April 19, 2024

Business Bib

Business & Finance Blog

What Are Channel Incentive Programs and What Benefits Do They Bring

2 min read

 

Channel partners are individuals or organizations that offer sells or services products on behalf of another hardware, software, networking or cloud vendors. An example of this would be Dell selling laptops with a gift of Microsoft Office already installed. After a year, the person who bought the Dell will need to pay a yearly fee to keep using the Office software. So, Dell and Microsoft are considered channel partners – each one helping the other company with their bottom line.

More on channel partners

Normally a channel partner is an organization that becomes a partner with a producer or manufacturer to market or sell theirservices, products, or technology. This can be done usually by a co-branding connection. This type of partner can be vendors, consultants, distributors, systems tech, value-added reseller, deployment consultancies and other such businesses.

Benefits

Channel partners help with many benefits. They might have an executive with one business, who becomes an executive with the other company because of his expertise in the development of this partnership. Plus, some of the employees of one company work with employees of the other company to get their project up and running. They also are trade or salesmediators that transfer products from the suppliers to the end-users. Distributors and wholesalers are intermediaries and channel partners by buying and reselling products. Brokers and agents have the same relationship.

Incentive

This is where channel incentive programs come into play. When two companies are channel partners and help bring money into eachother’s companies, there are incentive programs to help the partner be productive and happy with the entire relationship. An effective channel program brings in sales, increases productivity, earn channel mindshare as well as increase engagement between channel sales reps. Of course, if a company is doing that for another company, they need to show their appreciation with incentive programs. Such as a car manufacture allowing all their salespeople to drive one of their new cars – this gives the sales agent incentives to sell more cars.

These examples are quite simple while large channel partnership with very large corporations can be quite complicative.