tap the long tail
- Increased revenue from “long tail” partners
- Improved loyalty of “long tail” partners
If your long-term tier program favors larger partners (i.e., partners who contribute more revenue) in the form of bigger discounts, smaller and transactional partners may actually be disincentivized from performing better. You can make up for the inherent disadvantages encumbering the long tail by rewarding revenue growth via a short-term incentive program.
Determine the partners or group of partners which you want to include in your spur-the-long-tail incentive program – for example, all Bronze and Silver partners, Bronze Partners in Europe, or partners of a particular size (say, less than $10 million in revenue).
Pick a baseline time period. You need a time period as a baseline for measuring revenue growth – for example, last quarter (vs. this quarter), same quarter last year (vs. this quarter), or last year (vs. this year).
Determine how many points to award a partner for their revenue growth w.r.t. the baseline – for example, 100 points for each 1% in growth.
Calculate the baseline revenue for each partner as the total revenue contribution in the baseline period: (A) total revenue.
Set up your outcome rule. For the program time period, calculate the total revenue contribution: (B) total revenue. If B > A, allocate 100 points times (B – A) / A (100 points for each percentage point in revenue growth).
More revenue from your smaller partners – Your channel “long tail” (partners who contribute a relatively small amount of revenue) is probably made up of smaller partners and/or “transactional” partners (partners who act as “order takers”). That long tail, oft ignored, can be a significant source of increased revenue if incentivized properly.