In the quest to generate more sustainable brand commitment and better brand performance, operating channel incentive programmes has become a critical part of the overall marketing strategy for many businesses, according to a new white paper from Maritz.
In the paper, entitled 'Driving Channel Performance', Michael Spellecy shares insights and strategies to help vendors and channel partners build better business relationships and facilitate the co-creation of more effective channel partner management solutions.
Between 40% and 90% of high technology sales are sourced through a channel partner, dealer, or value added reseller and, with so much riding on the effective management of their distribution channels, vendors need solid relationship management programmes based on mutual trust.
According to Spellecy, these programmes must be reinforced by genuine business relationships that naturally generate loyalty and brand alignment. However, many vendors are currently facing decreasing satisfaction - from both channel partners and end users - because they have been unable to build this kind of sustainable business relationship.
Many vendors, particularly in the technology industry, already recognise channel loyalty as a key goal that provides a path to better business results, improved end user satisfaction, increased revenue, and stronger brands. But, despite the billions of dollars that have already been invested in Partner Relationship Management (PRM) strategies and programmes, Maritz was surprised to find that partner satisfaction is actually in decline.
One possible explanation for this finding is that many vendors are voicing concerns about business alignment with channel partners. While vendors struggle with business alignment, channel partners are also expressing frustration with vendors. Sales performance incentive funds (SPIFF) and market development funds (MDF) are still the main approach used to motivate partners, but these tactics often prove ineffective in the long term. The reason for this is that they sometimes fail to provide the motivating incentives necessary to build a high-performing distribution channel, while factors such as expansion into the SMB market also introduce significant challenges for vendors.
Today's channel partners require channel management solution improvements such as stronger integration with vendors, better sharing of information, and more relevant employee training. In addition, channel partners are now seeking greater recognition as well as incentive programmes that reflect a more informed understanding of their business.
Both vendors and partners desire the same basic business results: profitable and sustainable business, increase revenue, and satisfied customers. But while their similarities are great and their differences are often small, fundamental failures to effectively manage the channel partner relationship are still far too frequent. According to Spellecy, "Companies that understand and support channel partners' business goals and collaborate with them to achieve shared success, are more likely to be successful."
The full white paper has been made available for free download from Maritz' web site - click here (free registration required).
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