An introduction to channel sales incentives
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Craig Thomas
Director

An introduction to channel sales incentives

4th April 2018

Channel partners are fundamental to the growth of a business. According to a report by Deloitte, they can be responsible for generating more than 75% of revenue. So there is every reason to invest in optimising these relationships.

 

For vendors and manufacturers, these partnerships have a key role to play in business growth and are an integral part of sales and marketing strategy. Channel sales incentives are a powerful way to provide partners, distributors and customers with the motivation to do more.

 

How do channel sales incentives work?

Channel sales incentives are a collaboration between partners that help to produce better results for all parties and improve overall performance. They can be designed with a focus on a particular product or service, or to encourage various behaviours. Like any sales incentive, they often work best with a time limit and when tied into an overall business strategy to help drive strategic objectives.

 

Where can channel sales incentives make an impact?

  • Increasing sales
  • Cutting costs
  • Generating loyalty
  • Strengthening distribution channels
  • Improving partner relationships
  • Helping to build a better brand

 

Do channel sales incentives work?

Yes - in a number of different ways. Multiple studies have shown that even just the presence of channel sales incentives can have a positive influence on how interested channel partners are in working with certain manufacturers or vendors. That’s before you even start to consider the impact they can have on performance. Plus, channel sales incentives help to create better working relationships in which both parties profit, in both individual and cash terms.

 

Why do channel sales incentives work?

The desire to succeed, go further or do more can be intrinsic or extrinsic. Intrinsic motivation is drawn from the internal wants and needs that we all have as humans and is far more difficult for a third party to have any influence over. Extrinsic motivation is a different story. This originates from outside of an individual and is driven by the desire for reward offered by an external source. That reward could be something as simple as recognition for effort, or it could be a tangible incentive.

 

Channel partners are no different from the rest of us in that they too appreciate being recognised for the contribution that they have made to overall performance. Channel sales incentives tap into our responsiveness to extrinsic motivation by offering reward in exchange for certain achievements or behaviours.

 

How to make channel sales incentives work

The right channel sales incentives can be designed to be cost-effective and make an impact, but there is no 'one size fits all' solution. Specific partners, and the objectives and infrastructure of a particular business, will all have a part to play in determining what this kind of sales incentive should look like.

 

The best incentives don't just reward the top performers as this can be incredibly demotivating for everyone else. Plus it's worth bearing in mind that your incentive needs to be attractive and competitive, as it's not the only one your channel partners will be offered. The right channel sales incentive will be designed for your business with its people and objectives in mind.

 

At Active, we specialise in bespoke channel sales incentives that really work. Contact us to find out more.

 

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Other articles in this series

Where to start when setting up a channel sales incentive?

What are the best rewards to offer in your channel sales incentive?

How to measure the success of your channel sales incentives

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