Changing Channels: SiriusDecisions Says "Finding the Right Mix" Key to Driving Demand
SiriusDecisions has learned that while channel marketers are looking to trim back given the new reality of the global economy, industry leaders are still managing to grow their businesses by employing the right mix of incentives.
Wilton, CT (PRWEB) June 16, 2009 -- From that first report card, to playing kickball in the schoolyard, we quickly learn the importance of "keeping score" and gaining a competitive edge -- life lessons that certainly apply to business. In these belt-tightening times, when the need to drive revenue and battle for market share becomes particularly intense, a new SiriusDecisions b-to-b channel survey reveals that "a mixed approach" is now generating the most demand.
After conducting in-depth interviews with over 50 suppliers, distributors and channel resellers, the research and advisory firm has learned that while channel marketers would love to find one "silver bullet" for instant success, best-in-class companies are producing the highest channel returns by employing a multiple-incentive strategy.
To support these efforts, SiriusDecisions has developed a unique framework, the TRED model, that enables channel professionals to better allocate resources and programs to achieve corporate goals. Designed to address the four key layers of b-to-b channel investment -- technology, recruitment, enablement and demand creation -- the TRED model allows suppliers to compare channel incentives both internally and externally to measure effectiveness.
"Based on our channel survey and my regular conversations with top channel executives, I can't emphasize enough how important the 'measurement' aspect is to successful channel marketing," says Laz Gonzalez, SiriusDecisions' research director and head of its Channel Management Strategies (CMS) advisory service. "In fact, the VP of a global IT supplier recently told me: 'We will not fund what we cannot measure.'"
By leveraging SiriusDecisions' TRED model, suppliers can work with partners to determine their most effective integrated, multi-level approach to optimizing channel incentives. Commonly used (and misused) incentive fund types include:
-- Volume incentives. Funds allocated for partners reaching pre-determined, usually longer-term revenue-oriented goals; partners often rewarded with points that may add up to additional margin or redeemed for prizes.
-- Co-op funds. Costs split evenly by supplier and partner. Date back to when suppliers shared cost of running ads with partners to jointly promote product or service; have now evolved to paid search, email campaigns and social media.
-- Contra funds. Controlled by strict accounting guidelines and often used by larger companies, these can accumulate much like volume incentives, but differ in that they're often tied to completion of special activities (frequently involving third-party services). Preferred by partners due to their ongoing use; allows them to offset execution costs.
-- Market development funds (MDFs). Typically describes marketing programs developed by channel in conjunction with sales to target specific goal. Partners accrue marketing dollars or points based on percentage of sales; can have greatest near-term impact.
"While most vendors continue to fund MDF programs, it's interesting to note that our research shows that a significant portion of the reserved funds go untouched," says Mr. Gonzalez. "According to our survey findings, utilization rates for MDF dollars can range from 50 to 75 percent, but at a minimum 25 percent go unused. Suppliers must increase communications by applying social media tactics or optimizing their partner portals to address this major adoption issue."
Mr. Gonzalez continues: "Another interesting data point from our channel survey involves processing rebates. The average turnaround for promotional claims filed by distributors is three weeks, compared to just seven days for best-in-class respondents. The survey also revealed that points-based incentive programs which set mid-range goals and rewards seem to work best in this economy."
Summing up, Mr. Gonzalez says: "The key to determining your most effective channel incentive mix is to set goals and offer rewards that will directly influence partner behavior during the sales process."
To learn more details about this survey and how to optimize your channel incentive strategy, please contact Laz Gonzalez at lgonzalez @ siriusdecisions.com.
About SiriusDecisions:
SiriusDecisions is the world's leading source for business-to-business sales and marketing best-practice research and data. SiriusDecisions Executive Advisory Services, Consulting Services, Benchmark Assessment Services, Learning and Events provide senior-level executives with the sales and marketing operational intelligence required to maximize top line growth and performance. The unique combination of thought leadership, benchmark data, analytic tools, best practices and access to a peer and analyst network allow SiriusDecisions clients to quickly receive the critical insight they need to make decisions effectively. For more information about SiriusDecisions, headquartered in Wilton, CT, visit: http://www.siriusdecisions.com.
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