Channel Mechanics

Partner Incentives Type – Is Cash, Card or Points a More Effective Incentive?

Channel Mechanics

As an IT vendor, your channel partners expect to be rewarded for bringing their end customer business to you. In fact, those rewards can be a key differentiator when a partner is choosing which vendor they work with. Tailoring your channel incentive reward types on a partner-to-partner basis can therefore build loyalty and increase partner mindshare. However, there are several options when it comes to incentives. So how do you decide which reward type is best for which partner – cash, card, or points?


Considerations when Determining the Right Partner Incentives Type

CEO of Channel Mechanics, Kenneth Fox, tackled the subject on the recent webinar, “Leveraging Channel Incentives to Win Partner Mindshare”. In fact, he highlighted there are a number of things to consider when deciding upon reward types.

“Are you rewarding the partner company, for example? Generally speaking, if you’re doing a rebate, you will pay cash to a reseller or traditional partner. If it goes into a distributor, generally its credit,” he explained.

“The next is, are you rewarding individuals in the partner company? That could be anything from an MSP to a VAR to a distributor. There are many different partners in the ecosystem today.”

Indeed, you may be in a situation where you’re rewarding multiple individuals, said Fox.

“Behind every good salesperson, there’s going to be a technical person, an SE helping them with a demo or proof of concept. So, influencing the people behind the scenes can be a little bit trickier. But with the more successful incentives, the vendor has figured out a way to incentivize those individuals behind the scenes who are supporting the salesperson, which drives the salesperson in a particular direction.”



What do you want to achieve with your incentives?

It’s also important to understand what your incentive program is aiming to achieve. Is it designed for long-term loyalty? Or do you want to hit a short-term goal, such as within a competitive situation? Another consideration is whether you run a global program, or is it going to be local? You are restricted from certain activities in some countries due to tax regulations, etc. Additionally, some partners may not want you to reward their individuals, but they’re fine to take the reward as a company entity.

How prompt you are in paying incentives to partners is also incredibly important, said Fox.


“The speed of payment is really, really important,” he said. “If you can pay a partner or an individual very quickly for doing the behavior that you want them to do – which is in line with the goals of your company or your channel program – that makes a huge difference in terms of uptake and the competitiveness of the program.”


Cash vs. Cards vs Points

Ultimately, there’s no one right answer when deciding between cash, cards, or points as an incentive reward type. However, in general, larger organizations like distributors typically get incentivized with credit. With partner organizations, it’s usually cash. And again, with individuals, there’s also much more of a trend towards cash rather than cards today.

“It’s easier to hand out, it’s easier for them to take and go spend,” said Fox.

“In terms of points, it definitely is important, and it has a place. But when you’re doing a points-based system it’s more for long-term loyalty. And it’s quite effective, but it’s not going to make any difference when you’re in a competitive situation versus having some kind of an incentive to pick you over the competition,” he added.


In Summary

The truth is that different incentives work best in different scenarios and with different partner types – it depends on what business outcomes you’re trying to achieve. But regardless of the reward type, incentives remain an important factor for creating loyalty and increasing your traction with partners.


Driving channel revenue growth with partner incentives is now more accessible than ever…


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