Besides generating sales, well-planned channel incentive schemes improve customer service and brand loyalty. You need to design incentive schemes based on your objective, which invariably would be to sell more volume, channel partners’ potential, the association of a partner, product categories being sold, and different types of incentive schemes. You need to pick one which best serves the purpose and keep you as well as your partners happy.

Partner potential based scheme

Typically, the principal company comes up with a slab-based incentive scheme where the channel partner is encouraged to buy more volume to be eligible for more incentive than usual. The problem with this scheme is it treats all your partners equal in potential and performance. There are always going to be some who can buy huge volumes and hence be eligible. However, a small partner who is unable to purchase huge volumes will be discouraged. Therefore, in such a scenario, schemes need to be designed based on the past trend of partner performance. If you have a channel management application to track past performance, it can help you come up with customized schemes which are more effective to raise overall revenue of the channel. You ask partners to improve their performance to a certain a percentage which would provide even a small partner with the opportunity to grow along with your company.

Product mix based incentive/ product basket incentive

A channel partner who is buying only one product category has more chances of breaking up with the principal company in comparison with a channel partner which is buying different categories of product. A rival company can quickly offer a better incentive or profit margin and lure a channel partner to start buying their product. On the other hand, if you come up with product basket incentive scheme where a partner is incentivized for buying different product categories, it becomes easier to retain the channel partner. The partner is less likely to snap ties with you as a big chunk of his sales comprises of your products. The more exposure a channel partner has to your different product categories, the higher is the possibility of them staying with you for long.

Loyalty based incentives

Generally, principal companies keep incentives same for all the channel partners. Theoretically, it seems perfectly okay however, it actually isn’t. The longer they are associated with a principal company, the better incentives they should be entitled to. Keeping same incentives for a new partner and an old partner isn’t going to benefit you. It may sound good to have same incentives for all the partners, but it does not strike a chord with old partners. It’s just like offering the same salary to an old employee and a new employee. It’d surely lead to dissatisfaction and sales could suffer. Reward them by offering higher incentives so that they feel valued and motivated to stay with you.

Type of rewards/ incentives

The most common and prevalent incentives are monetary as they are easy to give and attract partners instantly. Such scheme is good as well as bad. It’s good because of the reason as mentioned above and bad because the partner forgets it as soon as it’s credited to their bank account. On the other hand, offering gifts to a partner when they buy more volume than usual is a great incentive scheme since the gift creates a recall value for the partner. It reminds partner of you and works as an advertisement tool. The one that tops the list in incentive schemes is experiential rewards, also known as foreign trip schemes. Such incentives always leave a partner with a memorable experience. Taking partner for a foreign trip or arranging a visit to abroad are all part of the experiential reward. This kind of experience stays for long in the memory of the channel partner and their staff.

If you put this list of channel incentive scheme to use smartly, you can encourage partners to buy more and put their best foot forward. It’s time to revisit your channel incentive schemes and customize them to suit your objectives and of course make partners motivated and keep them in high spirits.


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