PRM Best Practice: Motivation & Incentivization – Show Me the Money!

With frequent travel to and from the UK and the USA, many of us at RelayWare have airline loyalty cards. When close to losing it, we can be known to go to extraordinary lengths to make up the annual points total. And when the airline are having a slow quarter, we often help them out by taking them up on their offers of double points or free upgrades. We don’t fly with any other airline unless there is no alternative and we do all this because of a plastic card and a free cup of coffee on a comfortable chair in a lounge. But then deep down, we are sales people and we respond well to loyalty programs and incentives. Let’s consider some alternative approaches:

1. Loyalty programs. Such schemes are by definition strategic. In other words, such a program lasts for a long time or perhaps indefinitely and sets out to reward partners who are consistently loyal to your brand or product range over time. There are a variety of different models most of which reward sales with points and points with rewards of some sort:
   • Gift catalogs
   • Vouchers with a monetary value
   • Vouchers for goods or services
   • Credit or debit card accounts

   All such schemes can work well and some are better suited to specific countries, and cultures than others. Success can be governed by local pay and conditions, type of reward, threshold for entry and the time taken / effort expended to secure the all important first reward. But such programs can be incredibly expensive to operate, promote and fulfill. There are many marketing agencies out there eagerly waiting to take your money so consider automation in house before taking this route.

2. Incentives and promotions. Tactical campaigns can be much more effective at helping to mold behavior amongst your channel where short term goals become paramount eg. selling out end of line product, supporting a product launch etc. But you must be lightning fast and communicate directly with the channel sales people. Don?t rely on distributors or your channel account managers to do it – they won?t unless there?s something in it for them as well and by the time they reach everyone with the message, it will all be over. Tactical incentives are a great way of solving short term problems or creating a buzz and increasing activity for a short period of time but build them in under the umbrella of your strategic loyalty program and don?t run them too frequently or too regularly.
3. Top performers. Years ago, when margin was more plentiful, vendors used to treat their top channel performers to no-expense-spared “business trips” or “conferences” in exotic places. The problem was that it was inevitably the same faces every year and the events became cliche?d thank you?s for services rendered rather than an effective incentive for greater performance. But rewarding top performers can be effective if properly implemented and well communicated. It is important to consider your objectives first though. What defines true success? What really makes a difference to you? For example, is it better to reward a partner for winning new customers rather than simply selling the most to the one?s you already had?
4. Investing in collaborative marketing. “MDF”, “soft dollars”, marketing rebate – whatever you call it, it has a poor reputation for delivery of a good return on investment and throughout the history of the industry, most has ended up propping up channel balance sheets. So much so that vendors have introduced restrictions, limitations or else withdrawn it all together. This is a mistake. It is also a mistake to believe that administering such funds is difficult and time consuming. A good PRM system can manage these funds with ease and link in to both your financial systems to manage accruals and credits and your partner portals to facilitate self-service funding applications, approvals, redemptions and ROI reporting. Giving access to such funding in a disciplined, controlled and administratively “low-impact” manner will encourage proper use and will facilitate comprehensive reporting and analysis to ensure your get value for money and a good return whilst motivating your partners.

Having covered methods of motivating and incentivizing your partners, next time, we’ll move on to sales and marketing collaboration.