We've all seen portrayals of inept actors and actresses. These fictionalized thespians all have the same question for their exasperated directors: “what’s my motivation?”
While motivation is something imaginary to actors, it’s something very real to vendors and to their channel partners. Vendors face a wide array of distractions that jeopardize their ability to get partners to do what they want them to do: time issues, partners’ own selling activities and even the motivational activities of other vendors.
Taking the Monetary Approach
While vendors acknowledge how important motivation and incentives are, most of them are lax in determining the effectiveness of their incentivization programs. Vendors have a tough time allocating market development funds (MDF), let alone measuring ROI of those funds. Examining the return on bonuses for training and utilization of marketing resources has also proven problematic.
That doesn’t mean that financial rewards are going away. A study by CCI last year showed that the amount spent by vendors on MDF and other financial incentives increased 10 percent year over year in 2013.
The trick, if you’re a vendor, is to use these incentives the right way. A well-designed program motivates partners and their personnel in such a way that they see the value in that behavior -- and then continue that behavior after the incentive is over. It should lead them to discover ways of doing things that are profitable for you, but also for them.
A poorly-planned incentive program is used as a “Band-Aid” to fix a problem temporarily. Bad sales may be bolstered by incentives, but when the incentives are taken away sales will drop as a result. In many cases vendors end up offering perpetual rebates, co-op funds and MDF money, cutting into their margin. And the moment the partner finds value in a competitor’s product -- or, perhaps, incentive -- he’s likely to leave that vendor behind.
How do you know if your program is working? Analyze the data – if you’re using some form of partnering automation, the numbers should give you the answer. Plot your MDF and co-op spend in conjunction with the performance of the partners who receive that money.