Incentives: The Key to Activating Your Partner Ecosystem
Partner incentives play a crucial role in driving behavior within your ecosystem, and a solid partner program should include a wide variety of them.
Driving desired outcomes from your channel ecosystem is challenging for any partner leader. Strategic alignment and joint business planning will not provide the momentum needed for your partners to generate pipeline, lead pre-sales engagements, own project delivery/implementation, provide technical support, or drive product adoption.
Partner incentives play a crucial role in driving behavior within your ecosystem, and a solid partner program should include a wide variety of them. A well-designed partner incentives program must consider how to help your partner become more profitable as a whole and also think about how to motivate teams and individuals within your partners.
Organizational level incentives
The main goal is to create an environment that allows your partners to re-invest their back gains into the alliance, adding resources, capacity and capabilities.
At this level, your partner program needs to consider how to help your partner’s organization build a healthy and successful business. You will need to put forward assets, programs, and financial terms to ensure your partner can: increase profitability, drive revenue, reduce customer acquisition cost, and build a steady working capital.
Team/Individual level incentives
These incentives should aim to energize teams/Individuals and prioritize efforts around your product. Consider what you can provide to help your partner sales teams achieve quota faster, generate a better sales pipeline, and elevate individual capabilities.
The most common incentive used across partnerships are Marketing Development Funds (MDF). Mainly, cash for a partner to run demand generation/marketing campaigns with the expectation to create a sales pipeline. Beyond MDF, there are additional incentives that should be part of your repertoire when building alliances:
Resell Margin (fixed vs. variable): providing partners with a percentage of the revenue made by selling your product to end customers. You can create a fixed or variable margin structure, allowing you to create more value for a specific set of target accounts.
Sales rebates
Enhance partner’s revenue by giving them extra cash, as a % of revenue, if specific sales outcomes are accomplished. You can reward closing deals in specific timeframes, reaching a pre-established revenue threshold, or driving a set of new logos.
Deal referral rebates
Just like sales rebates, referral rebates focus on bringing highly qualified prospects to the sales pipeline. Ideally, the rebate is paid once an opportunity converts, thus adding an extra carrot to take that opportunity through the sales funnel as quickly as possible.
Payment terms
Reselling margin alone might not suffice to help your partner grow over time. Favorable payment terms will allow your partner to build a healthy cash flow and working capital.
Examples include: +45-day payment terms, or payment installments over a period of time.
Enablement incentives
Motivate individuals at your partners to be knowledgeable about your products. Folks need to take time out of their busy days to study and become experts around your offerings. This will not happen by chance, reward course completion or taking a certification test on your product.
Sales Performance Incentive Funds (SPIFF)
Provide partner sales members the opportunity to earn a cash reward if specific sales outcomes are met in a predefined period of time. If your partner sells multiple products, SPIFFs can give your product a bit of extra mindshare within sales teams.
Weighted sales recognition:
Accelerate sales members’ quota attainment by providing a multiplier to sales related to your product. Like a SPIFF incentive, this will prioritize teams towards your product/solution over others.
Project Implementation incentives:
Reward engineers, project managers, and support teams to deliver high-quality and timely engagements. Such incentives become increasingly valuable if your KPIs include daily active users and Monthly Run Rates.
Awards:
Recognition at an entity and individual level is one of the best ways to keep your partners focused and excited. "Partner of the year" awards are very common these days, but equally important is elevating individuals for their commitment and performance across departments like sales, marketing, engineering, and partnerships.
Incentives can help drive partner engagement strategically and tactically. Be open to using a mix of incentives in addition to joint planning as a partner activation mechanism. As you select the proper incentives for your partner program, think about how it will motivate the individuals and teams to invest time and energy in your product.
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