Channel Rebates: What Works, What Doesn't, and What to do About it

Company Confidential © 2017 Perks.com All Rights Reserved.
Channel Rebates
What Works, What Doesn’t,
and What to do About it
Outperform the competition
Claudio Ayub – Chief Strategy Officer

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Using GoToWebinar

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Welcome!
Today’s presenter
Claudio Ayub
Chief Strategy Officer
Perks | Channel Practice
Claudio brings over 20 years of global channel marketing experience to Perks. He is a loyalty
marketing expert with broad knowledge in strategy development, market management and channel
sales planning. He has cross-functional expertise in business, finance, sales and marketing, strategic
planning, and customer relationship management; an area he has excelled at by executing complex
CRM implementations, customizations, and business process re-engineering for CRM applications.

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Executive summary
Key Issues
In the incentives sphere there are company, team, and individual level incentives
Traditional company level incentives are typically delivered as rebates, built around revenue attainment
Rebates are a powerful motivator for channel partners, when targeted as part of an overall incentives strategy
It is estimated that IT & Telco vendors spend over $70B per year in channel rebates
Key Takeaways
A definition of what a rebate program means
An analysis of what rebate types work and how they are applied
An overview of what rebate types do not work
The effective use of rebates as part of a holistic channel program

What is a Rebate Program?
Definition and terminology

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What exactly is a channel rebate program?
Leading manufacturing companies often drive increased sales by financially rewarding the
performance of their channel partners with rebates and incentives programs.
Examples include:
Base rebates for achieving revenue or unit target (at product, BU, or partner total revenue levels)
Base rebates for exceeding revenue targets with additional points for exceeding stretch goals
When a partner achieves their goal, the vendor issues a rebate payment
within an agreed-upon timeframe.
Base rebates for revenue attainment typically average between 2% to 3% of sales
Base rebates for revenue growth (stretch goals) typically average between 2% to 5%

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What are the different mechanics of rebate programs?
POS-Based Rebates are the most common, and
empowers vendors to design, configure, manage, and
track rebate promotions using your POS data.
MBO
Claim-Based Rebates utilize a configurable claim
form and a rules engine to design rebate promotions
where partners submit proof of performance
documentation with ease, during a claiming process.
MBO-Based Rebates utilize a partner scorecard to
reward partners for achievement of specific vendor-
defined managed business objectives.

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How is data used to configure, calculate, track, and report rebates
Channel POS data
Program Goals
Eligibility Rules
Payment Rules
Claims
Integrate channel POS data to your rebate program to enhance the partner experience
Calculation engine

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How is MBO data used to calculate, track, and report rebates
You will need to integrate partner scorecard data to your MBO based rebate program
This means a way to set, track, and report certain
expertise, skill sets, or business objectives
Partner scorecard report complete with
category and topic scores 1-100% score for all
metrics
Scorecard rollup reporting by partner and by
CAM for overall scores, and by category and
topic

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How is MBO data used to calculate, track, and report rebates (continued…)
The dashboard view provides a summary view
Engagement Metrics: Partner-level program
requirements completion metrics
Financial Metrics: Partner-level sales and
pipeline metrics
Enablement Metrics: Partner-level training
and certifications metrics
Each key partner performance metric is shown
versus target
Best practice is to maintain an incentives dashboard to consolidate all key performance metrics

What Works?
These are best practices really!

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Using clear incentive plan terminology is essential
Vendors use a wide range of terms for
their channel incentive programs which
can create confusion
Confusion about incentives can leave the
vendor and its partners vulnerable to
misunderstandings that can reduce the
effectiveness of incentive programs
Partners are often confused by variations on
incentive terminology and how different
vendors operate incentive programs in different
ways
Revenue/
Performance
Achievement
Managed
Business
Objectives
MBO
Reward for reaching
predefined revenue or
performance objectives
Reward for achievement
of specific supplier-
defined objectives
Monetary rebates earned
upon reaching specific
goals or targets
Rebates
SPIFs
Sales performance incentive
funds earned by reaching
specific sales goals

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Clearly communicating objectives and benefits is critical!
Ensure that the organization and its
channel partners are on the same
page when it comes to channel
incentives
Use clear terminology for all incentives
and make the definitions and terms of
incentives readily available to partners
Use a planned approach to align
incentive types, goals and objectives to
properly utilize funds

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Moving away from revenue attainment rebates only
In recent years vendors have implemented rebate programs
that reward partners for achieving net new business goals
Business growth: rebate payments focused on creating net new
business, rather than repeat orders with existing customers
New market penetration; focused on creating new business in
designated vertical markets (average 3 to 6 percent of sales)
New customers; pay-outs based on achieving revenue goas with net
new customers (average 5 to 8 percent of sales)
Adding value: achieving attach rate goals for services (i.e. a target
percentage of services sold or services revenue goal)
“Base” Rebate programs still exist but primarily for competitive
reasons
Base Rebate
Growth
> 100 %
> 120 %
Service
Net new LOB/Logo
Paid on all revenue (Back to $1)
Incremental rebate
+
+
or
++

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Not paying all rebates in cash only, but adding other options…
Pre-packaged marketing plays
Joint customer and prospect events
Joint marketing, marketing tools, and training
Funded head count in engineering, sales, and marketing
Creating opportunities for partners to augment/add their
own solutions and services
rebate marketplace
The emphasis has shifted from pure rebate pay-outs to
vendor support and vendor-partner collaboration in the
following areas:

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Combining individual level incentives with company level incentives
Provide a mix of individual, team and company level incentives
Combine company-level (rebates) and individual/team level (rewards) into a single incentive program built
around solution selling
Ensures that all stakeholders are aligned
Align partner rebates goals with sales reps goals
Ensures that all stakeholders derive tangible benefits
Most of the time these program compete with each other
A unified approach to incentives builds deeper relationships

What does not work?
These are bad practices

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These practices are no longer effective at driving performance
One size fits all rebate programs
Annual rebate objectives and payouts
Blind engagement rebate programs
Engaging partners based on channel data you can’t really trust

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Key challenges in using channel data for incentive programs
Partner and Customer
identification
Inconsistent data quality &
timeliness
Data silos
Legacy Applications /
Manual processes
Data diversity and partner ability
Sales In – Sales Out
reconciliation

What to do about it?
Rebate program workflow

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You can do this with an e-mail, formal printed letter mailed or
delivered in person by CAM’s or PAM’s to your partner
principals
In the communication piece, detail the partner’s target, the rules
of engagement, promotional periods and the possible earnings
Partners can click through to the program’s enrollment page,
and can see any rebate promotion they are eligible for
Partner’s may also log into the partner portal, and if eligible will
see their rebate promotion, goals or target, the rules of
engagement, promotional periods and the possible earnings
Rebate workflow – Before start of quarter - Communicate
Formally invite partners to participate every quarter

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Have accurate partner company information
at every level, from local and regional
partners, to countries of incorporation and
DBAs
Record the partner’s acceptance of these
rules and terms and conditions, to ensure
(among other things) their targets and
payouts are not shared
Keep partners current on their standing
against goals through interactive dashboards,
and a monthly account statement e-mail
Rebate workflow – Start of quarter - Ensure engagement
Communicate and keep track of all accepted agreements, promotional periods, and earnings.

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Rebate work flow – During Quarter – Data quality
Need to consolidate, cleanse, stage and enrich POS data to enhance accuracy and ease of use
Partner Pay-outs
APPROVALWORKFLOWS
Financial
Control
Geography
Partner Tier
Product Family
Product SKUs
Date Range
Eligibility Rules
Who gets paid?
If Program 1 and 2, pay
for program 1 only
for both
the higher amount
If Program 1, then don’t
pay for Program 4
Payment Rules
$2 per unit, 2% on sales
2% on all sales + 1% if SKU A
2% X Target Achievement%
2% if sub-goal 1, 2.5% if sub-
goal 2, 3% if both, 1% if none
2% of sales of SKU A if target
sales of SKU B is achieved
Programs
CalculatedPayments
How much is to be paid?
FilteredTransactions&Claims
Master Data
Partner Claims
Transactions
Inputs

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Rebate work flow – End of quarter – Pay fast!
Partner’s rebate amount, payment date, and credit
memo/check number displayed on incentive portal
Display the partner’s statement with target, current
revenue achievement, and current rebate displayed on
the incentive portal

Incentive Programs from Technology Leaders
Example channel rebate programs

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HPE Rebate Programs

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Cisco Rebate Programs
Opportunity Incentive Program (OIP)
Value Incentive Program (VIP)
Teaming Incentive Program (TIP)
Technology Migration Program (TMP)

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Dell/EMC Rebate Programs

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Lenovo Rebate Programs

Conclusions
Key Takeaways

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Key Takeaways
One size does not fit all; profile your partners and determine the most effective rebate program for each partner
type
Provide clear definitions of rebate and update standings frequently
Consolidate, cleanse, stage and enrich your POS data
Measure (rebate) program and partner performance and provide dashboards to partners
Emphasize rewards for net new customers, new market penetration, and value add
Push specific products with short term incentive opportunities
Encourage more sell-through with growth/stretch rebate goals
Born in the Cloud partners require a new approach rather than conventional rebates

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This document is the property of Perks | Channel, and is presented to you on the understanding that its contents are
copyright and that the ideas, proposals, techniques and creative design concepts expressed in it or presented as
separate examples are intellectual property belonging to Perks | Channel.
This presentation includes confidential and proprietary data that shall not be disclosed outside the addressed
audience and shall not be duplicated, used or disclosed – in whole or in part – for any purpose other than to
evaluate this presentation. Other companies and products named herein may be trademarks or registered trademarks
of their respective owners, and are hereby acknowledged.
© 2017 Perks | Channel. All Rights Reserved
Copyright

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Thank You
cayub@perks.com
(305)-728-7054
www.perks.com
@chanstrategist
www.linkedin.com/company/perks.com
plus.google.com+PerksIncentivePrograms/posts
www.facebook.com/perksincentives

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