The Approach To Compensation Policy Will Make Or Break A Channel Program
This list isn't all-inclusive, but I believe it has the basics. More importantly, step No. 1 is the most critical component without which I guarantee a painful failure. This can be used to evaluate a vendor's commitment, or, if you happen to be a manufacturer, it can help you assess your own program.
1. Compensation plans absolutely must encourage behavior that supports the channel. This is the most misunderstood component of the 12 steps because it has to touch departments that may not be directly involved with the channel. However, if one part of an organization's incentive plan allows or encourages it to do things that harm the company's channel or do not support it, then devastation can result. Everyone in the organization must be driving toward the same objectives.
2. There must be executive support. If the CEO and the company's top lieutenants are not behind the channel effort, it is doomed to failure. Compensation obviously can focus their attention. In the end, if the CEO doesn't believe in it, then why is the company doing it?
3. Listen to your solution providers, but understand that they don't always know what they really need. By this I mean vendors need to dig deeper to understand the problem and why it is occurring. The answer isn't always as simple as it seems. For instance, I've never met a solution provider that hasn't told a vendor that more sales leads would help. I've also never met a solution provider that hasn't said the sales leads it receives stink. In the same respect, if a partner points to an inadequacy in a supplier program, ignoring it isn't going to do anyone any good. The key is to get lots of feedback from lots of different types of partners. That includes distributors, solution providers and even those that have stopped selling your product or that have drastically decreased their volume with you.
4. Put co-op and MDF programs in place that are designed to nurture the relationship with the solution provider and help the partner build its business. These programs can be a vendor's most powerful tool. They should be contingent on the partner meeting realistic goals and on its ability to plan for success.
5. Don't sabotage your channel programs. I hate to keep coming back to this issue, but it is the most critical point. Everyone inside the organization must consider both direct- and indirect-sales efforts and how a change on one side can impact the other. Programs, plans and marketing efforts shouldn't favor one approach over the other. They should be positioned with common goals. If everyone in the company isn't working toward the same objectives, or if these programs favor the direct-sales effort, then channel conflict will build and the desired goals of the company will not be met.
6. Hire smart channel reps, and give them the means to be successful. I'm a big believer in empowerment at the field level. But you first need to make sure that these individuals know and understand the channel and, more importantly, believe in it. If all you do is hire individuals who would rather be in direct sales, and force them to work with the channel, you are not going to get the most out of either asset.
In the end, once again, compensation can be a powerful motivator here and can help ensure that everyone is working toward the same goals, with the same rules and a clear direction from the top. Next week, I'll finish my list.
Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].