What is a sales incentive?
According to the Longman Business Dictionary (ldoceonline), a sales incentive is “money or another reward that is offered to a salesperson if they sell a large number of a product.” Selling a large number of products and rewarding them with money is just one of many sales incentives and rewarding options. In this article, we will go over 6 ideas for rewarding behaviors that are proven to motivate channel partners.
How to reward channel sales
You can reward channel sales and subsequently your channel partners with monetary or non-monetary rewards once they have met or exceeded sales objectives that your company has clearly communicated.
But it is important to understand that no two channel partners are the same. You may work with large partners, small partners, some that focus on a specific vertical industry, and even some that are in a different part of the world. Likewise, channel sales deals are not all the same. You may want to reward for sales in a specific industry market, geographic location, or even on the size of the deal itself.
Your best results will come when you build out a sales incentive plan that factors in the different channel partner segments (for example, large partners vs. small partners), as well as what reward will work best for a particular sales scenario.
What is a sales incentive plan?
A sales incentive plan outlines how salespeople or channel partners will be rewarded when reaching and exceeding sales goals. Its purpose is to motivate desired behaviors that will lead to increased sales and higher revenue.
You and your team should do research to find what the best approach will be for your company. Some questions to ask include:
- What kind of rewards do my channel partners really respond to?
- Should large channel partners get rewarded differently than small ones?
- Am I incentivizing the right behaviors to get the results I want?
- How will my incentive program be tracked and monitored?
These are all great questions to have answered before implementing a sales incentive program. For more tips on creating a great Incentive program, check out our whitepaper “Drivers for Investing in a Strategic Channel Incentive Program”
6 sales incentive reward ideas for channel partners
There are two concepts you should understand before we go further – rewarding for: (1) single-action events (do something, get something) and (2) multi-action events do multiple things to meet an aggregate goal). All 6 of these ideas can apply to both concepts, and it is even more powerful when you interweave these incentive ideas together to build a robust rewarding program, both for short-term and long-term benefits.
Reward points are a non-monetary compensation allocated when a goal is met or exceeded by a channel partner. This is a great way to give channel partners freedom to use accumulated points as they see fit — according to a rewards catalog crafted by you.
Points can be redeemed for, merchandise, trips, or business benefits such as extra training or premium support. This is a really great solution when you want to provide a lot of freedom to your partners.
Channel rebates are reimbursements paid to partners based on individual sales transactions or pre-determined sales targets, usually within a specific timeframe. Rebates can be awarded based on sales volume, order size, frequency, or even selling a specific product.
A spiff (sometimes referred to as SPIF) program, is implemented as a way to give an immediate reward, usually in the form of a small cash reward, for a sales behavior. It is a great way to give a short-term boost to adhering to some aspect of the sales methodology or selling a specific product or service.
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Market Development Funds (MDF)
Every sale that fits your sales criteria (order size, frequency, or closing a deal within a specific time period) will be rewarded with market development funds (MDF), generally based on a percentage of the total sale. Over time, the accumulated funds will be used to pay for various marketing activities that will further promote and sell your product or service.
On top of rewarding a channel partner for the sales they bring in, reward them for the sales that are generated by the customers they refer to your company. Tap into your channel partners network where they can become your biggest spokesperson.
Rewarding for each successful referral will come in the form of a commission based on the total deal size.
A level program, or tier program, is a progressive reward system that has specific criteria that needs to be met in order to move from one level to the next level. Generally, each channel partner will be awarded Level Program Points for each achievement they make. When the accumulated points reach a predetermined threshold, the partner will automatically move up to the next level.
This is a great way to motivate long-term channel partners’ loyalty as well as sales growth. Imagine that you bring on a new channel partner into your sales incentive program. They will start out at the base level, let us call it the “Bronze Level”. In order to reach the next level of “Silver”, you have set specific goals that need to be reached in order to get to the next level. Each level may include more challenging goals but will provide additional benefits to the channel partner which could come in the form of bigger discounts or even access to exclusive products or training.