Has your partner ever asked how they can get a bigger discount or higher commission? My guess is that most respond with something related to their sales volume. Maybe the partner has to reach a certain volume to get a price break or a larger commission. Does this make sense? The answer is probably “yes” and “no”…although, I am leaning towards “no”.
Since your channel represents your company and your products in the market, they are in essence representing your brand. The experience they receive will be directly transferred to your brand. If the customer has an excellent experience and receives great service from your partner, it will have a positive effect on your brand. Unfortunately, the opposite is also true. If a partner doesn’t return service calls, or doesn’t live up to the Service Level Agreement, or is not fully trained on the product, your brand will suffer.
What, then, is the best way to structure your financial incentives? Should it be based on volume of business that partner does with you? Does the end user care? Or, should it be based on the “value” that partner offers the end user? Should it be more about the end user experience or more about the transactions between you and the channel?
Value is more important than volume. Can you structure your incentives around channel competency and service capability? Yes, you can. Is it harder than building price breaks based on volume? Yes, it is. Is it worth the extra effort? Yes, it is.
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