In today’s marketplace many companies are forced to sell indirectly and often choose to use the services of a channel partner. This method, though widely used, also poses some challenges. When it comes to channel partners, finding the perfect fit could be hard. Before creating the partnership, a company must figure out what would make a good partner and what actions it must take to build a successful relationship.
Most of the companies evaluate the performance of the partner by measuring volume-based metrics. This evaluation system fails to inspect how the partner does business. Therefore, this can lead to incenting unworthy partners.
A common problem this evaluation method creates is that the partner, instead of providing superior service as part of the sale process, only focuses on finalizing the sale. Harming the overall consumer experience can have devastating long term effects on the company’s sales and reputation.
Another common problem that occurs when depending solely on volume-based evaluation is that the partner stockpiles inventory during the last month of the incentive compensation software and by doing so completely distorts the company’s revenue forecast.
The solution lies within changing the evaluation system. Instead of focusing on sales alone, the company must evaluate the partners’ service component, their commitment to the partnership and volume growth. Using a balanced evaluation system, will ensure that the company only incents partners whose operations are in line with the company’s values and strategy.
At the end of the day, the problems many companies experience when incenting channel partner can be resolved by adjusting their evaluation systems so they will evaluate the customer experience the partner provide, rather than just his sales. A well-balanced evaluation and incentive-spm will strengthen the partnership and focus the partner on growth-focused behaviors. It is the only way to make sure the company’s resources are wisely spent.
