Our recent survey of manufacturing organizations showed that 77% of the respondents run ten or more promotions in a given year for their channel or partner sales representatives. This provides a huge opportunity for companies to get creative with their promotion mixes—but are they doing so?

types of incentive programs

Among OEMs, rebates are far and away the most popular promotion type, with 68% of organizations using them to incentivize their indirect sales teams. Rebates or volume-based discounts are used to offer prices that are lower than standard based on the promise of a distributor, reseller, VAR, dealer, or contractor to buy a large volume of a certain product.

But rebates don’t have to be the only way to incentivize your indirect sales organization. A solid channel incentive program should incorporate promotions that cover the primary business goals: brand awareness/mindshare and sales lift. In addition to offering rebates, other promotion types often come into play. Consider the following:

  • Provide market development funds (MDFs) to assist channel partners in marketing goods or services, creating additional awareness about the brand. These activity-based funds are typically awarded to the distributor, reseller, or contracting company in advance to provide marketing support in meeting targeted sales goals for a particular period of time.
  • Make co-op funds available to channel partners based on the sales already made by the partner organization in a certain time period, usually in the past year. Your partners receive their share of the co-op funds once all sales have been reported and pre-specified goals have been met.
  • Leverage classic “sell x, get y” sales performance incentive funds (SPIFs or SPIFFs) to accelerate the sales of a particular product or service by individual sales representatives. Sales representatives get a set reward for every unit sold, with no (or minimal) limits.

The Benefits to Bundling

Your promotions are the “meat ‘n potatoes” of your incentive program, but that doesn’t mean that you’ll get maximum engagement from your indirect reps if you offer just the most basic promotions. First, consider augmenting your SPIFs by taking a tiered approach; that is, the sales representative receives a higher amount for every unit sold once he or she hits a predetermined sales threshold. For example, the sales rep receives $1 for each of the first 5 widgets sold, then $2 for each of the next 5, and so on.

spin-to-win workstride contestYou can also drive further engagement—and competition—with contests or sweepstakes. Leaderboards can provide good visibility into the competition and can be especially effective if you offer a prize for the top three, five, or ten sales reps (especially if you tailor the leaderboards to smaller segments of the indirect sales organization, such as a particular region or store). Sales activity can also result in a sales rep being added to a sweepstake such as a random drawing for a prize, or a spin-to-win module which gives the sales rep the chance to gain a certain amount in instant rewards.

In addition to sales rewards, you can take your program one step further by offering training incentives. Offer rewards for finishing a product overview video or even require that a course and its accompanying quiz be completed (and passed) before a sales rep can participate in one or more of the aforementioned promotions or contests. This is a solid way of increasing greater brand awareness among your indirect reps, which, in turn, boosts the odds of your products or services being top of mind while the reps are speaking with the end consumers.

No matter what types of promotions you use in your channel incentive program, note that they don’t have to be mutually exclusive. By bundling different types of promotions and contests to meet specific sales goals—and by targeting these at specific audiences within the indirect sales organization—you’re more likely to engage and motivate the channel to sell your products over those of the competition.