Channel Incentive Program Best Practices

By Jim Sullivan, Director, Channel Sales, Kaspersky Lab North America

It’s no secret that we’re in a highly competitive market in technology sales. It takes more than groundbreaking technology and innovative products to make the channel sales engine operate. Vendors can’t afford to put an incentive or program in place and simply hope for the best; it’s more than just throwing dollars at a product to make it sell. Carefully crafted partner programs, incentives, events and mindshare-building activities can provide significant competitive differentiation.

One recent trend I’ve seen is that VAR owners are becoming increasingly dissatisfied with Sales Performance Incentive Funds (SPIFs) being offered by manufacturers to their salespeople. Their fear is that the salespeople may not necessarily be selling the right technology to meet the customer’s needs, and that the margin per transaction may be compromised if a sales rep knows he/she is receiving a SPIF and using it to offset the offering of deeper discounts.

If structured incorrectly and without control or direction, these types of programs most likely won’t be successful. There are a few common themes that contribute to an incentive or program missing the mark and not achieving the desired outcome:

There was never a formal desired outcome in the first place. By desired outcome, I mean goals/objectives that are specific, actionable and measurable. Without a quantifiable objective and stated impact to the business, how will we know where we’re going? How can we expect buy-in from an owner or sales executive? We need to start with the end in mind.

Strategy means nothing if it’s not carefully executed and managed. More often than not, it’s the Channel Manager’s responsibility to ensure that milestones are being accomplished throughout the program or incentive period with a partner. Careful attention to detail, accountability on both sides, continuous feedback loops, and scheduled program reviews for progress updates are essential for success.

It doesn’t align with a partner’s business objectives. At a workshop earlier this year, I listened to a panel of VAR business executives discuss what is most important to them and what they wish manufacturers would do to improve alignment with channel partners. One sentiment was unanimously shared: “In order to partner with me, you need to align with my strategic goals.”

So what can vendors do to ensure their channel incentive programs are successful? Start by working backwards with the end in mind. Ask as a team: “What does success look like at the end of this incentive program?” Then create systematic activities and milestones to support the program to ensure it will be successful.

For example, if we establish an incentive program based on deal registration for a quarter, we plan activities and events throughout the quarter to support the partner’s efforts. The model for any incentive program should be bi-directional, where partners are being enabled and incented, while helping us expand our reach.

The bottom line is that sales reps will perform according to how they’re compensated and incented. Vendors must create programs that incent partner sales reps and help partners accomplish their strategic objectives.

Successful programs for partners are not “one-size-fits-all,” so vendors must provide the necessary flexibility for a program to adapt to the profile of a partner. When all these parts fall into place and work together, a mutually successful incentive program for a partnership is realized.

As Director, Channel Sales, Kaspersky Lab North America, Jim Sullivan is responsible for the Value Added Reseller strategy and sales performance. His teams of Regional Channel Managers and Inside Channel Managers work closely with partners to drive profitability and optimize the experience of customers. Jim has over a decade of experience in working in the IT security space. Prior to joining Kaspersky Lab in January 2012, Jim was a top salesperson who held leadership positions in direct sales and channel sales at Sophos.