cut through the complexitysmarter incentives drive results

table of contents

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executive summary 5survey participants 6sharp insights 7slicing and dicing manually 8pinpoint which incentives work 9split decision: who is actually incented? 10split between strategy and execution 11cut through channel complexity 12are complex incentives out of reach? 14our conclusions 15

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simply manage more complex incentives

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yesterday’s incentives won’t cut through the complexity

It’s my pleasure to share the results of the new parago channel incentives study. We all know that incentives can drive sales, but what — exactly — do vendors need to do to maximize engagement? Some of the insights were surprising.

manual processes are still commonVendors large and small reported that, on average, 80% of their channel incentives management is done internally and manually. From spreadsheets to inflexible systems, these tools are not powerful enough to support today’s complex programs or provide true engagement-to-sales insights.

incent sales-driving behaviors plus salesIn the past, rewarding sales was sufficient to motivate channel partners. Today’s complex ecosystems must also incent sales-driving behaviors — lead generation, deal registration, MDF, training, business planning and more — when they result in sales. If you believe an activity generates sales, you should incent it.

simplify your complex channel needsLet’s be honest: Vendors need to start adding more compelling bundled, overlaid and tiered channel incentives with targeted partner communications — including leader boards, eLearning, campaigns on demand and more.

Want to cut through the complexity? Look for an end-to-end channel provider that offers a one-stop shop. Let’s talk about what parago can do to differentiate your program.

Dan Hawtof

VP of Business Solutions, Global Channel972.538.4017dan.hawtof@parago.com

parago.com/channel@paragochannel

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survey participantsvendor annual revenue

< $100M 30% $100M–$1B 33% $1B–$5B 24% > $5B 13%

business categorieshardware 32%

traditional software 31%

cloud software 10%

cloud services 9%

traditional infrastructure 5%

cloud infrastructure 2%

other 4%

percentage of revenue from channel

0% of revenue 4%

1% – 25% of revenue 21%

26% – 50% of revenue 30%

51% – 75% of revenue 11%

76%+ of revenue 34%

percentage of revenue from recurring

0% of revenue 7%

1% – 25% of revenue 20%

26% – 50% of revenue 27%

51% – 75% of revenue 30%

76%+ of revenue 16%

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most important partner sales behaviors to incent

sharp insights

only 48% of vendors directly incent

partner sales reps

70% of vendors incent channel partners for meeting

sales performance goals

3 out of 4 vendors want to offer complex

incentives, but can’t

57% of recurring revenue models incent

total contract value

lead generation deal registration business planning creating solutions

80% OF CHANNEL INCENTIVES MANAGEMENT is done internally and manually

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slicing and dicing manually

ACROSS ALL COMPANY SIZES, 80% of channel incentive programs are still managed manually using spreadsheets, limited databases and other labor-intensive tools.

how do you manage your incentive programs?

80%

33% combined,

including manual

6% combined,

not manual

6% third-party managed

47% internal, manual

methods (e.g., Excel*)

8% internal incentive

software

*Excel is a registered trademark of Microsoft Corporation in the United States and/or other countries.

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pinpoint which incentives work

how important are these incentives for driving sales? 1 = not important; 5 = extremely important

special price discounts 3.5

deal registration 3.4

MDF or co-op 3.2

partner sales rep SPIFs 2.9

back-end partner rebates 2.8

NFR demo allowance 2.5

end-user rebates via partner 2.0

trade-in rewards 2.0

in your recurring revenue model, what do you incent? check all that apply

total contract value 57%

monthly subscription value 39%

behavior 9%

other 13%

3 in 5 vendors with recurring revenue models incent on

total contract value

only 1 in 10 incents on behaviors other

than sales

As the channel transitions to the cloud, there’s been plenty of talk about moving to recurring revenue models.

However, only 39% of vendors have made the shift so far.

Not surprisingly, channel vendors still think an array of incentives is important for driving sales.

On a scale of 1 to 5 (with 5 being “most important”), the highest-rated incentives are special price discounts, deal registration and MDF or co-op.

LEAST IMPORTANT($100M – $1B vendor revenue)

trade-in rewards ranks 1.6 out of 5

MOST IMPORTANT($1B – $5B vendor revenue)

deal registration ranks 4.7 out of 5

RESULTS FOR ALL VENDORS

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split decision: who is actually incented?

21% points redeemed

for cash

which other partner participants do you incent? check all that apply

partner sales engineers 46%

partner marketing 40%

partner business manager 3%

none 11%

45% cash only

(checks or cards)

34% points for merch

or travel

what is your primary reward for partner sales reps? check only one

of vendors who incent partner sales reps, 2 out of 3 offer cash rewards

ONLY 52% of vendors pay partner sales reps directly,which means most incentives are given to companies — not the actual people closing deals — in some form of back-end discount.

89% OF VENDORS also incent more than just partner sales reps

52%

89%

what percentage of incentives do you pay directly to partner sales reps?0% of incentives 48%

1% – 25% of incentives 39%

26% – 50% of incentives 9%

51% – 75% of incentives 0%

76%+ of incentives 5%

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split between strategy and execution

Start by determining your most important partner engagements.

There is a wide gap between the most important partner engagement strategies

and how successful they are.

Then, focus your incentives on successfully driving these behaviors.

lead gen

deal reg

business plan

create solutions

reading email

portal login

certification

sell outside IT

recurring revenue

MDF

incentives

2.8

4.3

2.9

3.2

3.1

3.5

2.6

3.5

2.6

3.6

2.7

3.6

2.7

3.7

3.0

3.8

2.8

4.0

3.0

4.0

2.8

4.2

how important is each of these partner strategies? 1 = not important; 5 = extremely important

how successful are you at each of these partner strategies? 1 = not successful; 5 = extremely successful

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cut through channel complexity

Simplify your sales and channel incentives management with a platform that enables more targeted, effective and measurable programs.

69% of all vendors incent channel partners for meeting sales performance goals, including

year-over-year and reach goals

less than 40% of vendors

offer complex incentives

SIMPLIFY

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$100M – $1B in revenue

performance goals

sales volume

bundles

by profile

behavior & sales

47%

47%

13%

27%

7%

> $5B in revenue

performance goals

sales volume

bundles

by profile

behavior & sales

67%

33%

33%

17%

0%

< $100M in revenue

performance goals

sales volume

bundles

by profile

behavior & sales

29%

43%

21%

21%

29%

$1B – $5B in revenue

performance goals

sales volume

bundles

by profile

behavior & sales

64%

18%

45%

36%

9%

which types of incentive programs do you have? check all that apply

53%

sales volume

69%

performance goals by profile

38%38%

bundles

19%

behavior & sales

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are complex incentives out of reach?

3 out of 4 vendors want to run more

complex incentives, but don’t have the

management tools or staff to handle the data.

74%

why are you not offering more complex incentives? check all that apply

28%

not applicable

26%

don’t want to run these programs

22%

partners won’t participate

44%

too complex to execute

44%

not enough staff

33%

too complex to communicate

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our conclusions

FINDING

most vendors still manage incentives manually

INSIGHT

Transition to a flexible channel platform. Look for a provider that presents total program view and systemic management.

FINDING

majority of vendors cannot implement complex incentives, even though they want to

INSIGHT

Use a channel platform that can handle flexible attributes and tie non-sales behaviors to sales. Plus, look for a provider that offers managed services, partner marketing and full reporting.

FINDING

there’s a large gap between partner behavior strategies and successful execution

INSIGHT

Define which sales-driving behaviors are most important and target them with incentives tied to sales. Find a channel provider that can deliver speed to execution for the most powerful and effective programs.

As the channel gets more complex, our clients are asking for additional managed services that use our flexible platform to simplify their channel management and incentive programs. Here are a few key findings — and our insights into how you can cut through the complexity, too.

parago simplifies channel engagement for greater ROI with industry leading insights and flexible technology through channel incentives, marketing and partner relationship management. At parago, we:

• serve300+clientswith3millionpartnersworldwide

• deliverbillionsinrewardstomillionsofpeople

• arerankedbyAd Age as one of the largest promotional, digital and CRM agencies

Dan Hawtof

VP of Business Solutions, Global Channel972.538.4017dan.hawtof@parago.com

parago.com/channel@paragochannel

channel as simple as possible

© 2014 Parago, Inc. All rights reserved.