Is tiering still relevant? Is it the best approach for a partner program or are there better options to consider?
These questions float around in the minds of many channel leaders. The answers depend on how the partners use the program, focus the program on specific areas, strategically structure the tiers and utilize program tools to make effective changes.
Let’s go through the basics of tiers and some of their potential shortcomings.
Related: Dig deeper into whether tiers are right for your channel program with our white paper, Evolving Partner Program Levels & Tiers to Modernize Your Channel Program.
Start With Tiering Fundamentals
Tiering (program levels inside a vendor channel program) dictates the requirements, awards and benefits partners earn based on their performance. Historically program creators label tiers by types of metals (i.e., Bronze, Silver and Gold).
Tiers and levels are a tool to productively scale things like rebates, margins, service and support levels, marketing tools, training, enablement and vendor resources. The higher levels are often unlocked by meeting a threshold for transactional revenue and training criteria.
If you’re dealing only with product resellers, tiers are great. These partner types represent the brand, put products in the hands of customers and help reach new markets. Program tiers are an easy way to manage straightforward investment levels based on reseller revenue and profit.
Why Many Partner Program Tiers Need to Evolve
Most tiering levels haven’t evolved with the world and the way people buy and sell products now. Consider, for example:
1. Industries are adding recurring and service-based revenue.
These recurring revenue streams take many forms, including XaaS, SaaS, MROs, consumption or premiums.
2. There’s been a decline in relationship-driven sales.
Companies now need to market themselves as a brand, have a strong digital presence and sell on quality or price.
3. Solutions are getting more complicated.
Technology is changing how people do business, adding complexity and new roles to channels. Buyers want niche expertise. With so many ways to buy products, competition is fierce.
Because of the changes in how people buy and sell, traditional tiering can seem outdated instead of rewarding. Channel leaders don’t want partner programs that feel irrelevant or only significant to a small fraction of partners.
Tiering is also ill-equipped for adding new partner types. Because new partner types have different needs, you may be prompted to add additional programs with new tiers inside of them. Unique programs mean additional tracking, numerous log ins and extra rule structures to navigate for partners. They also increase workload for the internal teams who must maintain the systems.
In the white paper, we share in-depth research from the partners’ point of view on how tiers in vendor programs can be ill-equipped for their needs.
3 Steps to Move Away From Tiering to Evolve Your Program
Let’s say partners provide feedback that your program tiers feel inflexible, complicated or built for a different partner type. The next question would be, “How do we fix it?”
The trick is to focus on segmentation instead of tiers. Start with these three steps.
1. Evaluate Current Programs
You need a solid grasp of where you are before you can plan for the future. In the white paper, we include a thorough list of questions to ask, including:
- How many programs do you have in place?
- Who is eligible?
- What are the requirements to participate?
- What benefits are available?
- How are benefits earned?
- What benefits are being used and by whom?
- How many partners does the program reach?
- What roles inside the partner channels are you focused on (e.g., partner owners, sales reps, marketing, technicians, etc.)?
Compare the answers and see where they overlap. Then add in partner and internal feedback. Use this data as a foundation for what’s worth keeping and cutting.
2. Align Your Current State to Future Goals
With your foundation in hand, layer in your business goals.
- Where are you trying to go as a company?
- What specific goals do you have for your channel?
- How do you hope to grow revenue? (e.g., in new product areas, specific high-margin products, services, different payment types, etc.)
- How can you grow partner capabilities and competencies?
Knowing where to take your business will help determine how to re-structure your channel program successfully. It’s useful for identifying partner types, coverage gaps and alternative roles to focus on inside your program.
The process might create the impression that you need even more programs to meet your needs, but that will increase administrative headaches. Tiers alone can’t solve the problem.
The good news is that it’s possible to encompass multiple goals and partner roles inside a single program with technology already in the market.
3. Redefine Tiering & Levels to Focus on Segments
The third step takes all the information and ideas gathered in the first steps and moves toward segmentation instead of tiers and levels. The key is to account for all the variation in a single program by using advanced segmentation.
In a consolidated partner program, segmentation is like flipping the complexity on its head. It makes the program simpler for partners to use and internalizes the rest of the details.
Segmentation (Not Tiers) Allows for Personalized Channel Programs
Collecting partner information can help deliver relevant benefits, enablement and promotions by allowing for personalization. With more personalized channel programs, partners are more inclined to increase sales and influence the purchase of your brand’s products and services.
Related: Curious how personalized channel programs impact sales? Check out the data in our commissioned Forrester study.
As partners grow their business to add new products, services and capabilities, segmentation lets you grow with them without needing a new program.
Learn more about tier levels, take a self-assessment on their effectiveness for your partner ecosystem, and discover if your channel should move toward segmentation. Download the white paper today.