Channel Incentive Programs: Partnering for Success

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Channel Incentive Programs: Partnering for Success

Manufacturers and vendors use channel incentive programs to motivate their channel partners to sell their products with greater interest and enthusiasm. Channel partners, such as distributors and resellers, are rewarded handsomely for their efforts through these sales incentive programs.

Although selling products via partner ecosystems is not easy, manufacturers and vendors now spend more and more towards incentive programs because they know such spending results in greater sales.

Types of Channel Incentive Programs

Incentive programs can be based on programs, objectives, performances and activities. Some of the most popular programs are as follows.

Rebates: When resellers, distributors or partners achieve certain sales targets, they receive money or discounts on large purchases.

Market development funds (MDFs): Manufacturers provide these to help partners market and educate customers about their products.

Sales performance incentive funds (SPIFs): Manufacturers offer these to individual sales representatives when they reach a certain sales target.

Gift cards: These are one of the most popular methods of rewarding partners. In 2017, manufacturers spent US$24 billion on gift cards for their incentive programs.

Loyalty programs: These are based on long-term use, contests and sales promotions.

Creating Successful Channel Incentive Programs

Your incentive programs need to be exceptional, to be noticed and appreciated among the innumerable incentive programs available to your partners nowadays.

While creating your channel incentive programs, keep the following in mind.


Research what works and why before you start any channel incentive program. Thoroughly analyze the target audience and channels, and check your competition and the necessary legal protocols. Don’t launch programs prematurely in a bid to overtake or catch up with your competitors.

Understand the current market trends, the success your incentive program can realistically expect and the elements that can ensure its success. Check what your channel partners prefer, and offer a wide spectrum of incentives.


Set clear, measurable qualitative and quantitative objectives. You can measure the quality of your programs in terms of participant satisfaction and an increase in brand awareness or mindshare. Quantitative objectives can be sales growth, product sales, enrollment rates, market share increase and overall ROI.

Once you decide on your objectives, document them. Distribute the document to serve as a guide that can be referred to later.


After defining objectives, develop a strategy to execute them well. Begin by identifying channels suitable for your products, generating interest through clever promotion and distributing leads.

Choose the best channels for each product. Have a clear idea of how much to spend to maximize partner activity.

Review incoming data and feedback regularly. Be prepared to face any obstacles or problems, and be flexible enough to make quick changes.

Choice of Channel Partners

Channel partners generally fall into three categories: traditional, where the partners collaborate with vendors using traditional methods, such as phone or mail; cloud-based, where the partners interact with vendors via cloud-based systems; and hybrid, where partners use both traditional and cloud-based processes.

Regardless of your industry, you have to engage partners belonging to all three groups by creating and mindfully implementing your incentive programs.

Find the right partners by checking if they align with your expectations. Ensure that they fare well in experience, expertise, assets and sales revenue, using the latest technology, handling operations, compliance with laws and regulations, market influence, employee relations, community relations, customer service, etc.

Due to the deluge of incentive programs, partners may not appreciate constant interaction. Conversely, if you don’t interact with them and educate them about your products and programs, they may be overlooked. Strike a balance to remain in constant, yet unobtrusive contact.

Your channel partners are bound to have strengths and/or weaknesses. Build good long-term relationships with them so that you are able to respond well to their needs.

Implementing Channel Incentive Programs

You don’t need many channel incentive programs; you need only a few robust, targeted, comprehensive programs. You can ensure that they are successful in the following ways.

Enroll and engage first: Focus on getting channel partners on board first. Introduce them to simple things first so that they easily engage and internalize what would help them succeed. Complicated programs can be implemented later.

Ensure ease and interest in participation: Make participating in your incentive programs positive and easy to sustain your partners’ interest in them. Encourage healthy competition by including competitive challenges and rewarding good performances.

Introduce compulsory, but reward-based, training: Training makes salespeople effective and successful. The more your channel partners learn about your products, the more likely they are to push them.

Be accessible: Learn about new trends and communicate them to your partners. Always be available to respond quickly, clearly and consistently to their queries.

Use your internal sales force well: Your internal sales team can act as brand ambassadors to promote your incentive programs. Offer them rewards on various metrics so that they maintain good relations with your channel partners.

Give priority to partner needs: Offer programs that are easy to understand and have realistic goals. Many partners are financially dependent on your incentive programs. Offer cash incentives whenever possible and avoid prizes that have complications associated with them.

Communicate well: Use all communication methods available. Ensure that your messages are clear, precise and convey your intentions and expectations.

Measure success: Select an appropriate method to measure the effectiveness of your programs and the efficiency of your partners.

Pay up promptly: Always pay your partners on time to avoid problems in your relationship. Process all paperwork related to claims quickly and fairly.

Learn from your failures: Your incentive programs may fail–they may have flaws; you may not have presented them clearly to your partners; or they may be completely derailed due to unforeseen circumstances. Apply logical and reasonable changes for continued success.