The 9 Drivers for Automating Channel Incentive Program Management (CIPM)
Building The Business Case For a CIPM Technology Platform
There’s no doubt that a well-designed channel incentivization strategy – and the incentive programs that flow from such – pays big benefits.
It doesn’t take long for that success to manifest as program expansion, involving hundreds or thousands of partners, and dozens of programs.
But (and this is the industry’ dirty little secret (well, maybe not so secret)) the vast majority of channel incentive-fueled revenue operations (incentive program management) is run on the backs of spreadsheets.
- Until recently, viable channel incentive program management (CIPM) software solutions didn’t exist.
- Channel executives and technology decision-makers go with empty hands to the CFO to justify chantech investment.
But things have changed…
- Robust commercial CIPM platforms are readily available today.
- This report will outline how to build a ROI-backed business case for CIPM technology investment.
It’s Time For Channels To Move Into The Modern Tech Era
Operations executives/organizations have long employed a technology strategy to fuel and monitor their functions (think: ERP), as have sales executives/organizations (CRM). Until recently, channel executives/organizations were “holders-on” of the spreadsheet, but now even they have largely embraced modern marketing automation technology.
Like their corporate marketing brethren before them, channel marketing and operational professionals have long depended on the ubiquitous spreadsheet to manage channel programs.
The problems with that approach?
Spreadsheets Don’t Capture Business Process
Channel incentive programs are more than a point in-time financial model – they represent a number of business processes: design/model, approval, test, launch, progress, fulfill, etc.
Channel Partners Have No Visibility of Their Program Participation and Performance
Those 25MB spreadsheet files are not just bloated – they’re for internal use only, not to be shared with channel partners. So, channel partners get nothing, other than perhaps an email when the program launches, and another when it ends.
[Note: goal progression monitoring is a great motivator in and of itself.]
Spreadsheets Don’t Scale Well
The spreadsheet is a great personal productivity tool, and can even work well with a small group. But the spreadsheet was not designed to support hundreds or thousands of partners (and thousands or tens of thousands of partner company employees) or dozens of program models. One channel executive of a network tech vendor interviewed for this report said:
“We were maintaining 300 partners and a handful of incentive programs in a spreadsheet, a spreadsheet that had grown to 25MB and was about ready to blow up.”
CIPM Process Automation
Cuts Costs, Gets You Faster Time-to-Market
Modern CIPM as represented by the Channescaler platform include a robust business process automation engine. In particular, business process automation begets big efficiency gains in the form of:
1. Accelerated Program Design Time
Channel program professionals employ modern CIPM tools
to model and test incentive program designs iteratively,
adding, discarding, and refining program parameters to
optimize programs. Design time can not only be reduced,
but the end product is almost always better (i.e. more
successful in the field).
2. Faster Program Fielding Time
With CIPM process automation, not only is design time
reduced, but so is review, approval, and test time.
In competitive situations, i.e. where other vendors wield
incentive programs as a competitive weapon, faster time
to field can often result in market share gains. [N.B. These
market share gains can be temporary in nature, unless
fortified with a long-term loyalty program (see “The Not-So-Obvious Upside: Long-Term Loyalty … and Market Share”).]
3. Reduced Fulfillment Verification Costs
Incentive programs can be designed as front-end programs (additional discounts) or back-end programs (rebates, spiffs)(ii). For back-end programs, CIPM solutions automate the verification process and reduce the associated time dramatically.
Automation also eliminates the situation in which, with only a spreadsheet at hand, verification isn’t done, resulting in huge costs in the form of overpayments and clawback accounting.
CIPM Partner Visibility
Drives Participation/Engagement, Cuts Additional Costs
As noted, the oft-used spreadsheet is the tool used by channel program managers to model incentive programs … but channel partners get zip. CIPM platforms deliver the incentive programs into the hands of channel partners. Through a portal, channel partners can examine and subscribe to programs; are apprised of their progress compared to that of peers or against goals (gamification); can submit proofs of purchase; and can redeem points for rebates or rewards.
Channel partners’ visibility into the incentive programs they participate results in:
4. Reduced Support Costs
Without that visibility, partners resort to phone calls or
emails to get information on programs and updates on their
participation progress, placing a significant contact center
burden and cost on the tech vendor.
5. Increased Participation
Our research has shown that channel partners’ participation in incentive programs increases significantly in circumstances where they can monitor and self-manage their participation.
With CIPM: 10-100% increase participation
Corollary 1.
↑ Partners Visibility & Well Designed Programs = ↑ Participation
6. Increased Near-Goal Effort
With visibility, partners can see when they approach performance/reward goals. Research indicates that partners will strive harder the closer they get to a goal.
With CIPM: Faster goal attainment, more partners over achieve their goals
7. Revenue Uplift
Greater participation and near-goal effort correlates directly to increased revenue production (see Corollary 2).
With CIPM: 1.5 – 3x revenue production
Corollary 2.
↑ Participation & Accelarated Goals Achievement = ↑ Revenue
CIPM Program Insights
Match the Right Partners to the Right Programs
Some modern CIPM solutions sport a robust analytics capability – not just for monitoring in-field programs, but to
analyze program effectiveness and partners’ engagement (think: heat maps). Such learnings are invaluable for:
Channel partners’ visibility into the incentive programs they participate results in:
8. Smarter Targeted Investments
Attributional analytics are invaluable for designing future programs and directing marketing & program investment to those partners with which those program elements have resonated in the past.
The Invisible Upside:
Long-Term Loyalty … and Market Share
Too many channel incentivization strategies are based on short-term objectives.
“Can we boost revenue for a slow product this quarter?”
“How can we reduce overstock?”
“We’re taking a beating by our competitor’s program.”
But short-term incentive programs can have benefit beyond the scope of their terms. Incentive programs, designed well – both as standalone programs or in conjunction with one another – can have an even greater impact as “components” of a long-game loyalty program.
For example, consider the NASCAR racing circuit points system: Drivers earn rewards for each individual race, but also accumulate points for achieving various performance goals in those races – points, that when accumulated over the course of a season, get them into the big-stakes post-season Playoffs (see Figure 1). Similarly, long-term partner loyalty can be engendered by “stringing together” complementary incentive programs, which have both a short-term and accumulation benefit to partners, as components of a “macro” program.
Loyalty is ultimately affected too, as a result of the aforementioned drivers for considering CIPM technology solutions.
In essence, partners’ technology user experience (i.e. partners’ involvement and participation in the CIPM solution), from simple visibility to gamification to BI visualization, is, as our research indicates, a direct correlate to:
9. Increased Long-Term Partner Loyalty and Market Share
A positive technology user experience for partners is a critical ease-of-doing-business (EODB) factor, which is increasingly a critical decision point for guiding partners’ investments in their vendors. And EODB results in higher partner engagement levels, which yield loyalty behaviors and, ultimately, increased market share (see Corollary 3)
COROLLARY 3.
↑ TECHNOLOGY UX = ↑ EODB = ↑ ENGAGEMENT = ↑ LOYALTY = ↑ MARKET SHARE
Summary
Spreadsheets and email do not represent a modern technology approach to strategic Channel Incentive Program Management (CIPM). Channel automation solutions such as the Channelscaler platform create competitive advantage for Vendors leveraging the channel as part of their go to market model and improve ease of doing business for their channel partners.
