Channel technology service providers are leading the push to streamline channel operations by embedding payments functionality within their solution architectures…
Dispelling Myths About Global Channel Incentive Programs
Dispelling key myths about global channel incentives from program management to partner rep engagement and reward choice.
Launching a global channel incentive program to motivate partners and their sales reps requires focus, collaboration and discipline to work through the many obstacles to implementation. Here, we examine three such “myths” that often enter into discussions about global channel rewards programs.
The Program Management Myth – Managing Partner Incentives Globally Is Not Feasible
Channel incentives, particularly, any incentives aimed at individual or team members that are employees of the channel partners, operate differently in different regions and countries. Cultural, regulatory and market differences often lead to the decision to manage all such incentives locally.
Channel technology has evolved to support global program management including partner incentives offering global payment distribution options to reward both partner organizations and their front-line employees.
Often, the results are programs that are designed by overstretched teams to meet hyper-localized conditions using manual processes and spreadsheets or outsourcing the requirements to local agencies that create disparate, duplicate programs infrastructure on proprietary systems that do not connect to the company’s data while duplicating the core functionality in every region. Meanwhile, global channel incentive automation becomes more difficult the more entrenched each regional, bespoke program becomes.
Of course, when it comes to maximizing impact with customers, channel partners and partner sales reps alike the well worn maxim to “Think Globally. Act Locally” still applies. But if you’re managing a global partner network, you need to think and act globally! Strategically, that begins with understanding how the incentive supports the overall partner value proposition globally.
Operationally, the program management and resource strategy should be clearly set:
1.Create a consistent program management framework and infrastructure to support the partner experience
- Program Branding
- Terms & Conditions: Tax and Compliance
- Offers & Promotions
2.Establish program governance that clearly lays out roles & responsibilities for global and regional teams
- Offers & Promotion Funding
- Offers & Promotion Design
- Program Communications
- Partner Management
While it may not be the first consideration, ultimately, the foremost consideration in the program execution or implementation stage must be the partner experience. Channel automation tools can enhance that partner experience and simplify the channel operations tasks by replacing processes built on spreadsheets and emails.
In the implementation stage, the benefits of using a global rewards platform to provide for a consistent, branded experience that can be locally adapted through simple configurations becomes clear:
- Program flexibility can translate into the ability to act locally
- Operational efficiency means partner ease of use and speed of payment
- Participant reward choice can result in higher levels of partner sales rep engagement and partner satisfaction.
The Audience Myth – Engaging Individual Sales Reps Is Not Possible
The challenge with engaging individual sales reps is that not all markets operate under the same regulatory and cultural norms.
In North American and Latin American markets, it is common practice for vendors to spiff partner sales reps directly in partner organizations that permit such offers. In other words, they do so with the partner organization’s consent.
Not all firms will want their reps to participate. That’s their choice. But it shouldn’t stop a program manager from creating a program that’s effective for those that do participate. When surveyed, nearly a third of program respondents have reported that their firm only permits participating in ‘approved’ spiffs, while less than 10% reported that their company did not allow any participation. To a program designer, that should be good news. It is a best practice to get both management and sales reps engaged in any incentive or spiff in order to maximize participation levels.
Outside the Americas, the practice of directly rewarding individual partner employees can be a challenge. In the EU and other countries where rewards directly to individuals can run afoul of co-employment laws, any earned incentive payments can be aggregated at the company level.
From a program design perspective, however, don’t lose sight of program objectives which likely include creating higher levels of engagement and loyalty for your solution with those in direct contact with the customer and gaining deeper insight from the data generated by the incentive program. To do so, ensure that program claims or transaction data capture continues to include the individual partner employee so they can be engaged and recognized, if not rewarded directly.
Next, ensure that the rewards payments and supporting data aggregated at the partner level shows the individual and amount earned and provide the partner company with a means to easily redirect the earnings from the company’s account to the individual. Without the information and turnkey process, asking your partners to redistribute any earnings is adding an administrative burden that’s unwarranted. Using digital wallets makes transfers from company level accounts to individual accounts simple and straight-forward.
The Reward Myth – Is Cash or Non-Cash a More Effective Motivator?
When it comes to the question of what’s the best reward – cash, merchandise, travel, prepaid debit cards, gift cards, unique experiences, merchandise – there seem to be two camps: “Cash is King” vs. “Non-Cash is more effective.” Well, here’s a surprise – they are both right. Perhaps that’s because they aren’t addressing the same question.
In the ‘Cash is King’ camp, proponents would offer two key advantages:
- It’s often the easiest and most efficient way to reward someone for completing a sale or specific activity.
- Reward recipients, when asked, consistently select cash as their preferred award.
Cash rewards are an effective means to motivate a desired behavior change. And with the advent of global multi-currency digital wallets, paying rep SPIFs in local currency is no longer an operational nightmare.
But behavioral scientists and those in the “Non-Cash is More Effective” camp will also tell us that the behavior changes are also likely to revert once the cash incentive is taken away. From an optimizing your incentive budget this suggests that the best use of cash incentives is for gaining attention, initial awareness and consideration and adopting new behaviors. Perhaps that’s why most SPIFs are paid in cash.
The problem with many ‘non-cash’ options, however, is in their execution – they don’t scale. Travel incentives can be incredibly powerful when they link performance and achievement with an exotic location and access to senior executives. However, for all but the very highest performers, they are unaffordable and often require a prohibitively large commitment of executive time.
Meanwhile, most incentives are aimed at moving the middle performers because that’s where the biggest ROI is found. And the most common ‘non-cash’ alternatives used for these purposes are gift cards, prepaid debit cards and reward points. Non-cash alternatives can also prove important when direct cash payments are precluded for cultural or legal considerations.
These are all important considerations when designing partner and partner rep incentives, but what about the partners or partner reps’ perspective?
When asked, incentive program participants consistently say that choice is highly desirable. While it is true that when given a choice they tend to elect cash or cash equivalent options at a very high rate; nevertheless, they prefer being given the choice so program designers should factor that into their program development efforts. This includes options to directly deposit funds to their bank account or place funds on a virtual debit card for immediate use.
Please share your ideas, insights or other ‘myths’ you may have discovered about creating a channel incentive program.
Contact us to see how XTRM takes away the complexity, cost and compliance burden of making global, secure and instant cash or non-cash payments – anywhere across the globe.