Leverage Operational Incentives to Motivate Channel Partners to Work for Your Business Objectives

In the 1980s and 1990s it was en vogue to implement enterprise sales strategies on a “win win” basis with channel partners. This strategy was built on the premise that working with channel partners to achieve important, but differing objectives was a highly valued endeavor and, in fact, the best way to move solution sales forward to its next level of enterprise sales effectiveness within a channel partner model.

In 2011 this strategy of mutual attainment of objectives is passé. Now what matters is winning the business by delivering precisely what the channel partner needs–end of subject. Most products and services vendors have to make do with whatever they can get out of the sale, and make do without complaint. Of course there are astute marketers who, despite market conditions, still manage to sell products and services their way, thereby achieving their objectives, but they are clearly in the minority.

What kind of effect has this market shift had on Channel Sales? The Marketing Leadership Council of the Corporate Executive Board published a piece on November 22, 2011 by Shelley West on this topic on their “Wide Angle” Blog, Give Your Channel Partners the Right Incentives. Ms. West astutely points out that financial incentives simply based on purchasing volume don’t work: “While simple to administer and easy to track, volume-based incentives often don’t deliver what we want them to.” Ms. West goes on to refer to a complex incentive program which, she contends, empowers the manufacturer/services provider to directly manage four key points with regard to channel partner performance, including “Core Product Sales”, “Services Solutions Integration”, “Sales Growth” and “Partner Investment in Relationship.”

All well and good, but I have to ask the question, is there a real partner in Ms. West’s model, or are we providing incentives to prod a reluctant business into a partnership? I suspect the latter. I would rather see partnerships for my clients orchestrated around plain and simple operational assumptions (as opposed to financial assumptions), including:

  • We built it, your selling it
  • You manage the end customers, we have the right to influence them, meet with them periodically, but with you tagging along
  • We create our brand, you receive sales leads

Financial incentives ought to be derived from margin. End of story.

The pollution in today’s channel partner programs, as I see it, stems, in part, from an effort on the part of some manufacturers and service providers to maintain direct selling efforts to the end customer while ostensibly operating a channel program. This pollution makes of the channel partner a rather useless component who will have to be cajoled and pampered into performing some type of service. I would rather remove the pollution and then address channel by crafting operating procedures that make sense for partners and manufacturers and service providers.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved

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