How can vendors create incentives for a new generation of non-transacting partners?
The last couple of years have seen an influx of new types of partner in to the IT channel. This new demographic comprises non-transacting players in the shape of referral, influence, consulting partners. As such, vendors are working out how they can reconfigure their partner programs to accommodate these new partners. This includes incentivizing them – how can vendors create incentives for a new generation of non-transacting partners? Should they stick with the same or use different incentives for different activities or behaviour?
This was one of the topics under discussion on our recent webinar: ‘Modernizing Incentive Programs for Today’s Channel’. Channel Mechanics’ CEO Kenneth Fox was joined by Sunny Song, Director Channel Operations at SentinelOne and Margaret Fetting, Channel Strategy, North & Latin America with Zebra Technologies. These two leading Women of the Channel weighed in on the best way for vendors to adapt their incentive programs to meet changing partner types and business models.
Download the full webinar on-demand: “Modernizing Incentive Programs for Today’s Channel”
Emergence of the Influencer Channel
In 2019, Microsoft announced that 7,500 new partners were joining its partner program each month. Eighty percent of those partners are non-transacting. This is just one example of the emergence of an ‘influencer channel’ now made up of affinity partners, referral agents, affiliates, advocates, ambassadors, and alliances.
Referral partners usually refer qualified customers to your business. In return, you pay them a percentage commission on any sales that traffic produces. So how can vendors design an incentives program that reflects and rewards those partners?
“A trend that we’re seeing more and more, is how the partners are influencing and referring opportunities to us,” said Song. “So we want to make sure that we’re capturing a way to incentivize that as well. We are looking at a way to see how we make the incentives current and applicable to the different models that we’re seeing out there.”
Fetting agreed that how program roles are defined needs to be modernized. This might mean adding programs to capture business from referral and influence partners.
Referral Programs
Fox said vendors are typically approaching incentivizing non-transacting partners from two angles. “One is creating referral programs, which are still relatively new. But also, the more traditional approach to incentives is paying out on closed business. Certainly, the percentage range is much higher, Most people are paying into double digits on what we see for monthly recurring revenue type products.”
In a poll of webinar attendees, 35% said they currently offered referral programs, while 65% said they did not. Fox noted this is a significant increase on a few years ago and a validation of the importance of referral programs.
This is because vendors are increasingly recognizing that they need to incentivize these partners to continue passing along high-quality leads. And as Fox notes, “referral commissions can be higher” than those offered in an affiliate program. So although some vendors are still currently struggling with how to run a referral program, along with how much they should pay out to partners, they are becoming an important part of the channel landscape.
In addition, Song said it is critical to have a systematic approach to how vendors execute and measure incentives for non-transacting partners. “Before you start any program right you want to have a clear strategy about what your end results are going to be or what the desired end results, you’re trying to achieve.”
Conclusion
Ultimately, says Fox, “it is easy to justify the investment for incentivizing non-transacting partners,”. This is because as a vendor, you don’t pay out unless you close the deal.
“It’s a bit like rebates – it’s a win-win. You’re not going to pay it out unless you close that business. So the ROI takes care of itself, and you’re not going to get that business in the first place unless you engage with that referral partner.”
While Fetting added: “Referral programs definitely open up new opportunities that you may not have had access to in the past.”