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As channel partners increase in importance to high-tech companies, the need for effective
partner incentives is growing.
In fact, when channel executives look to increase the effectiveness of their organizations, incentives for the indirect channel are a rich target. Most high-tech companies have
significant opportunities to improve indirect channel incentives to drive sustainable growth, reduce overspend and enhance overall channel satisfaction. However, doing so is not easy. As investment levels grow, programs get more complicated and overhead continues to rise. Complicating matters, most companies lack dedicated resources for conducting the analysis required to identify areas that are a drag on incentive return on investment (ROI).
Improving the ROI of indirect channel partner incentives is a C-Level imperative. First, incentives are crucial given the importance of the indirect channel. In Accenture’s experience, on average about 70 percent of the typical high tech company’s revenue comes from the indirect channel, and that share is expected to grow to 80 percent or more by 2015. Second, incentives typically are a high-tech company’s largest marketing expenditure, with high-tech companies investing on average 3 percent to 5 percent of revenues in indirect channel incentives.
While the situation tends to be different from company to company, three common
factors are responsible for high-tech companies’ struggles to make their incentive spending more effective and improve ROI. The biggest driver is the significant complexity that has accumulated over the years in many companies’ partner programs. Partner program complexity is exacerbated by decentralized accountability for incentive spending. The third major driver of ineffective incentive spending is infrastructure limitations—including ad hoc collection, cleansing and use of point-of-sale data and insufficient investment in analytics that are key to optimizing spend.
Based on our experience helping a variety of companies address these issues, we have
identified six key steps companies can take now to put them on the road toward
optimizing their incentive spend and improving ROI.
By adopting a new, more effective approach to developing, implementing and managing their channel incentives, companies can reclaim millions of dollars per year in overspend, improve
their indirect channel incentive ROI, and more effectively leverage their partner network to drive growth in today’s competitive global economy.
May 7, 2014
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