Inspired Incentives

How To Build Long-Term Channel Equity

Posted by Travis Smith

Tue, Oct 15, 2013 @ 03:32 PM

channel incentivesAs a distributor, you’re often faced with the challenge of managing numerous vendor marketing programs and SPIFs. In fact, I’m sure many of you have a small army of vendor/manufacturing program managers to do just that. As the popularity of these short-term promotions remains steady, let’s take a look at why, in spite of the demand, these SPIFs often fall short and rarely impact long-term behavior. Then, after making our case, we’ll uncork some straightforward solutions for how to gain the long-term channel equity that organizations continue to search for.

 

Problem 1: Rigidity

First off, upon commencement SPIFs have instinctive attributes and characteristics that leave little choice or creativity to the vendor that’s rolling it out. There is usually a set budget that must be spent that quarter, or else it goes away. In many ways, this “use it or lose it” approach handcuffs the vendor and diminishes the chance for flexibility.

Incentive program success story

Problem 2: Short Runway

Another factor vendors are up against is the short runway. Maybe he/she wants to run a SPIF that creates excitement and activity around a new product launch, or is trying to get more mindshare from a region that is eroding. Unfortunately, by the time the budgets are approved and the initiative is fully defined, 30 of the 60 days have already past. At this point, it might take an additional 30 days just to have the communication travel all they way through the channel (distribution) to the channel partner. What this means is that by the time the target audience is aware of and understands the program, only about 1/3 of the selling period remains. Thus, the impact of the program similarly depreciates.  

Problem 3: Minimal Mindshare

The third challenge with SPIFs is that they are inherently cash-based. Now I know what you’re thinking. What’s wrong with cash? It’s easy and people invariably wont complain when it’s offered to them. The problem, though, is that cash is too easy, i.e., it is ultimately a forgettable reward. Yes, you can get a brief lift from a cash SPIF, but once that gift card shows up and the SPIF is over, the “what have you done for me lately” mentality quickly settles back in. What’s more, if your competitor matches or trumps your SPIF in the next quarter, any goodwill you might have gained from the previous quarter is sure to dry up. Sure, SPIF recipients remember you when they spend their reward . . . there’s mindshare there, right? Unfortunately, 85% of SPIF cash earners spend their cash on groceries or bills, or they simply don’t remember what they spent it on. What did you spend your last cash gift on?  I can’t remember either.

non cash incentive awards

 Solution?

So how do you solve these three issues—rigidity, a short runway, and minimal mindshare? In a word, it’s all about the platform. Is it flexible, efficient, and effective? Can it build long-term loyalty in addition to short-term business? For example, HMI has recently unrolled its exciting new Campaign Management Platform, featuring a multidimensional, vender-branded Rewards Zone. This platform can support many different campaigns, both short- and long-term. It can segment your various audiences, and can be broken down by region. When you initiate a platform like this, you are investing in your long-term channel strategy while continuing to nurture the short-term promotions that have proven successful. In effect, you are buying real estate in your channel’s mind and market share. What this means is you can roll out any number of CREATIVE, MEMORABLE quarterly promotions IN A MOMENT’s NOTICE, and be able to communicate it IMMEDIATELY to your participating audience. You can feature thousands of exciting rewards, and allow the participant to redeem immediately or accumulate and build equity in the program for future aspirational rewards. Best of all, you can manage all of these campaigns through a single, branded, pane-of-glass viewing window that allows you to update specific campaigns in real-time. Ultimately, this type of platform enables you to accumulate long-term equity across the channel, and doesn’t force you to abandon the short-term promotions that you’ve grown comfortable with. What more can you ask for?

Topics: Channel Incentives

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