Industry Outlook – The Evolving Impact to Channel & Incentive Programs

ITA Group
ITA Group

blank etch a sketch on desk

The current state of our lives, businesses and industries is a bit like an etch-a-sketch in that every time a clear picture starts to take hold, something shakes it up and leaves a blank slate. Adapting to these changes takes courage, effort and a willingness to evolve.

Below are some of the market impacts we’ve seen drastically affect channel programs and their participants. Are you also feeling any of these realities?

Understand that some industries could be seeing opposite trends, which seems counterintuitive, but different industries are experiencing varying impacts of market conditions. Take a look below and find some suggestions for how to respond to an assortment of disruptions.

1. Inflation

Market Impact: Inflation has increased prices in every industry.

Program Impact: In some industries, programs that have established year-over-year (YOY) growth objectives based on sales dollars are seeing participants at times breeze through the objective with little true incremental effort and volume growth. The increased prices for the same goods is pushing them to the goal faster than before. This can impact ROI as not all growth is equal margin growth and you could be making payouts without incremental margin contributions.

Suggestion: A few things could help: shift goals to measure on volume or units, adjust thresholds for new pricing increases, or set margin-minimum goals.

2. Increased Distractions

Market Impact: With so much disruption everywhere around us, continued changes to supply and demand, paired with evolving go-to-market efforts—the channel can’t keep up.

Program Impact: Programs that have gates, thresholds, requirements and other layers of qualifiers to receive an award used to be the norm, but clients are acknowledging the need to simplify the incentive design to increase and maintain engagement as well as motivation.

Suggestion: Program messaging and the ask has to be clear and simple to remember. Otherwise, you’ll risk not getting any attention. Leave the complex rules and qualifications out and keep it simple! Research conducted by Forrester and commissioned by ITA Group showed the most challenging aspect of vendor programs is the amount of effort it takes to participate, qualify or advance, and the sheer number of competing promotions. Vendors should focus on simplifying the entire program experience.

3. Uncertain Demand

Market Impact: Uncertain demand, hard to forecast growth, and the perceived struggle in asking the channel to “do more” during a market disruption.

Program Impact: There’s a decrease in the desire for channel programs with a straight and pure “Pay for Growth” mentality where you ask them to do more every year. Partners are asking for more tier-based designs that unlock benefits and recognize those contributing overall volume versus only YOY increments.

Suggestion: Use technology to minimize friction or confusion. Refresh your program goals and be sure to show progress towards them in your portal or through regular communications. Offer benefits that matter to each role and allow choice for the best effect.

4. Supply Chain Disruptions

Market Impact: From cars to computer chips and refrigerators to couches, it’s a difficult situation to create incentives for sales when there are back-orders and other restrictions in the supply chain to deliver the product.  

Program Impact: Having incentives in place at the wrong time can create unintended consequences and maybe even create end-customer issues if product can’t be delivered after a salesperson has completed a sale.

Suggestion: New strategies will need to be implemented to keep top performers engaged for the long-term. Consider incentives focused on retaining customers, offering service and maintenance packages, rewarding for relationship building activities, and reskilling to prepare for the future of demand.

5. Expanding Ecosystems

Market Impact: Companies are looking for new partner types to meet shifting customer demands and additional partners to break into new markets.

Program Impact: There is a need to enroll and activate dormant partners, but also identify and recruit new partners. Existing value propositions may be outdated or not resonate with new partner types and markets.

Suggestion: Organizations should look to revamp and amplify their value proposition to new non-traditional channels. Don’t just create a communication plan emailed and mailed to a defined list. Consider looking into list creation and scoring to identify who might be strong with the competitor brand, but not buying from you (we can help with this). These can become targets for direct recruitment and special incentive offerings to onboard. Make sure to stand out from the crowd.

6. Augmenting Sales With Service & Support

Market Impact: Shifting focus to move past sales and into service and support.

Program Impact: Programs are struggling to add and manage additional roles to reach with total engagement. For example, the business owner/principal/GM/locations level requires broadening the scope of channel programs to brand awareness, advocacy and risk reduction. These partners need more than traditional rewards—they need things such as lead generation, distribution, marketing tools and support, training, MDF funds, etc. since they’re focused on improving their small businesses.

Suggestion: Focus on segmentation, creative variety in rewards, and applying specific incentives to the right level of person (owner, rep, support, technician, etc.) by using personalization-ready technology and journey mapping.

7. Drained Workforces

Market Impact: Take two on the increased distractions of our new normal; these changes are draining energy and focus faster than ever before during a work day.

Program Impact: One-size fits all programs are finding themselves with waning engagement. Participants can’t find the value or what’s in it for them and abandon efforts for training, claiming, and participating when things aren’t clearly aligned to their goals.

Suggestion: As you build engagement strategies, harken back to the original goal, “help each person know what to do next”. Are your efforts making it clearer, easier, and simpler to participate for the person engaging in your program? Invest in personalization and journey mapping to help partners with quick access to tools, progress, next steps and content to create a valuable experience.

8. Skills Gap

Market Impact: The number of skills required for a single job is increasing 10% year over year, and 46% of channel leaders face challenges in getting partners to adopt new technology or services.

Program Impact: As part of the effort to re-train salespeople or encourage partner owners to change how they do business, incentives to learn and adopt to new elements are being incorporated for many roles, including customer service reps who are responsible for service levels and support.

Suggestion: Reward and train on customer service, implementation, up-sell/cross-sell, new skills, etc.

Find a place inside your program that you can adapt to the changing market with grace and updated strategies.

We can help, let’s talk.