Reporting • Three- Touch Email • Video Training • Try & Buy Offer • Content Creation • Content Syndication • Lead Reporting • Teleservices • Account Mapping • Database Cleansing • Database • Teleservices • Confirmation • Followup Reporting • Venue Mgmt. • Teleservices • Onsite Support • VIP Takeaway Estimated Results 15 MQLs 15-20 MQLs 25-30 MQLs 25-35 MQLs 300 Tele-qualified Names 4 or 8 Onsite Appointments 6-8 Onsite Meetings
  7. 7. © 2016 SiriusDecisions. All Rights Reserved 7 SiriusPerspective: Consider program success definitions and measurements, think beyond proof of performance, with the ultimate goal of closed-loop lead reporting. • 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 as a tool to drive deal registration. Example Marketing Activity KPIs: MDF/Co-op Success Definition and Measurement ACTIVITY MINIMUM ROI METRICS ADDITIONAL METRICS Emailing Marketing • Click-through rate • Conversion rate (% that take action) • Bounce rate (% of total emails sent that could not be delivered) • MQL/SAL/SQL leads generated per campaign/event • Registered deals per campaign/event • Closed/won rate • Cost per lead • Cost per opportunity/registered deal • Cost per closed/won Events • Number of registrations • Number of attendees • Cost per attendee Telemarketing Campaign • Number of calls made • Number of meetings secured • Response rate = # of response / sales # of total contacts
  8. 8. © 2016 SiriusDecisions. All Rights Reserved 8 Program Goals MDF/Co-op Program Considerations Focus on overarching program goals: • Increased partner utilization • Optimized program ROI • Improved partner experience • Ease of doing business with • Speed of process • Etc. • Establishment of performance reporting/ measurement Consider compliance requirements: • Regulation based on funding structure/how funds are earned • May need to abide by accounting, anti-trust and other legislation • GAAP/FASB • Sarbanes-Oxley (SOX) • Robinson-Patman Act • Foreign Corrupt Practices Act • Etc. Apply program best practices: • SiriusDecisions Fast Tracking Model (e.g. partner assessments, prescriptive-based programs, etc.) • Leveraging the power of channel technologies (e.g. CMM, CIM, etc.) • Services marketplace third-party services for partners with limited expertise • Future incentives expansion – thinking beyond MDF Compliance Best Practices • Future incentives expansion – thinking beyond MDF/co-op
  9. 9. The New State of Channel Incentives Thinking Beyond MDF and Co-op Programs
  10. 10. © 2016 SiriusDecisions. All Rights Reserved 10 Sirius Perspective: Past performance is not an indicator of future growth; suppliers should look beyond revenue/sales and develop incentives that drive future performance. Channel Incentives in the Rearview Mirror • Co-op Funds • MDF Funds • Rebates (partner or customer focused) • SPIFs THERE ARE FAR BETTER THINGS AHEAD THAN ANY WE LEAVE BEHIND
  11. 11. © 2016 SiriusDecisions. All Rights Reserved 11 Incentive Program Types The Expanding Universe of Incentives SiriusPerspective: As channel incentive programs evolve; the ideal mix of programs will expand to include a blend of channel incentive program types. Accrued marketing funds* earned through revenue attainment (percentage-based) Co-op Funds Marketing Development Funds (MDF) SPIFs Sales performance incentive funds earned by reaching specific sales goals MDF $ Points- based Rewards 123 Launch Funds Discretionary funds* used to seed new market opportunities Monetary rebates earned upon reaching specific goals or targets Cumulative rewards earned through specific behaviors or activities Discretionary funds to launch new partnerships, drive awareness/ demand for new offerings Rebates * Co-op funds are contractually accrual-based, while MDF funds can be discretionary or accrual-based (non-contractual).
  12. 12. © 2016 SiriusDecisions. All Rights Reserved 12 Incentive Reward Goal Examples* *Consider corporate strategic goals (e.g. emerging market strategy); focus on desired growth in partner capabilities or participation in channel programs (e.g. thought leadership, social leadership, account-based marketing (ABM), digital transformation, partner-led marketing, involvement in pilot programs, channel ambassador programs, etc.) The Expanding Universe of Incentives SiriusPerspective: As channel incentive programs evolve; expand the universe of rewards to align with corporate strategic and growth goals as well as channel-specific goals. Revenue/ Performance Achievement Deal Registration Onboarding Velocity Lead Reporting Managed Business Objectives Reward for partner on- boarding within the desired timeframe R MBO Certification/ Specialization Achievement Reward for reaching predefined revenue or performance objectives Reward for registering opportunities, deals, sales-accepted leads Reward for partners reaching certification/ specialization goals Reward for closed- loop lead reporting, adherence to SLAs Reward for achievement of specific supplier- defined objectives Partner Engagement Cloud Transformation Reward for partner engagement in supplier programs Customer Success Reward for partners achieving customer success goals Reward for partners transforming to cloud business
  13. 13. © 2016 SiriusDecisions. All Rights Reserved 13 Sirius Perspective: Establish a comprehensive incentive strategy incorporating leading and lagging indicators of success, as well as clear goals aligned to “who” is being incented. Channel Incentive Examples Partner Team/Group Individual LaggingIndicator Incentives • Co-op Funds* • MDF Funds* • Revenue Achievement • Performance Rebates* • Volume Rebates* • SPIFs* ✔ ✔ ✔ ✔ ✔ ✔ ✔ LeadingIndicator Incentives • Launch Funds or Business Development Funds* (discretionary) • Deal Registration • Onboarding Velocity • Certification/Specialization Achievement • Enablement/Engagement Incentives • MBO/KPI Incentives (Persona-based: Sales, Mktg, Tech, Support, etc.) • Points-based Rewards* or Gamification ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Expand Incentives to Motivate Future Success *Incentive/funding program types
  14. 14. © 2016 SiriusDecisions. All Rights Reserved 14 Channel Incentives Strategy Considerations SiriusPerspective: Essential for effective channel incentive programs is to start by clearly defining the strategy by routes-to-market (partner types) and partner personas. Partner Personas Support Leader, Support Staff Consulting or Services Leader, Staff Engineering or Technical Leader, Staff Owner, CEO, CFO or President VP of Sales, Sales Management, Staff Marketing Management, Staff EXEC TECH SALES PROFSVCS MKTG SUPPORT Partner Type Service Provider Strategic Alliance OEM ISV System Integrator VAR/Solution Provider DMR/Retailer Distributor/Aggregator Agent/Broker Referral Partner
  15. 15. © 2016 SiriusDecisions. All Rights Reserved 15 Service Provider MSP Alliance OEM ISV System Integrator VAR / Solution Provider DMR / Retailer Distributor / Aggregator Referral Partner SiriusPerspective: With each partner type, there are different sets of personas to consider in managing the partner relationship; establish incentive strategy for key partner personas. Channel Incentives Strategy Considerations Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech* MktgSales Support Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech* MktgSales Support Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech* MktgSales Support Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech MktgSales Support Exec Prof SvcsTech MktgSales Support
  16. 16. © 2016 SiriusDecisions. All Rights Reserved 16 SiriusDecisions Partner Journey Stages Channel Incentives Strategy Considerations SiriusPerspective: Essential for an effective channel incentive strategy is to consider incentives aimed both at the progression and velocity within the partner journey stages. OFFER QUALIFICATION COMMITMENT INVESTMENT & ENABLEMENT PRODUCTIVITY EXEC TECH SALES PROFSVCS MKTG SUPPORT PARTNER Examples: • Onboarding Velocity • Certification/Specialization Achievement • Partner Engagement/Participation in Programs and Events • Business Planning/QBRs • Performance/Revenue Achievement Evaluate what incentives can be established for the partner as a business or for the key individual personas within each stage to successfully progress them to the next stage.
  17. 17. © 2016 SiriusDecisions. All Rights Reserved 17 Channel Incentives Strategy Considerations SiriusPerspective: Future incentive strategies structure aligned to partner’s pre-and post- sales customer experiences; establish appropriate partner and persona incentives. SiriusDecisions Buyer’s Journey SiriusDecisions Customer Lifecycle Pre-Sales Efforts (Buyer’s Journey) Post-Sales Efforts (Customer Lifecycle) Education Solution Selection Deliver Develop Retain Grow Examples: • Social Thought Leadership • Supplier Demand Creation Programs • Partner-led Lead Generation Campaigns • Lead Development/Lead Maturation • Deal Registration/Opportunity Management • Revenue Generation Examples: • Customer Engagement • Customer Marketing • Customer Experience • Customer Revenue (upsell/cross-sell/renewals) • Customer Advocacy • Customer Loyalty EXEC TECH SALES PROFSVCS MKTG SUPPORT PARTNER
  18. 18. © 2016 SiriusDecisions. All Rights Reserved 18 Strategy for Future Success: Key Takeaways • Optimize MDF and co-op programs by leveraging best practices for optimal program utilization, ROI and for the ideal partner experience • Establish a comprehensive incentive strategy incorporating leading and lagging indicators of success • Lagging indicator incentives: Recognition for partner achievement/success • Leading indicator incentives: Reward to motivate desired partner behavior • Channel incentive programs should maintain an optimal mix of incentive program types and incentive rewards aligned to corporate and channel goals • Essential for effective incentive programs includes defining the strategy by partner type, partner persona, partner journey stage, pre- and post-sales efforts
  19. 19. © 2016 SiriusDecisions. All Rights Reserved 19 Q & A Steven Kellam @CCIChannels www.linkedin.com/in/stkellam Kathy Contreras @KWContreras www.linkedin.com/in/kathyf1
  20. 20. Thank You!

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