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The key to optimising your channel incentives

The key to optimising your channel incentives

Over the last 10 years I’ve worked with some incredible brands to design, develop and manage highly effective channel incentives. This involved many an hour trying to come up with ideas to make the next incentive bigger, better and more effective than the last one. This was no easy task, so I’m going to share with you just some of the ways you can optimise your channel incentives.

This blog will dive into the details of what channel incentives are, the impact they have on staff and how they can be optimised. So whether you work in manufacturing, telecommunications, electronics, or any other industry that sells through channel, hopefully this provides the key to success.

What are channel incentives?

Let’s start with what is a channel incentive.

Channel incentives are rewards or benefits provided by a manufacturer or supplier to its channel partners, such as distributors, resellers or retailers, to motivate them to sell more of their products or services. These incentives are designed to encourage channel partners to promote and prioritise the products or services of the manufacturer or supplier over those of competitors. But when multiple manufacturers are trying to compete to get noticed, you will need to optimise your sales incentive for success.

During my time at FMI Agency, I have worked with many types of businesses that have implemented successful incentives. I’ve designed both employee and channel incentives, however it’s the challenge presented by channel that makes this type the most exciting for me personally. Trying to get noticed, maximising budgets, conjuring up new ideas for motivating non-direct staff is what inspires me.

Channel incentives work well for ambitious brands, brands with touchpoints across retail, contact centres and in multiple territories. This doesn’t mean a one size fits all solution is available, in fact quite the opposite, the key to optimising a channel incentive is about tailoring it to your specific audience. The core mechanics may remain the same, but the finer details should be localised, customised and tailored to your audience.

I have run incentives in India, where a contact centre sales floor takeover, combined with localised rewards and branded merchandise really hit the mark to help sales staff to exceed their targets. Conversely, I’ve taken a branded car on the road, touring UK retailers to launch and promote an 8-week tactical sales incentive to support a new product launch. Each completely different but both highly optimised to achieve success, achieving sales of over 150%.n

The benefits of channel incentives

What are the benefits of channel incentives?

Channel incentives contribute to a mutually beneficial relationship between manufacturers or suppliers and their channel partners, driving sales growth, market expansion, and improved collaboration within the distribution network.

Channel incentive benefits:

Increased Sales: By providing incentives, manufacturers can motivate channel partners to prioritise their products or services, resulting in increased sales volume and revenue.

Improved Market Penetration: Channel incentives can help manufacturers penetrate new markets or expand their reach by incentivising channel partners to promote and sell their products in regions or customer segments they may not have previously targeted.

Enhanced Product Visibility: Incentives such as co-op advertising or market development funds (MDF) can increase the visibility of a manufacturer’s products through joint marketing efforts with channel partners, leading to greater brand awareness and customer engagement.

Better Channel Partner Relationships: Offering incentives demonstrates a manufacturer’s commitment to supporting its channel partners’ success. This can strengthen relationships and foster loyalty among channel partners, leading to long-term partnerships and collaboration.

Competitive Advantage: Channel incentives can help manufacturers differentiate their offerings from competitors and incentivise channel partners to promote their products over those of competitors, thereby gaining a competitive edge in the market.

Feedback and Insights: Incentive programmes often involve tracking sales performance and metrics, providing manufacturers with valuable insights into market trends, customer preferences, and the effectiveness of their channel strategies.

Efficient Resource Utilisation: Manufacturers can use channel incentives strategically to allocate resources effectively, focusing on high-potential markets or key channel partners to maximise returns on investment.

Motivated Channel Partners: Incentives serve as a motivational tool for channel partners, encouraging them to actively sell and promote the manufacturer’s products, leading to higher engagement and effort from the channel partners.

Different types of businesses benefit from channel incentives in various ways depending on their position within the supply chain and their specific goals and challenges:

  • Manufacturers or Suppliers: – may benefit from increased sales, market expansion, brand visibility, competitive advantage and relationship building.
  • Distributors or Resellers: – may benefit from increased profitability, marketing support enhanced product portfolio, training and support and competitive positioning.
  • Retailers: – may benefit from increased margins, merchandising support, marketing assistance, inventory management and customer loyalty.

Optimising your channel incentives

The most important point when considering how to optimise your existing channel incentive is to continuously assess what you are doing, why and how. Speak to participants, stakeholders and sales directors to fully understand from all sides what is working and what needs improvement. Regularly evaluate the performance and effectiveness of incentive programmes based on predefined metrics and feedback from channel partners. This will provide valuable data insight that will allow you to make changes that will really enhance your incentive. And once you’ve made these changes, keep reviewing and assessing to tweak and improve further along the way.

Another key point is communication. I come across this repeatedly in my role as project director where businesses think they are communicating to their channel partners but in fact they are just getting lost in the noise. With many manufacturers trying to fight for airtime, you need to think a little bit differently about how and when you communicate your incentive. This is critical, because if salespeople are unaware of your incentive, they will simply sell a competitor’s product instead. Communicate incentive programme details, criteria, and rewards clearly and transparently to channel partners. Transparency builds trust and encourages active participation in incentive programmes.

My third point when optimising your channel incentives is to create innovative incentive structures. Experiment with innovative incentive structures and rewards to keep channel partners engaged and motivated. Consider incorporating gamification elements, such as leaderboards, badges, or competitions, to make incentive programmes more interactive and enjoyable for participants. Games don’t need to cost a fortune, a simple ‘Spin the Wheel’ mechanism can provide excitement and anticipation whilst helping manage reward budgets and distribution amongst participants.

Find out more about cost effective gamification and other solutions to drive sales and engage audiences.

Optimising channel incentives with FMI

Whilst I specifically have experience in channel incentives for manufacturing, telecommunications and electronics clients, the wider team at FMI Agency span many sectors, including insurance, finance, automotive and more. FMI are experts in channel and partner incentive programmes and are a trusted agency for many global brands such as Sony, Three and bp.

Channel incentives can be tricky to get right, with each and every business having different needs and objectives – but with FMI, you’re in good hands. We offer channel incentive programmes, combining our web platforms with a wealth of experience, our team know exactly how to do channel incentives the right way.

If you are interested in optimising your next channel incentive then please do reach out to me directly via We love talking to new companies and exploring how we can support.


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