Channel incentive ROI

Author: Gordon Wilson, commercial director at Achievement Awards Group

Well-designed incentive programmes work – and they work fast. They can help clear old stock quickly. They can accelerate sales. They can contribute to spikes and increases in revenue. You see the results, almost immediately. But if a short-term boost is the extent of it, these programmes are missing out on other, more sustainable, more valuable returns.

Quick wins

Among our case studies are examples of channel incentive programmes that bore outstanding results in a few weeks or months. One contributed to a 53% increase in used vehicle finance within weeks of the programme’s launch. Another targeted responsible liquor trading and saw compliance improve from 72% to 80% within six months.

And another was initially designed as a short-term sales drive, run over a series of 'sprints'. It paid off with a 178% ROI and was so effective that the programme was renewed for three years. This particular case study demonstrates the potential for greater, accumulated value over time. The incentive programme targeted non-sales staff by improving their product knowledge and including them in a sales incentive structure. The staff became better informed – something that doesn’t simply disappear when an incentive programme ends. And through the incentive programme, they also became more engaged employees – which has hugely valuable secondary benefits.

It begs the question: if limited-duration incentive programmes are extended or sustained, what are the potential returns over time?

Long game gains

Perhaps the most obvious benefit is that the results you see in the very short term are also apparent, and often more so, over longer periods.

The first example of the used vehicle finance campaign is a case in point. The 53% increase in used vehicle finance was the immediate result. But, extended over a year, the programme also saw a 34% increase in new vehicle finance, and a 49% increase in insurance products sold. This case study bears out what a meta-analysis of scientific research on incentive programmes concluded: that 'longer-term programmes outperform short-term programmes'.

Specifically, the study found that while incentive programmes of a week or less yielded a 20% performance boost, those that ran for up to six months showed a 30% increase. programmes that ran for a year or more, however, did best of all, producing an average 44% increase in performance.* But there are other long-term benefits, which, although not visible (at least not directly) on the bottom line, are enormously valuable, and which compound.

Increased mindshare

It’s logical that if you’re constantly in sight, you’ll be top of mind. This means that when your partners have a dozen different brands to sell, yours gets mental salience and preference.

Better product or brand representation

Incentive programmes don’t necessarily only reward sales. They can also reward things like training, product knowledge and, as the second case study above showed, compliance. These things equip your channel partners to sell and support your brand better and more confidently. This, in turn, inspires similar confidence in customers.

Affinity, loyalty and trust

Rewards are not purely transactional, especially over time. Consistent recognition builds an emotional connection between your partners and your brand. This is especially true of non-monetary rewards like travel, collaborations or early product access. These are experiences, which create goodwill, make partners feel recognised, and build a deeper and more lasting relationship.

Behaviour change

Consistency builds habits. And so sustained, long-term incentives help to positively shift your channel partners’ behaviour over time. That may come from them regularly registering sales, upselling and cross-selling, completing courses or learning modules, or logging into the programme platform to check scores and statuses. These repeated acts become embedded habits.

Not just soft stuff

These benefits used to be thought of as 'soft' – in other words, touchy-feely and difficult to measure. That’s wrong on both counts.

Firstly, the compounding effect of all of these things is substantial, and should mean that, in addition to short bursts and spikes during sprint or campaign periods, overall performance improves sustainably over the long-term. Simple year-on-year comparisons are one place to look. programme ROI should also be measured over both the short and long term.

Secondly, long-term benefits, like the strength of your channel partner relationships, can be measured beyond the bottom line.

Partner engagement scores, for example, enable you to quantify how actively and meaningfully your partners are interacting with your brand, and how healthy the relationship is. Partner relationship scores can take into account things like platform or app usage, training and certification, programme participation, marketing collaboration, and other relationship signals such as net promoter scores or partner satisfaction surveys. This enables you to keep a regular finger on the pulse of your channel partner relationships.

The long and short of short- and long-term ROI

Short-term returns on channel incentive programmes are the glamour guys, the rock stars that like the limelight. And that’s understandable: everyone likes to see the measurable results of their efforts, fast. But long-term benefits are like the strong, silent types. They keep on working consistently, their progress not always as immediate, not always as visible, but they consistently build loyalty, and sustainably deliver.

Reference:
* Incentive Research Foundation, (2002) Incentives, Motivation And Workplace Performance: Research And Best Practices. Available at https://theirf.org/research_post/incentives-motivation-and-workplace-performance-research-and-best-practices/