Clock icon 8 min read Calendar icon Feb 5, 2024

How to Build a Channel Incentive Program (and all about incentives and rebates)

A Channel Incentive Program is a powerful strategy designed to motivate and reward channel partners, such as contractors, affiliates, distributors, and resellers, to actively promote and use your products. In a landscape of fierce competition, treating these partners as true collaborators becomes paramount. This article explores the fundamentals of channel incentive programs, the various incentives available, and key considerations for implementing a successful strategy that aligns the interests of your company with those of your partners.

Why You Need a Channel Incentive Program

Stiff competition is a primary reason to adopt a channel partner incentive program. Your channel partners use products from many different vendors; how do you encourage them to choose your products over a competitor? The answer is to treat them like true partners and provide incentives that encourage them to increase sales and promote your company's products or services. 
There are a few other reasons you want to implement a channel incentive program:
  • If you are introducing a new product or trying to increase sales of an existing product, you can implement rewards to partners to actively promote that product.
  • You can incentivize partners to help you move into a new market, whether it's a new customer segment or location.
  • You want to motivate your partners to invest time and effort in specific activities (like training) that support business goals.
  • Collect valuable data that helps you understand partner performance and identify market trends and areas for improvement. 

Examples of Channel Incentives

Channel incentives come in various forms, tailored to motivate and reward channel partners for their performance and contributions. Here are some examples:

  • Rebates and Discounts: A popular channel incentive, offering financial rewards such as rebates and discounts encourages partners to use your products.
  • Volume or Performance-Based Incentives: Incentives can be based on sales volume or for hitting milestones, bringing in leads, etc.
  • Market Development Funds (MDFs): You can support your partners’ sales and marketing efforts by helping fund activities such as webinars, radio ad spots, marketing events, booths at tradeshows, and so on.
  • Sales Performance Incentive Funds (SPIFs): SPIFs are short-term incentives that reward sales reps on the spot for reaching a specified milestone, like selling so much of a product in a defined time frame.
  • Complimentary Products: You can offer your channel partners free products or samples based on sales performance. Partners can use these free products to help showcase your offerings in their stores.
  • Recognition and Awards: Create an awards program that recognizes top-performing partners, including plaques to display in their store and recognition on your website or in your store.  
  • Travel or Events Rewards: Give your best-performing partners rewards like trips, vacations, exclusive events, or travel vouchers.
  • Referral incentives: To get your partners to recommend you to their peers offer referral incentives such as a rebate on their next purchase or a shift to the next tier in the program for bringing in multiple referrals.
  • Training and Education: Offer partners incentives to participate in training programs or get certified with your company. Training and education programs increase partners' understanding of your offerings and how to sell them effectively. 

The incentives you offer will depend on your business goals, the types of channel partners you work with, and what motivates them. 

Why Channel Rebates Work

Channel partners come in different shapes and sizes, which means there are any number of incentives you could offer. However, channel rebates are one incentive that every partner will appreciate.

Rebates are cash incentives for selling or promoting your products. Rebates can be based on factors such as the volume sold, dollar amount spent, purchase frequency, or purchasing multiple product types.

Not only is the type of rebate and how you get it important but so is how quickly the rebate can be processed. If a channel partner has to jump through hoops to get their rebate, they aren't going to find it worth the effort. Your channel rebate program must be easy to understand and use if you want it to be successful.

This is where a Rebate Management Software can help you greatly. It provides all the tools you need to set up and manage rebate programs, including:

  • Accept receipts, invoices, or purchase orders that show a product was used – accept submissions in ways that work for the partners and your company.
  • Manage the rebate verification and inform the channel partner of the rebate status.
  • Provide a range of payment options such as prepaid gift cards, bank transfers, reloadable credit cards, PayPal, and others.
  • Report on the performance of the rebate program, including partner performance, market trends, and geographic data. 

3 Examples of Channel Incentive Programs

Hayward feature logo

Hayward’s Digital Channel Rebate Program for Installers

Hayward provides a range of pool technology, such as filters, pumps, LED lighting, and more. The company wanted to create a channel incentive program that encouraged installers to use their products for repairs and upgrades.

They created a channel rebate program where installers can upload before and after photos of their project that show the new Hayward product replacing the existing product. Valid submissions received a $50 digital gift card to use the Hayward Rewards store, such as Amazon, Bass Pro, Best Buy, Dunkin Donuts, and Home Depot.

Barilla_logo 

Barilla Drives Sales Through Rebate Program

Loyalty programs don’t have to be complicated. Barilla wanted to celebrate National Pasta Month by offering a rebate to restaurant owners. They instituted a digital rebate program that offers restaurants rebates on cases of Barilla Pasta.

Along with the rebate, the loyalty program included digital content such as recipes and tutorial videos that focused on cooking with Barilla products. Learn more about B2B Loyalty Programs.

Generac feature logo

Generac Grid Services & Sask Power Offer Smart EV Rewards

Working with Sask Power, Generac Grid Services (GGS) runs a program called Smart EV Rewards, which is a plug-and-play EV charge profiling and load shifting program designed to help utilities better understand EV load on the grid and shift charging to more desirable times for their grid. They needed a fast and effective way to issue digital rewards to customers based on enrollment and other behaviors they took in their program.

In this case, GGS integrated a rewards solution into their existing infrastructure that automatically gave members a PayPal credit for participating in the program and sharing their Vehicle type, charging type, and geographic location. Participants were divided into three groups with each group offered different incentives. The data from the program is used to evaluate and determine the impact of varying incentive levels on charging locations and times.

Run a distributor network? Learn specifically about Distributor Incentive Programs here.

Key considerations When Creating a Channel Incentive Program

You're excited about implementing a channel partner incentive program that drives loyalty and builds stronger partner relationships. As you start to design your program strategy, keep these considerations in mind to ensure you are building the right incentive program from the start.

  1. Keep it simple. Create an incentive program that is easy for partners to understand and use. Offer multiple options for submitting receipts and getting rewards to support most of your partners (especially your top-performing partners).
  2. Set realistic goals for partners. Think about the rewards and incentives your partners would love and what they would have to do to achieve them. Be realistic with your expectations. Partners work hard and have to pay the bills. Setting up a program that is difficult to participate in will cause frustration and may fail.
  3. Consider a tiered incentive program. As your channel partners drive more business for you, they become more important and deserve greater rewards and incentives. A tiered channel incentive program will consider this and offer more exclusive rewards in higher tiers.
  4. Use a mix of rewards. Your partners will appreciate having multiple rewards and incentive options. Along with financial rewards like rebates, include experiential rewards or help your partners grow their knowledge and experience to help their business thrive.
  5. Communicate clearly and often. Regular communication about the incentive program is essential to ensure its success. Provide tools for channel partners to track their status in the program, including the status of rebates and other rewards. Help them quickly understand what is required to move to a new program tier and the benefits of moving to a new tier.
  6. Measure and adapt: Don’t set your program and forget it. You must constantly review its performance and be prepared to adapt it to support changing partner expectations, evolving market trends, or drive sales of new products and in new geographies. Change is the only constant, and the best channel incentive programs will change regularly. 

Key considerations When Creating a Channel Incentive Program

A channel partner incentive program serves as a strategic tool to align the interests of your company and your partners. The best channel incentive programs offer a mix of rewards and incentives and make it easy for partners to participate. It is a mutually beneficial collaborative relationship that contributes to the company's overall success in the marketplace.

To brainstorm with a loyalty expert on how to foster loyalty and incentivize your channel partners, contact us here! Also, read our full B2B Channel Loyalty Guide