ROI Evidence for Channel Partner Incentive Programs
Q: Prospect: Do you have research showing positive ROI on channel partner incentive programs?
A: Brightspot: Of course!
84% of Businesses Use Rewards
The most straightforward ROI proof is 84% of U.S. businesses use non-cash incentives according to the Incentive Federation market size study. It is estimated U.S. businesses spend $ 90 billion on non-cash rewards. If the thundering herd of U.S. companies is investing in non-compensation rewards, it proves a widespread belief in their ROI.
Ok, I agree with your thought. That stat is not purely focused on channel partners.
Channel Partner ROI Case Study
The Incentive Research Foundation (IRF) conducted the best single study, calculating ROI on reseller incentive programs, named “ROI Incentive Programs: A Case Study for Channel Sales Success.”
To increase sales and grow market share, a Fortune 500 manufacturer selling through value-added resellers (VARs) formulated a new channel partner incentive program to respond to competition in the marketplace. IRF validated the math. The program results were:
• revenues increased by 32%
• market share increased in 9 of 12 markets, more than 30%
• net operating income increased to 19% of revenue
Additional non-financial results (often called ROO – Return on Objectives) included:
• 30% of the VAR participants were first-time reward earners (showing new mindshare, loyalty, and adoption)
• program participant surveys yielded 87% “excellent” ratings
• turnover of key VARs decreased by 2% from the previous year
The channel partner incentive program yielded the following ROI:
• incremental improvement: $ 3,934,700
• incremental costs: $3,186,900
• return on investment: $747,800
• return on investment: 23%
Top Performing Companies
The IRF recently launched its “signature study” series on top-performing companies. They analyzed companies with high revenues upwards of $100+ million, good growth with greater than 5% revenue growth or stock price growth, excellent customer ratings with 90% customer retention or 90% customer satisfaction, 5% new customer acquisition rate, and excellent employee ratings with 90% employee satisfaction ratings or 90% employee retention.
See the original 2017 Top Performer Study infographic
Top Performing Companies in Technology
Now, the IRF has added vertical industry studies. If a reader dives deep into the research of the 2019 Study on Top Performing Technology Companies, several ROI and ROO golden nuggets can be found deep inside. Fortunately, you have a guide; follow me into the underlying research slides.
• Slide 22 – top technology companies are more likely to use outside incentives agencies for help (see below)
• Slide 47 – channel programs are tiered to allow 2nd tier awards other than a partner incentive trip (93% adoption)
• Slide 54 – average non-cash reward value earned for channel incentive programs = $3,156 per salesperson
Incentives are Self Funding
The simplest justifications are the best. Incentive programs pay for themselves. They only pay when sales are made. Incentive programs are “self-liquidating.” Feel free to play around with some “what-if” scenarios with your channel partner incentive program budget using our handy budget calculator.
If you’re looking for more bright ideas on how to make your channel partner incentive program the best it can be, download our channel partner rewards guide for step-by-step advice, tips & tricks, and current industry trends. Of course, you can always drop us a line for a no-strings-attached consultation of your current program or upcoming program.