BEST PRACTICES: PART TWO
Channelinsight
ENHANCING THE
VENDOR/RESELLER RELATIONSHIP
2
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SURVEY METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . 5
HOW VENDORS & PARTNERS SEE EACH OTHER: DUEL OR DANCE? . . . 7
SALES INCENTIVE PROGRAMS: MOTIVATE OR SALIVATE? . . . . . . . .14
THE INFORMATION “CHUNNEL”: IS THERE LIGHT AT THE END? . . . . . .33
SUMMARY & CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . .47
Channelinsight
© 2014 Channelinsight | Propreitary & Confidential
3
BEST PRACTICES: PART TWO
INTRODUCTION
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
4
S
tanding out from the crowd is a
challenge for any business. No less
so for a manufacturer wanting to
distinguish itself among its many channel
partners. Fanciful marketing programs with
little substance no longer cut the mustard.
For a manufacturer to stand as “hero” in
a complex distribution channel, the first
step is knowledge. What works, and what
doesn’t?
How do channel partners view their
vendors? How far can manufacturers see
down the channel to the end- customer?
Which incentives motivate partners,
producing revenue for both parties?This
insight comes from a probing look into
manufacturer/partner relationships. A
survey conducted by an independent
INTRODUCTION
research firm, Silicon Valley Research
Group, asked these questions and many
more. The questions were put to CEOs,
officers, directors and managers of Fortune
500 and mid-size firms in the IT space,
whose business depends on channel
partners. The results are telling.
In this eBook we’ll explore what
vendors and partners say about the
complex dance between channel
participants. Some of what we learn is
conventional wisdom. But we also draw
an unconventional conclusion—that
fresh, accurate channel data can be
the differentiator between a mediocre
program or relationship and one that is
highly profitable and mutually beneficial.
© 2014 Channelinsight | Propreitary & Confidential
5
BEST PRACTICES: PART TWO
SURVEY METHODOLOGY
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
6
SURVEY METHODOLOGY
T
he survey from which our conclusions
are drawn included a total of 295
Fortune 500 manufacturing companies,
and 195 of their U.S. channel partners.
All the companies were in the high tech
industry, with average annual revenue of
$848M and staffs averaging 5,859 people.
Companies included an even mix of large
and mid-size business-to-business firms, with
sales, marketing, and channel operations
throughout the Americas, Europe/Africa/
Middle East, and the Asia-Pacific region.
Over half the companies derived more
than 60% of their revenue from channel
partners.Channel partners included a mix
of Value Added Resellers (VARs), distributors,
and direct marketing retailers. These
firms averaged $125M in revenue and 75
employees. They sold systems, sub-systems,
software, and components, and their
vendors included companies such as HP,
Cisco, Microsoft, IBM, Dell, and Apple.
The survey was conducted among
owners, presidents, CEOs, vice presidents,
directors, and managers, and included
both qualitative and quantitative
methods. Qualitative, in-depth interviews
provided insight and commentary, while
the quantitative methodology provided
results that can be projected to the larger
population. The margin of error is +/- 9.7% at
the 95% confidence level and +/- 8.1% at the
90% confidence level.
© 2014 Channelinsight | Propreitary & Confidential
7
BEST PRACTICES: PART TWO
HOW VENDORS & PARTNERS SEE
EACH OTHER: DUEL OR DANCE?
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
8
I
HOW VENDORS & PARTNERS SEE
EACH OTHER: DUEL OR DANCE?
s the relationship a duel? A dance? Or worse yet, is the manufacturer getting the cold
shoulder?
As noted in the survey methodology section, more than half the companies surveyed
realize more than 60% of their revenue from their channel partners. That’s a nice chunk of
change. So it behooves manufacturers to court those partners who put forth the greatest
effort and generate the best results.
But which ones are they?
© 2014 Channelinsight | Propreitary & Confidential
9
HOW VENDORS & PARTNERS SEE
EACH OTHER: DUEL OR DANCE?
That’s the essential question
that an effective channel
data management program
can answer. First, however,
let’s look at what the survey
says about the expectations
that manufacturers and
channel partners have
regarding each other.
There are certain
characteristics that
manufacturers expect from
channel partners as a given:
“Manufacturers need be upfront,
provide a timeline and then deliver
on what is promised”
– VAR Manager
Likewise, partners have their
own set of expectations
from manufacturers:
•• Sales Leads and Best
Practices
•• Technical Expertise
•• Sales/Marketing Support
•• Customer Relationships
•• Technical and Sales
Training
•• Local Market Knowledge
•• Market Research
© 2014 Channelinsight | Propreitary & Confidential
10
HOW TO CONTRIBUTE TO
PARTNER SUCCESS
The survey data took a deeper dive into the traits that partners consider important and
effective to be successful. These traits are listed in Table 1 below.
Table 1
WHAT IS IMPORTANT?
High Quality Products
Vendor Reputation in Marketplace
Competitive Pricing
Sales/Incentive Tracking/Reporting
WHAT IS EFFECTIVE?
High Quality Products
Vendor Reputation in Marketplace
Competitive Pricing
Sales/Incentive Tracking/Reporting
Good Marketing Support
Face Time with Vendor Personnel
Sales Training and/or Sales
Materials
Good Incentive Programs
Breadth of Product Line
Technical Training
Sales Training and/or Sales Materials
Competitive Benchmarking Reports
Breadth of Product Line
Face Time with Vendor Personnel
Sales Leads
Social Media
Technical Training
Good Marketing Support
Sales Leads
Good Incentive Programs
Social Media
Competitive Benchmarking Reports
© 2014 Channelinsight | Propreitary & Confidential
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HOW WELL DO MANUFACTURERS
SUPPORT THEIR PARTNERS?
When asked how well manufacturers support their
partners (see Fig. 1), some activities and traits
scored highly both in importance and ability to
motivate, including:
Good tracking/reporting
ability held the middle ground,
followed by:
•• Sales Training
•• High Quality Products
•• Marketing Support
•• Vendor Reputation in Marketplace
•• Good Incentive Programs
•• Competitive Pricing
Social media was the outlier, ranking near the bottom in both importance and
performance. However social media is on the rise with savvy B2B buyers who are turning
to search and social media for business recommendations.
© 2014 C hannelinsight | Propreitary & Confidential
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HOW WELL DO MANUFACTURERS
SUPPORT THEIR PARTNERS?
Figure 1
8,50
High/Quality Products
8,40
PERFORMANCE
Vendor Reputation
8,30
Competitive
Pricing
8,20
Tracking/Reporting
Tech Training Product Line
Breadth
Face Time
Sales Training
8,10
8,00
Social Media
Leads
7,90
7,80
7,70
Marketing Support
Good Incentive
Programs
Competitive
Benchmarking
7,80
7,90
8,00
8,10
8,20
8,30
8,40
8,50
8,60
IMPORTANCE
© 2014 C hannelinsight | Propreitary & Confidential
13
HOW WELL DO MANUFACTURERS
SUPPORT THEIR PARTNERS?
For a manufacturer, traits such as
product quality, company reputation,
and competitive pricing are what it
takes to get into and stay in the game.
Going beyond these traits, best practice
in creating an effective manufacturer/
partner relationship involves setting clear
expectations, aligning goals, and setting
up rules for communicating regularly.
Marketing Strategies for Success, “What
does matter is that you have mutual
respect, and that you support each other’s
goals and values…. Best practice is to
establish simple rules around how often
you communicate to make sure you are
staying on track and not drifting apart. …
Equally important is establishing how each
partner will be rewarded.”
As Debra Delaney, President and CEO
at CCI, states in her post “What Makes a
Partnership Work?” from her blog Channel
And that brings us to the issue of sales
incentive programs.
© 2014 C hannelinsight | Propreitary & Confidential
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BEST PRACTICES: PART TWO
SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
15
SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
“The most effective sales incentive
program helps support a good
product and vendor, and as a
result, increases sales.” – Executive
Director, Distributor
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
When was the last time a channel partner drooled over your incentive program?
The sad fact is that many sales incentive programs are largely ineffective. The survey
probed both manufacturers and partners to determine what works and what doesn’t
when it comes to sales incentives. Table 2 describes which incentive programs rank most
important among partners.
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
Which Incentive Programs Are Important to Partners?
Table 2
WHAT IS MOTIVATING?
WHAT IS EFFECTIVE?
Big deal discounts
Performance based
Performance based
Big deal discount
MDF
Short-term price-based
SPIF
Volume rebates
Non-payment incentive
Volume rebates
Short-term price-based
SPIF
Non-payment incentive
MDF
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
In the qualitative research, partners had a mouthful to say to manufacturers about sales
incentive programs. Here are some dos and don’ts gleaned from these interviews:
What To Do:
We love it when you provide cash
incentives. Cash is king. The more cash the
better.
What NOT To Do:
•• Don’t make incentives too small.
•• Don’t overlook the need to market the
program.
•• Create progressive incentives.
•• Don’t create confusion with complexity.
•• Make goals realistic and attainable.
•• Don’t rely on prizes. They are not
universally appealing and present tax
complications.
•• Pay consistently and quickly.
•• Communicate program details and
success tips clearly and simply.
•• Respond in a timely way to calls and
short shipping times.
•• Don’t ignore outstanding partner
successes. Doing so will hamper
participation in future programs.
© 2014 C hannelinsight | Propreitary & Confidential
19
SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
Do Sales incentive Programs Really Increase Sales?
When done properly, the answer is yes. You can change partner behavior with a welldesigned program that incorporates the dos and don’ts noted above, especially these:
•• Use cash, not prizes
•• KISS (Keep It Super
Simple)
•• Clearly communicate
program details and
success tips
•• Automate to ensure fast
and accurate payments
Which Incentive Programs Work Best?
The survey probed
respondents about program
effectiveness by type (see
Figure 2). Channel partners
rated the following types of
programs as most effective:
•• Performance Based
•• Big Deal Discounts
The programs most likely to
motivate partners included
the following:
•• Big Deal Discounts
•• Performance Based
•• Market Development
Funds (MDF)
•• Volume Rebates
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
Figure 2
What kind of incentive programs are effective?
8,40
Performance
Based
MOST EFFECTIVE
8,30
Big Deal
Discounts
8,20
Volume Rebates
8,10
8,00
7,90
Non-payment
programs
SPIF
7,80
MDF
7,70
7,60
7,70
7,80
7,90
8,00
8,10
8,20
8,30
8,40
LIKELY TO MOTIVATE
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
“We want MDF funds that we can
use for custom programs.”
– Manager, Retailer
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVE PROGRAMS:
MOTIVATE OR SALIVATE?
Manufacturers were also asked to rank their rebate programs on the basis of four criteria
(see Figure 3). 93% of manufacturers rebate programs are performance driven.
Figure 3
93%
95%
89%
90%
89%
86%
85%
m
ra
Pr
og
ity
iv
ct
A
ec
bj
O
Pe
rfo
rm
an
tiv
e
ce
80%
Manufacturers favored performance based programs, for example, those using metrics
such as year-over-year growth or sales quotas. An example of an objective based
program is one using new customer acquisition as a metric. Programs that allocate MDFs
are an example of activity-based programs, while a ranking system such as Platinum/
Gold/Silver describes a program based plan.
© 2014 C hannelinsight | Propreitary & Confidential
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PERFORMANCE METRICS
When manufacturers were asked how many of their incentive programs met or exceeded
their revenue performance goals, 86% said that “All, Most, or Some” of their programs did
so (Fig. 4). However, Only 28% could answer “All or Most.”
Figure 4
86% of incentive programs meet or exceed incentive goals.
How many of your incentive programs
meet or exceed revenue performance goals?
4%
9%
All
6%
Most
24%
Some
Few
58%
None
© 2014 C hannelinsight | Propreitary & Confidential
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SALES INCENTIVES MEAN
REVENUE AND PROFIT
The survey indicates that sales incentives programs contribute significantly to channel
partners’ sales and profits. Incentives can boost both these metrics as high as 40 percent
(see Figure 5). In fact, channel partners depend on various types of incentive programs
for revenue (see Figure 6).
Figure 5
Incentives Can Add
40% To Partner Profits
25%
40%
20%
30%
Partners
Partners
Incentives Can
Boost Sales By 40%
15%
10%
5%
20%
10%
0%
0%
Incremental Sales
Incremental Profit
© 2014 C hannelinsight | Propreitary & Confidential
25
SALES INCENTIVES MEAN
REVENUE AND PROFIT
Channel partners rely significantly on incentive programs
from the manufacturer for revenue.
Figure 6
*
Average Impact on Revenue
Back-end Rebates
18.4%
Revenue Rebates
17.3%
MDF
16.6%
Deal Reg
14.8%
Co-Op
14.0%
© 2014 C hannelinsight | Propreitary & Confidential
26
LATE PAYMENTS CAN
DAMAGE THE RELATIONSHIP
Partners want prompt and accurate payment for fulfilling their end of the bargain in
an incentive program. Yet only 7% of manufacturers pay incentives in less than 14 days
(see Figure 7). Additionally, only 40% of manufacturers calculate and process incentive
payments automatically all or most of the time.
7% of manufacturers pay incentives in under 14 Days
Figure 7
How many days does it take
to process and pay
partner incentives?
What percent of incentive
payments are calculated
and processed automatically?
45
# Respondents
40
35
17%
30
8%
All
25
20
32%
16%
15
10
5
0
27%
0 10 20 30 40 50 60 70 80 90 100 110 120
Most
Some
Few
None
# of Days to Pay
© 2014 C hannelinsight | Propreitary & Confidential
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LATE PAYMENTS CAN
DAMAGE THE RELATIONSHIP
Resellers are likely to remember late
payments. And they may perceive
“late” differently than the vendor
because of the time difference
between claim submission and
payment. For example, if it takes 45
days to get a claim submitted and
processed, and another 45 days
before that claim is paid, that’s 90
days. In the reseller’s mind, that’s
a late payment, which may feel
like a burr under the saddle of the
relationship.
© 2014 C hannelinsight | Propreitary & Confidential
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AVOIDING INCENTIVE
OVERPAYMENT
The survey found that respondents run an average of 21 channel incentive programs
annually, costing on average 11% of their annual channel revenue (see Figure 8).
Among survey respondents, this figure amounts to $31,800,000. The survey also found
that 6% of channel incentives were believed to be overpayments (see Figure 8),
costing vendors approximately $2.1M.
Figure 8
Average Incentive overpayment is 6%
90%
45%
80%
40%
35%
35 - 40
30 - 34
% of channel incentives
believed to be overpayments
0%
0-4
80+
70 - 79
60 - 69
50 - 59
40 - 49
5%
30 - 39
0%
20 - 29
10%
10 - 19
10%
25 - 29
15%
20 - 24
20%
20%
15 - 19
30%
25%
10 - 14
Average
6%
40%
Average
11%
30%
5-9
50%
% Respondents
60%
0-9
% Respondents
70%
Incentives spend as %
of channel revenue
© 2014 C hannelinsight | Propreitary & Confidential
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AVOIDING INCENTIVE
OVERPAYMENT
These survey results indicate that an otherwise successful incentive program could be
overshadowed by a number of administrative problems, such as:
•• Slow manual processes
•• Program abuses
•• Late program analysis
•• Duplicate claims
•• Calculation inaccuracies
•• Partner frustration due to
slow payments
The results further emphasize the need for a fully automated system to gather timely,
accurate, and reliable data to manage incentive programs effectively.
© 2014 C hannelinsight | Propreitary & Confidential
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IMPORTANCE OF
INCENTIVE PROGRAMS
How do manufacturers know what they are getting out of their incentive programs? The
survey indicates that 38% of manufacturers calculate ROI on their incentive spend (see
Figure 9).
Figure 9
38% of manufacturers calculate ROI on Incentive Spend
Are You Getting the Most Out of Your
Channel Incentive Programs?
80%
52%
60%
40%
73%
72%
38%
20%
0%
Calculate ROI on
incentive spend
Test programs
before launch
Pay on NET
Revenue
Required to
submit claims
© 2014 C hannelinsight | Propreitary & Confidential
31
IMPORTANCE OF
INCENTIVE PROGRAMS
When asked about the importance of various criteria relating to their incentive programs,
respondents rated the following as somewhat or very important (see Figure 10):
•• Testing and modeling of
incentive programs before
launching (64.7%).
•• Real-time visibility into the
performance of incentive
programs (81.4%).
•• Ability to compare
performance against preset program goals (85.3%).
•• Identification of over/
under performing
incentive programs
(78.4%).
•• Speed of incentive
payment (64.7%).
© 2014 C hannelinsight | Propreitary & Confidential
32
IMPORTANCE OF
INCENTIVE PROGRAMS
Figure 10
Incentive Programs - All Respondents
5,0
Testing and modeling
of incentive programs
before launching.
4,5
4,0
Real-‐time visibility into
incentive performance
3,5
Importance 3,0
Compare performance
against program goals
2,5
Identify over/under
performing programs
2,0
1,5
1,0
1,0
2,0
3,0
4,0
5,0
Rapid incentive
payment
Satisfaction
However, only 34% of respondents on average were somewhat or very satisfied with their
ability to meet these criteria. This discrepancy between importance and satisfaction
spells opportunity for manufacturers who can put automated information systems into
place to improve satisfaction levels.
© 2014 C hannelinsight | Propreitary & Confidential
33
BEST PRACTICES: PART TWO
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
34
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
Preposterous! That’s how the idea of a tunnel under the English Channel was first
received. It’s also the way some manufacturers may think about their ability to see down
the sales funnel to the ultimate end-customer.
Survey respondents were asked about their ability to identify the end-customer in their
indirect sales channel, as well as market segmentation data concerning that end-use
customer (see Figure 11).
Figure 11
Only 34% of Manufacturers have actionable-end customer data
Can you identify the end-customer
in your indirect sales?
Can you identify the end-customer
market segmentation in your indirect sales?
4%
5%
6%
Always
39%
22%
Usually
10%
18%
Sometimes
Rarely
28%
Never
Always
Usually
Sometimes
34%
33%
Rarely
Never
© 2014 C hannelinsight | Propreitary & Confidential
35
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
From the 67% of
respondents who reported
that they can “Usually or
Always” identify the endcustomer, 51% of those can
usually or always identify
the end-customer market
segment (see Figure 11).
This means only 34%
of manufacturers have
actionable end-customer
data, meaning the ability to
know not only who made
the purchase, but also what
was purchased and where.
© 2014 C hannelinsight | Propreitary & Confidential
36
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
Among respondents, 87% were confident in their ability to identify their channel revenue
by partner type. However, 54% could not segment their channel partners by the market
segments they serve (see Figure 12).
Figure 12
54% of Manufacturers know where their partners are,
but do not know who they serve.
Can you segment your indirect sales
revenue by channel partner type?
8%
2%
Can you organize your channel
partners by the segments they serve?
4%
Never
Always
Usually
33%
54%
Sometimes
Rarely
Rarely
Company
size
Sometimes
Vertical
market
Usually
Never
Always
0%
10% 20% 30% 40%
© 2014 C hannelinsight | Propreitary & Confidential
37
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
As to the source of their information, manufacturers rely heavily on self-reporting or their
own internal research to identify end-customers (See Figure 13).
Figure 13
54% of manufacturers rely heavily on self-reporting & 57% on costly
internal research to identify end-customers
What is your source for end-customer segmentation information?
60%
57%
54%
50%
40%
28%
30%
20%
10%
0%
Internal team research
End-customer
self-description
3rd party service
© 2014 C hannelinsight | Propreitary & Confidential
38
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
Given the variety and complex nature of today’s sales incentive and rebate programs,
and the millions of dollars being paid out to channel partners, manufacturers cannot
afford to rely on partial or inaccurate data. Nor can they afford the cost of manually
processing data, which leads to problems such as the following:
•• Calculation inaccuracies
•• Resource intensive claims
processing
•• Incentive program fraud
and abuses
•• Inability to guarantee accuracy when
paying earned rebates or MDFs to partners
•• Inability to ensure timely payments to
partners
•• Inability to adjust course while
a program is underway
© 2014 C hannelinsight | Propreitary & Confidential
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THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
Best practice dictates an automated data gathering system that ensures accuracy,
timeliness, and transparency for both vendor and partner.
Figure 14
43% rely on POS from the partner & 24% from a 3rd party
What is your source for channel
partner segmentation information?
80%
74%
61%
60%
43%
40%
24%
20%
0%
Channel partner
self-description
Internal team
research
POS transaction
3rd party
service
© 2014 C hannelinsight | Propreitary & Confidential
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THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
For channel partner segmentation data,
74% of manufacturers rely on self-description
by channel partners.
Also, 43% of manufacturers depend on
channel partners for point-of-sale (POS)
transaction data (see figure 14).
Traditionally, the manual processing of
claims and rebates has placed a huge
burden on the partner. To claim benefits, the
partner must track sales and submit claims
with proof of performance.
The manufacturer must then manually verify
these claims. This often leads to requests for
more information and delays before claims
are finally paid out.
© 2014 C hannelinsight | Propreitary & Confidential
41
THE INFORMATION “CHUNNEL”:
IS THERE LIGHT AT THE END?
Best practice in gathering POS data to support incentive programs calls for an
automated approach that can accomplish the following:
•• Automatically evaluate POS data to
determine which transactions meet
eligibility requirements for each rebate
program
•• Automatically calculate rebates
across all programs
•• Automatically eliminate errors that are
inherent in manual processing
•• Eliminate the need for “shadow”
accounting by channel partners,
leading to improved relations
•• Automatically process claims without
the need for partners to submit
paperwork
Automation ultimately leads to reduced costs by eliminating overpayments and mistakes,
and by reducing administrative costs. The result: more dollars available for programs.
© 2014 C hannelinsight | Propreitary & Confidential
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PARTNER SEGMENTATION
AND TIERING
What do manufacturers think about the value of tiering or classifying channel partners?
On average, 66% considered end-customer and partner segmentation issues as
“Important or Very Important” (Figure. 15).
Figure 15
Partner Tiering – All Respondents
5,0
Compare end-customer
segment growth to
industry benchmarks
4,0
Target incentive
programs to specific
end-customer segments
Importance 3,0
2,0
Determine optimal
partner coverage
by market segment
1,0
Prioritze channel
partners to drop
1,0
2,0
3,0
4,0
5,0
Satisfaction
© 2014 C hannelinsight | Propreitary & Confidential
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PARTNER SEGMENTATION
AND TIERING
Following are the reasons that manufacturers value tiering:
•• Prioritize channel partners
to invest in (47%)
•• Determine optimal partner coverage by
market segment (42%)
•• Prioritize channel partners
to retain (46%)
•• Target incentive programs to reach
specific end-customer segments (31%)
•• Prioritize channel partners
to drop (40%)
•• Compare end-customer segment
growth to industry benchmarks (29%)
However, only 39% of respondents on average were somewhat or very satisfied with their
ability to do so.
© 2014 C hannelinsight | Propreitary & Confidential
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PARTNER SEGMENTATION
AND TIERING
Craig DeWolf also notes: “Assuming
you have a means for measuring
performance at the partner level,
you have the basis for your partner
scorecards.”
In other words, once criteria are
established, measurement is the
key. Here again, best practice
calls for an automated system to
gather the needed data reliably,
accurately, and in a timely fashion.
© 2014 C hannelinsight | Propreitary & Confidential
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PARTNER SCORECARDS
Setting up a partner scorecard is a best practice that can address many if not all the
reasons noted above.
What goes onto the scorecard depends entirely on the nature of the manufacturer’s
business and that of the channel partners.
According to CCI Global Channel Management, below are the top ten scorecard
metrics:
1.
Total Sales Revenue
1.
Current Revenue Model
2.
Technology Expertise
2.
Vertical Expertise
3.
Operational Efficiency
3.
Company Health
4.Mindshare
4.
Business Plan
5.
5.
End-User Satisfaction
Sales Metrics
For more information on Scorecarding, please see:
Key Scorecarding Practices for Channel Success | Top 10 Scorecarding Metrics”
© 2014 C hannelinsight | Propreitary & Confidential
46
PARTNER SCORECARDS
Some basic information to consider is provided in a post by Craig DeWolf entitled
“Creating Partner Scorecards” from the CCI blog, Channel Marketing Strategies for
Success. His list includes the following criteria:
•• Minimum number of new deals
registered per year (per sales rep)
•• Minimum attachment rates for
specific products or service packs
•• Utilization rate for Co-op/MDF
spending
•• Year-over-year revenue growth
•• Close/Win ratio of all deals
registered
•• Average time to close for all deals
•• Support calls received, or received
without escalation
•• Average gross margin per sale
•• Average deal size/value
•• Close/Win ratio for all leads
distributed to the partner
© 2014 C hannelinsight | Propreitary & Confidential
47
BEST PRACTICES: PART TWO
SUMMARY & CONCLUSIONS
ENHANCING THE VENDOR/RESELLER RELATIONSHIP
© 2014 Channelinsight | Propreitary & Confidential
48
SUMMARY & CONCLUSIONS
Following is a summary of highlights from the research regarding channel partner
and end-customer segmentation:
•• Only 34% have actionable endcustomer data.
•• 54% cannot identify partner market
segments.
•• 54% rely on self-reporting for
identification of partners and endcustomers.
•• 66% believe it is important, or very
important, to use partner and endcustomer data in planning and
decision-making.
•• 87% can always or usually segment
their channel revenue by partner type.
•• Only 39% are somewhat or very
satisfied with the data available.
Regarding incentive programs, these highlights emerge:
•• 93% of Rebate Programs are
performance-based.
•• 38% calculate ROI on incentive spend.
•• Fewer than 7% pay rebates in less than
14 days.
•• 6% of incentives are overpaid.
•• 75% consider incentive program Best
Practices to be important or very
important.
•• 33% are somewhat or very satisfied
with incentive program Best Practices
implementation.
© 2014 C hannelinsight | Propreitary & Confidential
49
For Partner Tiering
BEST PRACTICE
RECOMMENDATIONS
For Incentive Programs
•• Develop reliable end-customer
segmentation data.
•• Calculate ROI on incentive spend.
•• Segment resellers based on POS
transaction data.
•• Validate accuracy of incentive payments.
•• Use segmentation to prioritize partners to
invest in.
•• Compare end-customer sales to industry
benchmark.
•• Target incentive programs to specific endcustomer segments.
•• Determine optimal partner coverage by
market segment.
•• Prioritize channel partners to drop.
•• Prioritize channel partners to retain.
•• Speed incentive payments.
•• Gain real-time visibility into incentive
program performance.
•• Identify over/under performing programs.
•• Compare performance against program
goals.
•• Test and model incentive programs
before launch.
For Both
•• Rate your importance and satisfaction for
each practice on a scale from 1 – 5:
•• Importance Scale: 1 Very Unimportant; 5
Very Important
•• Satisfaction Scale: 1 Very Dissatisfied; 5
Very Satisfied
© 2014 C hannelinsight | Propreitary & Confidential
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MOVING FORWARD
This independent survey sheds invaluable light on the current state of affairs between
manufacturers and their channel partners in the high-tech arena. One might reasonably
assume that similar results could be derived from vendors and resellers in other industry
segments.
One insight gleaned from the survey is that respondents seem aware of best practices
regarding sales incentives and partner segmentation, but don’t always have the means
to practice them! Satisfaction levels lag behind performance on a number of criteria.
The antidote: fast, accurate, timely, reliable channel data to help manufacturers better
manage and enhance their partner relationships.
© 2014 C hannelinsight | Propreitary & Confidential
51
T
CLOSING NOTES
he content presented in this eBook is intended to provide foundational information
to help with channel partner management, as well as provide best practices for
channel data management.
To assist your effort further, this information can be supplemented by other best practice
white papers offered by Channelinsight including:
1. Best Practices in Channel Partner Data Collection
2. Best Practices for Using Data To Drive Channel Sales Growth
3. Best Practice in Channel Point-of-Sale for Timely Incentive Rebates
Additional reference materials may be found at www.channelinsight.com
About Channelinsight
Channelinsight the industry leader and pioneer in channel data management, delivering a cloud-based
application and enablement services provides manufacturers with visibility into every partner and every
end-customer in every transaction, in real time – allowing them to gain the insight necessary to drive sales
and optimize inventory. Channelinsight collects “raw” POS and inventory data from tens of thousands of
channel partners globally, and processes over $120 billion in channel sales transactions annually. Customers
benefiting from this 7x24x365 solution include: HP, TE Connectivity, AMD, Sharp Electronics, Microsoft, Smart
Technologies and more. Channelinsight is backed by Rho Ventures, Sequel Venture Partners and Vedanta
Capital, and is headquartered in Denver, CO with offices in Palo Alto, CA, as well as globally.
© 2014 C hannelinsight | Propreitary & Confidential
Channelinsight
CORPORATE HEADQUARTERS
1875 Lawrence Street, Suite 1200
Denver, CO 80202
Phone:303-293-0212
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