EXECUTIVE SUMMARY

The Channel Pulse™ survey captures and shares valuable insights from channel sales and marketing leaders from a variety of industries. It is designed to examine their goals, challenges, and strategies for driving program success. The Channel Pulse™ offers participants an insider’s look at current channel trends and contains:

1. Channel Thought Leadership & Best Practices

2. Valuable Benchmarking Information

3. Updates on Key Programs and Trends

In the latest Channel Pulse survey, 360insights reports how channel leaders are leveraging customer experience as a differentiator and applying the knowledge to product and digital experiences, as well as their attitude towards channel sales teams during the global pandemic. Additionally, the report compares how industry leaders invested in incentives in 2019 and their success to changes in incentive strategy as 2020 evolves.

CHANNEL PULSE / Q1-20 1

Q1

20

2020 Q1 REPORT

https://go.360insights.com

CHANNEL PULSE / Q1-20 2

BACKGROUND360insights conducted the Q1 2020 Channel Pulse™ survey to gain a holistic, cross-sector look at key channel trends and investments – targeting North American senior executives from a range of industries who directly oversee channel management.

To be eligible, respondents must work for a company with more than $50 million in annual revenue, they must be at a management level or higher within the organization, and respondents must have direct channel management oversight.

The survey included 12 short multiple-choice and stack-ranked questions and one (1) short answer question. 360insights screened participants carefully to ensure all respondents represented companies with large/mature channels (see demographics).

SURVEY DETAILS • The Channel Pulse information gathering process is led by 360insights

Corporate Marketing.

• Survey was conducted between 12/15/19 and 1/2/20.

• Over the last eight years, 360insights has compiled a database of channel management professionals. A large segment of this database was utilized to solicit the initial Channel Pulse™ participants. The targeted population included management level and up roles with channel management responsibility, employed within large/enterprise organizations.

• The Channel Pulse™ survey consisted of 12 multiple choice and stack-ranked questions and one (1) short answer question.

CHANNEL PULSE DEMOGRAPHICS

The Channel Pulse targets senior channel management professionals in North America. To qualify for participation respondents needed to be at a management level with a company greater than $50 million in revenue, they needed to be at a management level or higher within the organization and the participant’s role was required to be directly responsible for managing channel activities.

To ensure that respondents supervise well-established channel programs, the survey sought out representatives from companies with a minimum of $50 million in annual revenue. Almost half of our respondents (48 percent) came from organizations with revenues above $1 billion, 20 percent from organizations earning $251 million to $1 billion a year, and only 15 percent between $51 and 250 million.

MEDIUM($50m to $250m)

LARGE($250m to $1bn)

ENTERPRISE(+$1bn)

COMPANY SIZECompany Size

Channel Pulse™ featured channel leaders at a management level or above in their organizations, helping to ensure they could offer deep insight into the strategy behind company channel initiatives. 46 percent of respondents held a management position, over 28 percent were at the director level, and nearly 18 percent held Vice President or C-suite titles.

C-SUITEMANAGEMENT ROLE

VICE PRESIDENT

DIRECTOR

SENIORITY LEVEL Seniority Level

Respondents represented a broad cross-section of industries, with most respondents coming from traditionally distribution-focused verticals, including Technology, Electronics, Manufacturing, Telecommunications and others.

COMPUTER SOFTWARE & SaaSSERVICES

AUTOMOTIVE &AUTO ACCESSORIES

ELECTRONICSTECH & TELECOM

FOOD & BEVERAGE

OTHERMANUFACTURING

INDUSTRIES Industries

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CONSUMER DURABLES

HEALTHCARE & PHARMAINSURANCE & FINANCIAL

OVERALL CHANNEL PULSE SURVEY RESULTS

The data gathered in this Channel Pulse report was largely collected pre-pandemic. It provides a view of channel planning prior to the crisis. Business leaders are now needing to revisit these plans to adapt to a new world.

Prior to the pandemic customer experience (CX) initiatives were the norm, with industry leaders optimizing their digital and product experiences (DX/PX) to stand out in the marketplace. Post pandemic CX has taken on the new objective of needing to adapt to consumers who now live with significant fear and uncertainty. Customer engage-ment has never been more at the forefront, which puts the sales channel in the spotlight.

Incentive tactics and spending are also being revisited by most companies post pandemic. Channel leaders will need to rethink their use of MDF & CO-OP and Volume Incentive Rebates (VIR) and may need to re-emphasize consumer incentives to regain market traction.

With this Q1 Channel Pulse™ we report what was planned for 2020 and share our thoughts on how the Covid-19 pandemic may have changed these plans going forward. We’ve divided pre and post pandemic data and thoughts to contrast what has changed.

Experience as a Differentiator Tool:

At a time when digital transformation is a necessity, leaders across all industries have realized the value of custom-er experience (CX) as a differentiator tool. As a result, we found that all respondents have made steps to boost their CX strategy. In fact, over two-thirds of our respondents (68 percent) said they are currently in the Develop-ment, Implementation, or Realization stages of CX evolution. Just 32 percent are still in the Early/Idea Phase.

Part of this transformation includes leveraging customers themselves as ambassadors of CX differentiation. We learned that most respondents are using a variety of platforms and content to accomplish this, including Testimo-nials (62 percent), Case Studies (60 percent), Customer Profiles (50 percent), and Online Ratings (44 percent).

With 78 percent of channel leaders saying their products or services are unique compared to the competition, market saturation could still be a concern. But many have also begun to apply CX strategies to differentiate their offerings through product and digital experiences (PX/DX).

36 percent of respondents named Product Differentiation as the top reason they win new customers over their nearest competitors compared to Customer Experience at 24 percent. When asked to name the number one thing that separated their brand from the competition, most industry leaders responded with variations of Tech-nology or Product Innovation, and Quality or Value alongside Customer Experience and Engagement.

The current pandemic has had a dramatic impact on any customer engagement occurring in person. This has upped the anti on how to best engage the customer in a time of fear and social distancing. Early leaders were those prepared for online/low-touch transactions, however we’ve seen significant innovations in the retail space including various forms of drive-through and 3rd party delivery. The customer experience is top of mind for all companies as we begin to return to a post Covid new normal.

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COMMENTARY:COVID-19

THING THAT SEPARATED

FROM THEIR COMPETITIONLEADER’S BRANDS

TECHNOLOGY OR PRODUCT INOVATION

QUALITY OR VALUE

CX & ENGAGEMENT

Leveraging Channel Sales to Deliver Superior CX:

An overwhelming majority of respondents (89 percent) said their channel plays a pivotal role in differentiating them with custom-ers. When asked how important it was for channel salespeople to be recognized as value advisers, 85 percent of respondents answered Very or Extremely Important.

Now more than ever, industry leaders are recognizing that their resellers must be prepared to adapt to changing market dynam-ics. Our report found that a majority of respondents pre-pandem-ic were focusing on Sales and Marketing Enablement (69 percent), Technical Training and Certification (45 percent), MDF, Rebates, and Incentives (45 percent) in order to gain mindshare and strengthen partnerships.

Evolving Incentives in 2020:

This report found few respondents planned major changes to their budget for channel incentives in 2020 pre-pan-demic. Just one-quarter (25 percent) of respondents planned to reduce or significantly reduce incentive spending and many based their budget decisions on how certain incentives performed in 2019.

31 percent of respondents said Points Rewards produced the lowest ROI in 2019 and 32 percent said the same of Traditional Rebates, like consumer rebates (CR) and Sales Allowances. Between 86 and 93 percent of respondents said they would be using all three strategies about the same or less in 2020.

On the opposite end, 27 percent of respondents saw higher ROIs with Volume Incentive Rebates while 19 percent noticed the same trend with MDF & CO-OP last year. Between 82 and 91 percent of respondents said they will be investing the same amount or more into these two strategies this year, building on the trend of enabling channel sales and gaining mindshare. VIR in particular can encourage large volume sales and reseller loyalty.

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The global pandemic has wreaked chaos across most industries. Technology and telecommunication being a few of the exceptions due to a continued need for their services and their subscription business models.

Most other industries have struggled to pivot and retain customers during the crisis. Pre-pandemic over 30 percent reported challenges such as channel conflict, new product adoption, and management commitment to the channel.

Now, these businesses desperately need their sales channel to adapt to a new way of doing business. This should create closer collaboration and a renewed investment in partnership. Only time will tell how this plays out.

IMY CHANNEL!

$ $

86-93% WILL USE THESE 3 STRATEGIES2020 PLANNING

POINTS REWARDS / CONSUMER REBATES (CR)SALES ALLOWANCES

VOLUME REBATES & MDF CO-OP FUNDING

82-91% INVESTINGSAME AMOUNTOR MORE IN 2020 INVESTMENT

$

DELIVERING SUPERIOR CX! PROUD & LOUD

COMMENTARY:COVID-19

Conclusion:

This report covered industry leaders' attitudes, concerns, and strategies pre-Covid-19 pandemic. Based on our findings, respondents were prioritizing the need to meet growing digital demands and strengthen relationships with their resellers. Most had begun to develop and implement CX strategies and were applying similar principles to PX and DX as differentiator tools.

The trend of MDF & Co-op and SPIFFs incentives also indicates that channel leaders were focusing more heavily on supply chain enablement and behavioral modification success.

As the global crisis continues, we will be interested to see how industries continue to approach CX and reseller enablement and how these strategies help differentiate them from competitors in an uncertain time.

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The Channel Pulse report offers channel decision-makers an opportunity to learn from one another, share best practices and develop informed strategies to further program success. Thank you to all of our participants for your time and insights. Channel Pulse is open to senior channel executives at large organizations across North America. To review our eligibility criteria and be a part of future surveys, please visit: https://go.360insights.com/channel-trends

WANT TO PARTICIPATE IN CHANNEL PULSE FUTURE SURVEYS?

About the Channel Pulse®The Channel Pulse® report provides insights from senior executives across North America on emerging channel trends. Produced by 360insights, this quarterly resource offers channel leaders an inside view into the latest channel trends and investments, valuable benchmarking information, and strategies to drive success. 360insights leverages its proprietary database of channel management professionals to conduct the Channel Pulse survey, targeting senior leaders with direct channel management responsibilities at large, distribution-focused organizations across a variety of industries throughout North America. For more information on the Channel Pulse and to participate in future surveys, please visit https://go.360insights.com/channel-trends

WORDS FROM THE AUTHORThe Channel Pulse™ offers an opportunity for channel professionals to share knowledge and learn from each other. This report, like many other things, was disrupted by the Covid-19 crisis. For those who provided input, we apologize if you were impacted by this disruption. We know the report survives and thrives through your active participation. I’d like to thank all respondents for their support and encourage more to join in future reports.

Steven KellamVice President, Marketing, 360insights

For best practices on developing and implementing traditional rebate programs and understand-ing the differences between consumer and instant rebates, click on the link below.

Advantages of the 360insightsSaaS Platform.

As we enter a post pandemic phase, vendors find themselves needing to reevaluate short-term incentive strategies. Most businesses are caught between a need to maximize revenue and generate cash, and a need for profit to payback increased debt.

Certain incentives are less attractive in this environment. Take for example Volume Incentive Rebates (VIR) which relies on historical revenue baselines to create stretch goals and push inventory through the channel. Post pandemic there is no real reliable revenue baseline and the channel lacks the cash to take on inventory. Many products are also in short supply due to a manufacturing shutdown. We expect most companies will put VIR programs on hold in the short term.

With MDF, many are shifting funds away from events and certification and looking to initiate long-term enablement campaigns, including leveraging the power of SPIFFs for behavior modification, along with short-term digital marketing and training support.

We anticipate consumer products will overall see a big boost due to pent-up demand immediately post pandemic. However, to sustain revenue beyond this initial burst we expect to see an increase in consumer incentives especially in the areas of consumer durables. Most consumers are operating with less cash post pandemic and those without immediate need will require additional incentive to act.

COMMENTARY:COVID-19

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