Channel incentives are the foundation of B2B sales worldwide, and about 75% of all B2B revenue actually flows through partner networks instead of direct sales. Most vendors still design their incentive programs like every partner wants the same rewards, though. It makes sense that 58% of channel programs miss their targets.
Here’s something about marketing development funds – Around 60% of them go unclaimed every quarter. Partners continue to tell vendors that they need more support at the same time that they’re leaving money on the table. Almost half of partnership workers have said they would actually give up monetary rewards if they got other forms of value instead. Partner behavior shows us that there’s a massive difference between what vendors are giving out and what actually gets partners motivated.
Businesses that use real-time wallet payouts for their partners get 44% better results than businesses that are still stuck with those old, delayed payment systems. Speed matters quite a bit, but it’s not the only factor that partners care about. Some partners would rather have early access to product roadmaps or exclusive customer referrals than faster commission checks. The programs that work best are also the ones that balance three different types of incentives because each one meets different partnership needs.
Marketing investments and partnership benefits are equally valuable, and they create the best results when all three work well together.
Here are these three types to see which ones can improve your channel performance!
Money That Drives Your Partner Success
Channel partners care about one priority above all else with incentives. Money is what gets their attention. Financial incentives are the strongest tool that you have when you want to motivate partners and drive their behavior in the direction that benefits your business.
The most successful financial incentive programs use a tiered structure that gives partners bigger rewards as their sales numbers climb. Cisco has this down to a science. Partners who hit their initial sales targets might earn a 10% rebate on purchases. Double those sales numbers the next quarter, though, and that same rebate could jump to 15% or 20%. This progressive structure gets partners motivated and always reaching for the next level of rewards.
Volume rebates and tiered commissions work well because partners can easily see how the system works. There’s no confusion or complex math involved here. A partner can see the path to higher earnings. 10 units sold means X dollars in their pocket. 20 units means double that amount, and then there’s an extra bonus waiting on top of that.
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Deal registration programs add some more financial protection that partners value. A partner who registers a deal opportunity first locks in their margin on that sale. No other partner can swoop in at the last minute and undercut their price to steal the deal away.
Businesses make a big mistake when they overcomplicate their financial incentive calculations. Partners shouldn’t need to have a spreadsheet and a calculator just to work out what they’ve earned from you. Automated payout systems that also display real-time earnings make a difference in partner satisfaction and program participation rates.
Marketing Funds That Strengthen Your Partners
Marketing and development funds have changed quite a bit from what used to be simple co-op advertising programs. Modern MDF programs now include online marketing credits and certification training opportunities. You’ll also find technical enablement resources in most of these packages today. The scope has expanded dramatically over the years, and vendors are putting big money behind these initiatives.
Salesforce has a program that’s a perfect example of how this whole arrangement works. Qualified partners can tap into $50,000 worth of marketing funds each year. These partners just have to file reports that show where the money went and what they accomplished with it. They need to prove the funds are actually making a difference. This arrangement lets the vendor and the partner see if their investment is paying off for the business.
These programs are great because the vendor and the partner benefit from them. Partners build better marketing skills bit by bit, while vendors can hold their brand message right where they want it across all their channels. When partners use vendor-approved templates and campaigns, customers get that same polished experience no matter where they buy. Everyone comes out ahead, and the whole network gets stronger.
Most businesses never use all their available MDF money each year – industry data shows partners usually leave over half their funds untouched. The approval process is usually the culprit behind this waste. Partners submit proposals and then wait weeks for any response at all. Once feedback finally arrives, they need to revise everything and resubmit the entire package from scratch.
Some vendors have started to fix this bottleneck with more streamlined methods. Pre-approved campaign templates allow partners to launch marketing activities quickly without the waiting. Turnkey marketing programs give partners ready-made campaigns that they can lightly customize for their market. Then they can deploy them almost right away.
These investments pay off in ways beyond next quarter’s sales numbers. Partners who go through these programs can get much stronger businesses over time. The marketing expertise they gain helps them run every other part of their company.
Partnership Benefits That Go Beyond the Money
Financial rewards and marketing support definitely have their place in any vendor partnership. The benefits that are most worth talking about, though, are the extras that vendors throw into their programs. Partners consistently report difficulty when they try to choose between different vendor programs for this exact reason. What actually matters are those benefits that let partners do what their competitors just can’t pull off on their own.
AWS actually shows this concept perfectly with their partner tier system. The program starts everyone at the Select level, and from there, partners can work their way to Advanced and then eventually reach Premier status. Each new tier unlocks different benefits. Partners at higher levels receive early access to products way before they hit the general market. They also have dedicated technical support that lower-tier partners just can’t tap into. These are competitive edges that matter when partners try to close deals and win new business.
Deal registration programs are another big benefit that partners care about. After a partner has registered a deal, they get price protection and exclusive rights to work with that customer. The vendor backs off completely. They won’t undercut the partner’s pricing or hand the opportunity to another partner. Partners feel safe to put their time and effort into new business development when they have this protection in place.
The best partners in the program get top placement in vendor directories and marketplaces, too. Your company shows up first whenever customers look for what they need. All that extra visibility translates directly into more leads for your business, and the beauty is you’re not spending anything extra for that marketing bump. I hear from partners constantly that these premium placements are worth just as much to them as the cash incentives are.
Exclusive territories and customer referrals are incredibly valuable to partners, too. Nobody wants to fight with five other partners for the same customers in their area. Partners want a steady flow of qualified leads from the vendors who trust them with big accounts. A protected territory lets you build a sustainable business.
These benefits actually create a strong lock-in effect that vendors use constantly. Once a partner achieves Premier status or secures exclusive territory rights, the cost to walk away gets astronomical. Advisory board positions work the exact same way. Access to the innovation labs does, too. Partners get skin in the game when they actively shape the products that’ll hit the market next year. At that point, the vendor’s success is their success.
Combine All Three Types for Better Results
Businesses that actually know what they’re doing with channel partnerships don’t usually depend on just one type of incentive. Most of them have figured out that you need a healthy combination of all three categories if you want your program to actually deliver results. Financial rewards are great, and if you also throw in some decent training opportunities and a few strategic benefits, your partners are much more likely to stick with you for the long haul. The data supports it, too. Partners who are in programs with multiple incentive types usually stay active about 35% longer than partners who only get one type of reward.
HubSpot has mastered this, and they’ve been at it for years. Revenue sharing makes up a significant part of their partner program, and it’s excellent for everyone involved. They’ve also built out all these certification courses to help their partners get better at their work. Partners who perform well and show strong results get the best positions in HubSpot’s marketplace. That marketplace is right where customers look when they need help with their business challenges.
The biggest challenge is figuring out which incentives make sense for each partner based on where they are in their relationship with your company. Partners who just signed up yesterday will probably need way more help and direction. Training materials and product resources are going to matter much more to them than almost anything else. Partners who have been with you for years and who already know your product inside and out are probably more interested in perks like exclusive access to beta features or higher commission tiers.
Balance is everything, though, and you can accidentally create conflicts between your incentives if you don’t think them through carefully. Say that a partner can earn a quick bonus for closing deals fast. But they also need to finish a few hours of mandatory training. Most partners are going to chase that immediate money and skip the training, which is bad for them and bad for your business. The best programs make sure that all their incentives point partners in the same direction instead of creating these unnecessary conflicts.
Build Your Perfect Incentive Mix
Partner incentive programs need a well-thought-out plan for tracking metrics if you want them to give you results. Every type of incentive comes with its own tracking needs, and they’re all slightly different. Financial incentives are the easiest since you can calculate the ROI pretty directly without too much hassle. Marketing development funds get more complex because you have to monitor utilization rates all the time. You need to know if partners are even touching those resources. Strategic partnership benefits are the hardest to measure. Most businesses run partner satisfaction surveys just to see if these programs make any difference at all.
Manual tracking with spreadsheets doesn’t cut it anymore if you want your program to actually succeed. Automated dashboards have taken over and for good reason – they give you a real-time snapshot of how your program is doing and how involved your partners actually are. A quality dashboard makes it easy to see which partners are pulling their weight and which incentives are driving revenue or activity. You need this type of visibility because problems can develop without you realizing it. Identify them early, and you can course-correct before blowing through your budget or ending up with unhappy partners who feel ignored.
Data opens up some very useful possibilities for program optimization. You can run controlled experiments with different incentive structures across different partner segments and then measure the results. Your bigger partners might want immediate upfront rebates as their primary motivator. At the same time, your smaller channel partners could be much more motivated by backend performance bonuses that reward them for hitting specific targets. The data shows these patterns and preferences so you can customize incentives accordingly.
Partner feedback is very important and most businesses severely underestimate its value. Your partners have direct experience with what motivates them and their teams, much better than any external consultant or industry report ever could. Schedule regular conversations with your main partners to learn if your development investments will generate returns in the coming months or if you need to redirect that budget elsewhere.
AI and predictive analytics have changed the game for incentive programs. These tools let you create incentives that actually match what each partner has done in the past and how they typically work. A partner who always delivers great results needs something different from a partner who struggles with the basics and could use more training or support. Market conditions are always in flux, and your incentive programs have to evolve with them.
Schedule quarterly audits of your entire incentive portfolio to make sure that you remain competitive and relevant. The program that generated great results three months ago could also fail next quarter if one of your competitors introduces a more aggressive or innovative program that captures partner attention.
Level Up Your Incentives and Rewards
The most successful channel programs never depend on just one type of incentive. Actually, the secret is in the way all three types complement one another and build something far more powerful than any single approach could achieve on its own. Financial rewards are what first grab a partner’s attention and get them excited about working with you. Development funds then step in to give them the training and the resources they need to produce results. Strategic benefits are what seal the deal for the long term and help partners stay invested in the relationship year after year. Every piece reinforces the others in this smooth way. Immediate wins from financial incentives motivate partners to put time into capability development. Better capabilities then position them just right for those deeper strategic partnerships that matter most.
The right incentive combination for your program depends on two main factors that shape success every time. First is where your business currently stands, and second is the type of partners you’ve chosen to work with. A startup that brings on smaller resellers usually has to give big financial incentives up front. Cash flow is everything to these smaller businesses, and they need those immediate rewards. But an established company that partners with other large organizations has more flexibility. All sides already have stable finances, and strategic benefits can take center stage from day one. The smartest move is to let your incentive strategy evolve as your partnerships do. Begin with whatever makes the most sense for your situation today. Then layer in more advanced elements once the relationships get stronger and everyone trusts one another more.
Stop for a minute and look at what you’re giving to your partners today. Look at the gaps that you already know are there. Most businesses I work with do great in one area but have missed the other two completely. All that means is that there’s plenty of value just sitting there untouched. You might have great financial incentives, but zero development support. Some businesses run strong training programs, but strategic benefits haven’t even crossed their radar.
Level 6 specializes in partnership growth with incentive programs that actually work. We partner with businesses that want better sales team performance and happier employees, and we have a few tested ways to get you there. Our product lineup includes everything from branded debit cards to employee recognition systems that drive meaningful change. We also build custom sales incentive programs that fit your exact business needs. Every program that we create gets built from the ground up for measurable results for your organization. Contact us for a free demo, and we can talk about how we help high-performing businesses maximize their ROI and accelerate sales growth.
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
