Like their direct sales
counterparts, it is
often said that
channel partners are
What is the best level of investment for me?
Like their counterparts in direct sales, it has often been said that indirect sales
channels are “coin operated.” And, because marketers lack the control over their
indirect sales channels that they have over their own employees, they use more
types of incentive programs to influence a broader range of behaviors.
For most channel marketers, the plethora of channel programs that may need to
be funded can be daunting. The challenge is to find the right level of investment
between programs to optimize the sales and marketing performance of their
indirect partners (effectiveness) without overspending (efficiency). As a result,
most channel marketers must answer these questions: “How can I best allocate
my budget across the various programs?” And, “Which programs are going to
give me the most returns with the least level of investment?” This guide provides
a structured approach to answer those questions.
Incentive programs typically represent the largest
portion of a channel marketer’s budget. This is
especially true when one considers the broad range of
incentive program offered by today’s channel
marketer, including: MDF/Co-op, Rebate, SPIFs, Deal
Registration Discounts and others.
Start with a clean sheet of paper (figuratively of course) and list all of specific
behaviors you want to motivate through your channel. If you begin with the
program, you will likely overlook the true potential of that program, and miss
some key metrics that will help you track that programs success. For example, ask
yourself this: are there clear objectives and KPIs associated with your
promotional allowance program? Or, do you treat your Co-op/MDF program
simply as a cost of doing business to be competitive?
Focus on the
behaviors you want
to influence, not
Knowing where to invest begins with an understanding of the specific behaviors
you want to influence within your channel. When deciding which behaviors are
important to you, and therefore where to invest, you should consider:
The lifecycle of the partners themselves (what skills are needed to onboard
new partners to shorten their time to revenue)
The lifecycle of a given transaction (lead generation, and sales closing skills
This list of desired behaviors provides the foundation for program design,
including objectives, strategies and KPIs. Here is an example of a list of desired
Advertising and/or marketing your products
Sales and marketing training or certification
Reporting of active sales activity and have pipeline visibility—and specifically
the products, deals or value
Achievement of long-term sales growth
Closing leads that you forward to them, or reporting on the status of those
Creating new opportunities for specific deal types
Your list will likely be longer than this, and you should keep in mind that the more
specific you can make each item on your list, the better. The specificity you assign
to each item will directly correlate with the KPIs used to evaluate attainment. As
a rule, for every Go-To-Market strategy you have as an organization, there should
be a corresponding behavior you are trying to influence with your channel. Once
you have your list, prioritize it by level of importance – those with a higher
priority will likely require a higher level of investment.
The Behavioral Matrix
Each of the desired behaviors on your list can ultimately be categorized within
one of 4 quadrants as represented in the following matrix:
competition for the
partners, and the
desire to improve
The Columns: Post sales rewards
On the surface, it may seem that most of your channel investment should focus
on this area because it assumes your channel partners have attained sales goals,
presenting less risk for you. Investing entirely in post-sales rewards means you
assume your partners are willing to make their own investment in marketing your
products, training their sales teams, and other skills required to sell your
products. If you are really serious about enabling your partners to generate their
own opportunities or improve their close ratios, then investing in pre-sales
enablement activities is likely the right choice over the long run.
The columns: Pre-sales enablement
Driving effective channel performance means lowering the time to revenue for
new partners, and helping existing channel partners improve their ability to build
their pipeline and attain higher close ratios. An investment in pre-sales
enablement is, effectively, teaching your partners “how to fish,” which will
generate larger sales pipelines and higher close ratios in the long term.
The Behavioral Matrix
partner org as a
whole, while others
will influence a
The Rows: Organizational focus
These behaviors and related programs target the partner organization as a whole
or the collective efforts of all the stakeholders within the organization.
Encouraging the marketing and promotion of your products via an allowance
program (e.g.: MDF or Co-op) is an of an example effective strategy to influence
at the organization level.
The Rows: Transactional focus
These behaviors and related programs will influence the outcome of a specific
transaction or sales opportunity. Incentives are either designed to target the
individuals that most influence the sale (e.g.: sales people, SEs or others) or they
may be rewarded to the organization as a whole.
Using the sample list we created earlier, the final matrix looks something like this:
• Sales Training
• Technical Training
• Attaining Long Term
• Lead Follow-up
• Closing Deals
The behavioral matrix
How do your channel incentive programs align with the behavioral matrix?
Here is how typical channel incentive programs fit within the behavioral matrix:
With your list of
completed, it is
easier to identify
KPIs and the
At this stage of the exercise you would have:
• A list of specific behaviors and activities you hope to influence.
• A list of KPIs related to each that will keep you informed of goal attainment.
• An understanding of which channel programs may be utilized to achieve those
Considerations that impact program design
There is not a one-size-fits-all approach to program design. We encourage a
“crawl, walk, run” approach to evolve your program, and to focus on the ease and
simplicity of partner administration and communication. Listed below are some
guidelines to help you decide how to structure your programs, and how to spread
your investment across each of the 4 quadrants of the behavioral matrix.
There is no onesize-fits-all
It is unlikely any one program can be structured to address the needs of multiple
partner segments. Rather than settle for a compromise, it will be advantageous
to tailor each program to meet the needs of distinct channel segments and go-tomarket models. Your program mix between segments may be different as well.
In general, new partners require more training and more assistance to help
jumpstart their sales process and shorten their time of sale. Conversely, mature
partners may be more motivated by with post-sales rewards if other pre-sales
enablement requirements have been met. Consider “jump start” programs to
onboard new partners to reduce time to productivity.
Do your products target niche markets or early adapters? Are they mass market
products (“value” vs “volume” categories as is often referenced)? Typically,
mature products in higher volume categories will benefit more from post sales
Is your product highly differentiated within the category? Or is it in a highly
commoditized category? Companies with more commoditized products will often
focus incentive activities on aggressive pricing and post-sales rewards.
Longer sales cycles are generally the result of higher value product categories
that require more consideration by the buyer prior to purchase. In these
instances, the partner must possess high levels of sales and marketing skill to be
effective in selling your products. As a result, you would likely benefit from more
visibility into their sales processes, pointing to an investment in pre-sales
enablement, such as deal registration.
Considerations that impact program design
A well designed
provide you with
Brand recognition and customer demand:
Are your products highly sought after by the end user? Do your partners simply
have to fulfill demand because your brand and products have so much cache? Or,
do your resellers have to work hard to sell your products over competitive brands
because of the lack of consumer mindshare? In the case of the former, your
indirect channel partners will want to advertise and promote themselves as
authorized resellers, which may be accomplished through Co-op programs. If it’s
the latter, your partners may be more influenced by incentives that directly drive
sales activities via post-sales rewards. Ideally, in these instances, you may want to
focus your investment where the rubber meets the road — the individual sales
rep who controls that sale via a SPIF or rewards program.
Competitive environment and distribution arrangement:
What the competition does is important – particularly if your distribution channel
is also able to sell competitive products in addition to your own. As independent
businesses, your channel partners are going to be influenced by the products and
programs they feel will best benefit their business. This is where a well designed
program can provide you with a competitive advantage.
The investment calculator
Use the investment
calculator to get
started, or to
Use the investment calculator to help you determine where to allocate your
• Adjust the sliders to align with your product characteristics
• Hit “calculate” once your values are determined
• Percentages of investment indicating how you should allocate your budget for
pre-sales incentives vs. post-sale rewards will be displayed
About hawkeye Channel
hawkeye Channel provides software and services that drive channel revenue
growth for enterprise marketers who sell through indirect channels. With a
unique blend of robust channel programs and expertise, hawkeye Channel helps
clients easily integrate with their CRM platform, accurately measure channel
performance and optimize channel incentives on a global scale.