Channel Incentives Guide

When collaboration and partnerships are key to achieving success, channel incentives emerge as a real game-changer. Offering channel incentives is like the secret sauce for businesses that rely on a network of partners to get the word out about their products and services. 

According to Forrester, more than 73% of global trade flows through channels - so it’s not a strategy to be overlooked if you’re keen to hit the mass market.

In this guide, you’ll discover the best types of channel incentives to include in your programme and how they can work their magic for your company

But it's not just about identifying them; it's about making them work for you.

Whether you're a forward-thinking business eager to boost your sales or a curious channel partner keen to find out how incentive programmes work, we've got you covered.

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What are channel incentives?

Channel incentives are a motivational technique typically used by manufacturers to reward their distribution partners, resellers and dealers for repeat sales. All of whom play pivotal roles in promoting the company's products or services. 

These incentives are thoughtfully crafted to endorse the specific behaviours that organisations aspire to achieve. 

Nurturing positive relationships with partners is a cornerstone of success, ensuring that they remain dedicated and loyal to the brand and meet their targets and milestones.

In recent years, there has been a shift away from the traditional practice of exclusively offering cash incentives to partners. Instead, organisations are now embracing non-financial benefits such as training programmes, marketing support, points-based rewards and exclusive access to resources to inspire their partners. The choice of which incentives to offer is usually suited to the individual partner, to meet their unique interests.

Accelerate growth

What are the benefits of channel incentives?

Channel incentives come with a host of benefits that can make a huge difference in a company's growth, market position and relationships with partners. 

Here are just a few of the benefits of channel incentives:

1. Accelerate growth

Thoughtfully designed channel incentives can act as a powerful catalyst for sales and revenue growth. This is achieved by creating a system of rewards that are directly linked to well-defined targets and milestones. 

In fact, on average channel incentives can trigger up to a 32% boost in sales.

When businesses provide their channel partners with compelling incentives, it ignites a sense of motivation and enthusiasm. Partners become more proactive in marketing and selling the company's products, working passionately to reach and surpass the set goals. 

As such, this heightened engagement should result in improved sales performance, as well as a notable upswing in revenue.


2. Enter new markets

According to a study by the Incentive Research Foundation, companies employing channel incentives experience an average of 20% faster market entry than those without, helping them establish a greater presence more swiftly. 

By offering support and tailored incentives to partners, companies can gain access to local knowledge and new distribution networks, which in turn, reduces operational costs and potential risks.  

Furthermore, channel partners bring their own established relationships to the table, enabling businesses to efficiently tap into new markets instead of having to start from scratch. 

As partners become more acquainted with a company's products, they often identify opportunities for product extensions and new target segments. This can lead to organic growth beyond the initial market entry, further enhancing the business's global reach.

3. Improves brand awareness

Leveraging the capabilities of channel partners can be a game-changing strategy for businesses looking to expand their market presence and build brand recognition. 

A study conducted by Forrester Research revealed that a significant 70% of a sample of 10,000 buyers chose to make their purchases through a brand's channel partners, rather than going directly to the supplier, which demonstrates the valuable role these partners play in connecting with consumers.

When you use channel incentives thoughtfully, they have the power to truly motivate and ignite genuine interest and dedication within your partner network. 

In return, these partners transform into enthusiastic advocates for your products and services, going beyond their traditional role as ‘middlemen’ and becoming passionate cheerleaders for your business. 

In many cases, this wave of enthusiasm creates a ripple effect, which triggers word-of-mouth marketing and expands your brand's reach to a larger audience.


4. Enhances partner product knowledge

Aside from sales-related benefits, channel incentives play a role in empowering partners by equipping them with valuable insights and expertise. 

One significant way to drive knowledge and proficiency of your products is by integrating advanced learning objectives into the programme, which may encompass a range of activities, such as:

  • Interactive e-learning modules
    According to a report by eLearning Industry, 77% of companies in 2020 were already using e-learning to support their training and development efforts. 

    The implementation of interactive e-learning modules can provide partners with a platform to deepen their understanding of your products and industry trends. These modules should be fun and engaging, with the inclusion of quizzes, simulations, and practical exercises.
  •  Certification programmes
    A study by LinkedIn Learning found that 51% of professionals choose to take online courses in their free time to enhance their career prospects.

    This underscores the importance of introducing incentivised certification programmes, to boost your partner’s product knowledge and expertise.
5. Boosts repeat orders and loyalty
When strategically implemented, channel incentives can act as powerful motivators for partners to place repeat orders on a long-term basis. 

A 2020 Brand Loyalty survey found that companies with channel incentives experienced a 35% increase in partner retention rates

There are several reasons for this:

  • Competitive advantage: Offering attractive incentives gives your brand a competitive edge, making it more appealing for partners to focus on selling your products over those of competitors.

  • Consistency of financial bonuses: Consistent incentives create a predictable and stable income source for channel partners. This financial predictability can be a significant driver of loyalty, as partners rely on these incentives to sustain their businesses.

  • Recognition: Non-financial perks, such as recognition and exclusive access to industry events and resources, can be particularly enticing for smaller-scale partners, as they have the potential to enhance their reputation within the industry. This special perk can be a cornerstone for building a strong, enduring relationship with the company that made it possible.

  • Feedback and Improvement: When incentives are strategically implemented, they often come with performance tracking and data analysis. This data serves as a valuable resource for providing partners with insightful feedback. By delving deeper into their performance, the company can work with the partner to improve sales strategies and drive business growth. This personalised support goes a long way in strengthening loyalty to the brand and nurturing a more mutually beneficial partnership.


6. Gain a competitive advantage

Channel incentives extend beyond mere motivation for partners to boost sales; they serve as a potent tool for gaining a competitive advantage.

Why is this the case? 

It's quite straightforward - engaged partners are more inclined to opt for your business over your competitors. The allure of tempting incentives you provide not only fuels their motivation, but also encourages them to remain committed year-round.

That's precisely why many companies incorporate tiered incentives into their strategies. 

These programmes offer various levels of rewards and benefits to partners based on their sustained engagement and loyalty. This ensures that partners always have something to aspire to and understand that greater efforts result in more significant rewards, thus making them less likely to explore alternatives among competitors.

It all boils down to the fact that motivated partners are likely to sell more of your products, which results in increased sales and market share. 

This growth can make your business more competitive within your industry. The significance of this growth cannot be overstated, especially when engaged partners can deliver an impressive 21% boost in profitability, according to Gallup.

Referral incentives

Types of channel incentives

There are a number of different types of channel incentives that you could include within your programme, including SPIFFs, sales competitions, referrals and more; each of which are explained in more detail below:

  • Sales Performance Incentive Funds (SPIFFs): SPIFFs are immediate bonuses or gifts given to channel partners as a token of recognition for achieving predefined sales targets or goals (usually short-term). SPIFFs are especially valuable when a company must respond swiftly to market shifts or when the promotion of specific products within a constrained time frame becomes a priority.

  • Sales competitions: Sales competitions are an effective strategy for boosting sales within your network, which involves organising contests among your channel partners. The highest-performing partners are rewarded with prizes, awards, or public recognition for their achievements. Competitions encourage partners to outdo each other in their pursuit of accolades which not only boosts sales but also fosters a sense of camaraderie within your network.

  • Product education incentives: Here, partners are incentivised to undergo training to learn more about your products and obtain certifications. By providing rewards for partners to improve their expertise in promoting and selling your offerings, you empower them to more effectively represent your brand and products.

  • Referral Incentives: Referral incentives encourage channel partners to act as brand advocates, referring new clients or customers to your business. Partners receive rewards or bonuses for successful referrals.

  • Sales-based incentives: These incentives are fairly straightforward: partners are rewarded for selling a product. You may offer on-the-spot rewards for immediate sales, monthly incentives for meeting short-term goals and annual rewards for consistent year-long performance.

  • Activity-based incentives: These incentives are linked to specific activities that contribute to your business objectives. Partners receive rewards for performing tasks such as data entry in a Customer Relationship Management (CRM) system or conducting product demonstrations. By incentivising these standard day-to-day activities, you promote behaviours that directly align with your company's goals and drive partner engagement in critical areas.

  • VAR Incentives: VAR Incentives are strategically designed programmes to recognise and reward partners who go the extra mile in enhancing or customising your products before reselling them. These are dedicated individuals who invest in improving your offerings for specific industries or businesses, such as adapting or including specialised features, configurations or add-ons.

  • Upsell Incentives: Upsell incentives stimulate partners to upsell and cross-sell additional products or services to customers. Partners earn rewards for selling supplementary items, such as warranty registrations, product add-ons, bundling multiple products, or insurance packages. 

Launch your channel incentives

Launch your channel incentives today

In summary, channel incentives are essential for nurturing strong partnerships and achieving business success. They not only inspire partners to actively market and sell your products, but also reinforce the connections between your company and its distributors, resellers, and VARs. 

By providing appealing incentives, you empower your partners to realise their full potential and as a result, contribute to your company's growth and market reach. 

With well-crafted channel incentives, your organisation can establish a mutually beneficial environment where all parties can flourish, guaranteeing long-term success in a constantly evolving and competitive market.

Ready to get started with your very own channel incentives? Get in touch today.

Watch a 3-min demo of our sales incentive portal

See how our incentive platform can ensure your sales pros bring their A-game. 

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