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What behaviors should manufacturers be incentivizing from their channel partners?
One important point when thinking about engaging channel partners (distributors, dealers, manufacturer reps) is personalization. Expecting everyone to exhibit the same behavior, or trying to stimulate everyone using the same incentive, is not advisable.
Engagement programs need to do their very best to escape the ‘single behavior’ trap, i.e., purely incentivizing channel partners to sell more. They should also avoid incentivizing activities which don’t generate a stronger relationship between channel partner and company.
According to the Incentive Federation’s Incentive Industry research, the main reason manufacturers implement a channel program is to improve productivity, which almost all respondents said was a major aim. Other significant motivators included increasing sales of specific products – at 63%, and increasing overall sales – at 62%.
Driving behaviors which contribute towards overall objectives
By focusing on sales incentives for their channel partners, manufacturing marketers are incentivizing the goal (revenue) as opposed to the behaviors that result in the goal (e.g., training, marketing, customer service).
The structure of most manufacturers’ reward programs is dictated overwhelmingly by sales quotas, which again suggests that manufacturers are taking a short-term sales-based approach, which has been widely discredited by industry professionals, who see sales rewards as an ineffective way of generating loyalty. Less than half of vendors structure their program around goal-based earning – a much more advisable method of generating productive, skilled, satisfied and loyal channel partners.
Company exec’s need to ask themselves what each member of their channel needs to do to help them reach their overarching business goals. Behaviors should be identified based on this important question.
For example, it is a retail salesperson’s responsibility to recommend products at the moment of purchase. With knowledge about the product differentials and technical features, salespeople can make product recommendations with confidence and answer any questions or queries the customer may have. Successful incentive program designers find out what their sales team’s greatest pain points are and offer them training that will help alleviate those difficulties.
Companies are often faced by the problem of channel partners mis-selling their products, either by claiming they have features they do not, or not knowing about new features and capabilities. This can be a real concern for manufacturing companies which can end up losing customers and money to these selling errors.
To limit this risk, companies can disseminate marketing materials on a centralised platform and reward channel partners for consuming and distributing them.
Best of market companies go the extra mile and put time and effort into nurturing a lasting relationship between the company and its stakeholders.