Alarm bells should be ringing in technology vendors’ boardrooms as further disappointing high street sales figures point to more widespread economic difficulties. Technology vendors will not be immune from the downturn, but if they are to weather the storm they will need innovative and more effective tactics to support their mid-tier channel partners who are particularly vulnerable to fluctuations in SME spending.
Recent research conducted by CRN and UBM Channel Research, commissioned by ICLP, highlights shortcomings in many existing channel partner incentive schemes in the technology sector. The research focussed on five key roles within partner organisations (managing director, sales, marketing, technical and procurement) and looked at what they receive, want and value from their partner programme. Results indicate that a successful mid-tier partner programme depends on simplicity, consistency, good communication, more personal incentives and differentiation among recipients.
If vendors want at least to maintain sales, they need to re-evaluate their incentive programmes because nearly 90% of channel partners are not getting the rewards they want. And 82% of partners want vendors to be more dynamic with channel programmes. In short, vendors need to incentivise partners through channel programmes that are more generous and more attractive than their competitors’ schemes.
While many technology vendors already support their place in the market with incentives for loyal channel partners, there is a marked disconnect between what individuals in key partner roles actually receive and what they perceive as worthwhile incentives in the current economic climate.
Vendors who fail to address this mismatch risk losing market share and revenues as partners’ employees switch allegiances and promote competitors’ products instead.
Shortcomings in existing programmes
Overall, every role identified at mid-tier partner level is seeking a simple, consistent vendor partner programme offering valuable benefits with rewards they want, which are also easy to claim. The smaller mid-tier channel partners have limited resource means vendors need to appreciate that they only value those which can materially help them grow and run their business. Better supporting will be the key to increasing their share of the partner’s revenues.
If vendors are unable to provide dedicated partner managers for the mid-tier they should work closely with distributors who already have the resources, relationships and influence in place. The survey results show that the Managing Director role already perceives the distributor to be valuable and that over 85% of partners are likely to be influenced by distributor recommendations for vendor and product choice.
Shift from corporate to personal rewards
Generally, partners at all levels want a shift from corporate to personal rewards – reflecting individuals’ response to forced cutbacks on their personal spend because of the economic climate.
55% of respondents within a Sales role stated that they receive shopping vouchers as a reward from vendor partners but would prefer hotel accommodation, flights and dining experiences.
This is a stark contrast to those in a Technical role – whom would actually prefer to receive shopping vouchers rather than branded merchandise. Whilst ICLP appreciates that technical teams are often the toughest to influence, many vendors often overlook their potential to increase revenues.
In order to roll out a successful partner programme and maximise up-take, vendors may need to review the rewards currently on offer to ensure they are better aligned with the wants of the each recipient.
The results demonstrated that regardless of role, it is acknowledged that the main benefits currently received by mid-tier partners are pre/post-sales support and education and enablement.
However when reviewing the benefits valued, there was clear distinction between each of the roles which clearly reflected their business priorities and potentially how their individual performance was measured.
76% of those in a Sales role claimed pre-sales support and education are currently the main benefits received however, rewards, evaluation and demo equipment, were listed as those most valued. Demo equipment is central to generating more end-user sales and where sales team are comfortable and familiar with the equipment, they are more likely to recommend it to the end user.
Marketing roles, being rewarded based on company performance, are evidently looking to generate new opportunities through strong leads for the sales team to convert. Vendors should look at ways of better supporting the marketing team with lead generation activities such as email campaigns, telemarketing, joint collateral development and presence at relevant exhibitions. This relatively minor change could forge stronger relationships between vendors and partners.
Procurement teams also see benefit in additional sales leads, which would increase orders and purchasing power – possibly even improving status from mid-tier to upper-tier partner.
Overall, technology vendors are not completely off-beam with their channel programmes, but in the current economic climate there is urgent need for them to improve delivery.