How to modernize rebate programs for today's channel partner experience

Hi everybody, um, let's just give this another minute to let everyone join and then we'll start right away. Okay, I think, I think we can get started. So, hi everyone, and thanks so much for joining us. My name is Avantia, and I'd like to welcome you to our webinar today, Modernizing Rebate Programs for Today's Partner Experience. So channel partner expectations have changed dramatically over the course of the past few years, and we wanted to share with you our customers' experiences in the ways that they have been innovating their programs to address their partners' expectations. So with that, let me turn it over to Tim. Tim Harmon, our VP of Marketing. Tim, all yours.

Thank you, Ivantia. And hello, everybody. Good morning, West Coast. Good afternoon, East United States, and good evening. And thanks for giving up your dinner hour if you're in Europe. And I'm going to guess that there's no one from Asia-Pac or Australia, New Zealand that has been willing to get up in the middle of the night for this, but we'll make our recording available to you. Anyway, yeah, thanks for joining. So the partner experience, you may have heard, you know, the term customer experience or CX bandied about over the course of the past couple of years. Forrester, Forrester Research and Gartner Group, both, you know, big tech industry analyst firms talk a lot about the customer experience. And, you know, in fact, will make claims that it's those companies that deliver the customer experience today that are winning in the market and that will continue to gain market share. So, you know, what is customer experience? Well, customer experience, you know, ranges from providing a great physical experience inside of a store to being able to answer and address customers' questions in a fast amount of time, to being able to, uh, to being able to be easy to do business with, to make for a seamless, um, process for your customers regardless of which, uh, particular media they're using, whether it be in store or online or a mobile phone or, uh, or even a third party, a channel partner. And that's where channel partners come in, right? Because channel partners whether they be dealers, distributors, resellers, or agents, are critical in developing— in delivering that customer experience, right? They're a key part in doing that. And so it becomes paramount that you deliver a great partner experience. And that's like, you've— Attila said, this is what we want to do is share with you what our customers are doing with respect to their incentive rebate programs to provide that experience. So what I'll talk about over the course of the next, you know, 20 or 30 minutes, and then give you a chance to answer questions at the end. I'll start out, talk about, well, you know, what are the state of rebate programs today? And then I'm going to talk about 4 innovations or 4, you know, management scaling techniques that our customers are using to be more effective with the rebate programs for their channel partners and to be more engaging and interesting to their channel partners. So they've all, you know, grown their channel partner interest and engagement in their incentive programs. That's great. But— and I'll share with some of you some numbers at the very end— they've grown their revenue tremendously. I'll give you some statistics that show you what they've been able to do in terms of generating more revenue acceleration from their channel partners. So, state of channel partner rebate programs. Pretty much for the last 20 years, it's been very transactional. So, you sell a product will give you a rebate on that product for every sale that you make of that product. And it's been pretty much the same thing for 20 years with very, very little innovation. And of course, what is the result of that? Well, whenever you do something over and over and over again, it's not an incentive, right? It becomes worn out. It's not an incentive. It's seen as kind of the standard business model that channel partners come to expect, right? And so they're no longer, you know, driven or spurred to new levels of productivity or performance because companies have been doing the same thing over and over and over again for so many years. It just becomes sort of part of the baked-in standard, uh, business model. And like I mentioned, just like customer experience, CX, the partner experience has evolved, right? They, they also have newfound expectations. Again, so from a seamless interface, whether they are using your helpline or whether they're using your partner portal or whether they are using your mobile applications, they want to be able to get their questions answered easily and quickly, right? They are on the front line of support and need to be able to turn that knowledge around or those answers around to customers really, really fast. And so the partner experience has evolved, and it's unfortunate, I think, that the company's attention to the partner experience in general has been lagging their attention to the customer experience, right? And it's so important, again, because the partner experience is so integral, integral to delivering a great customer experience. So let's get into it. Let me talk about one of the things that our customers are doing with respect to their rebates called rebate stacking. So instead of just offering a plain vanilla rebate for a product, you know, you sell a product, you get a rebate, they're starting to apply conditions. To those rebates, things that they want them to do, or specifically markets they want them to go after. And so here are some examples, starting at the bottom and moving up. The bottom block, I'm going to give you a rebate of 3% for every deal that you close that is greater than $100,000. So now I'm I'm actually attaching some criteria to my rebate reward for deals of a certain size. Moving up from there, I'm going to give you a rebate of 3% if you sell to a new logo. A lot of channel partners have turned into farmers, right? They're very good farmers, but they're just doing nothing to find new customers. And so a lot of our customers want their channel partners to go out and find new customers, new logos, right? And so are starting to give them rebates, you know, so you get an additional 3% rebate if that deal that you closed is a new, is a new logo, right? Or by the way, if you're counting, we're up to 6% rebate now. Another attribute of an opportunity closed one is if you cross-sell, right? So it's great if you sell Product A, but if you sell Product B with Product A, we'll give you another 3%, right? Now we're up to 9%. And a fourth path that they can earn rebate earnings, make rebate earnings, is if— again, this is another example— if you sell into a particular market, in this case sell into the small to medium business market. Again, a 3% rebate. So that's rebate stacking. Really great for partners. They love it because it gives them different paths to make money. Now, they may not necessarily do all these things when they close a deal. But let's take, for example, that they got a new small business customer. Well, they would qualify for the new logo rebate at 3%. And the SMB customer market for 3%, total of 6% rebates. Pretty good. Now, what you— of course, what you want to guard against though is those partners who really are aggressive and taking advantage of all these different new paths to rebate revenue that they have and go after all of them. And so in this case, you know, a partner does a deal over $100K, it is a new logo, it does cross-sell product A, product B, and it is to a small business. 12% too high, cutting into your margin. So too high. So our customers are doing this, but our customers are doing this with a capability called rebate capping, right? So you have the capability within Fielo to say regardless of how many paths to rebate revenue or rebate earnings that you have, there is a maximum that you can earn, you know, for any one particular opportunity, right? And so in this case, I'm just in the example of setting the cap at 10%. So even though they might have the potential to earn 12%, it's capped at 10% to protect our profit margin. Let me go on and talk about another point, and this one is, is really interesting because a lot of our customers are innovating in so many different ways now. And one of the ways they're doing it in, in taking advantage of, you know, what a channel partner looks like today as opposed to say what a channel partner maybe looked like 10 years ago. 10 or 15 years ago. I mean, in the past, a channel partner— again, I'm talking about whether a manufacturer and you're working with dealers and distributors, or you're a tech company working with resellers and MSPs, or perhaps you're a financial services or insurance company working with agents— all your channel partners, a lot of them historically have been thought of as your sales channel, you know, your sales channel partners. Right. The reality is, is that today's channel partners, many of them are really seen as a sales, marketing, delivery, support partner, right? They have invested— channel partners have invested aggressively over the last decade to build out their capabilities, right? I mean, they're competing the same way that you're competing. They're just competing with other channel partners. And the way that they've found that they can compete is become more fully fleshed out in terms of the services and capabilities that they provide and that they have. So today's channel partner is really a sales, marketing, deliverance, support partner. But here's, here's— if you think about again rebate programs of the past, they've been incentivizing only sales behavior. Hey, what about incentivizing all these other skills and capabilities that channel partners now have? No. Could they market better or market more? Could they do a better job in terms of delivery? Or if they do a great job in terms of delivery, should they be rewarded for it? Just like you're rewarding them for sales today. If they provide superior customer support, great customer experience, again, aren't they warranted some sort of reward for being that, that superior, having that superior capability? And, and if they're not fully fleshed out on all these cylinders, an incentive rebate program that incentivizes these types of behaviors—marketing, delivery, and support behaviors—can actually urge them or push them to become more fully fleshed out, to invest more in marketing, to invest more in implementation and delivery, and to invest more in support and service. So that leads us to this second topic of behavioral conditional rebates, which sounds like a mouthful, but it's really not. It just boils down to what you want your channel partners to do besides sell more. Again, we've addressed that in what, you know, looking back, that's how rebate programs have been structured. I'm not telling you to abandon that, right? This is— these things that our customers are doing to innovate are being— are additive to their normal sales rebates. And I'll show you that, uh, coming up here in a couple of minutes. But behavior conditional rebates are all about what is it you want them to do and what is it that you are willing to reward them for doing a superior job, right? And our customers have the capability with the Fiallo solution to to incentivize and reward their partners for more engagement. I had the opportunity— this was a few years ago, actually, before I was with Fielo. I was an industry analyst with Forrester Research, and one of my, one of my clients, a tech company, had a concern that their incentive program was growing stale, right? They'd done a lot of wash, rinse, repeat over the years. And they actually did the— we actually went in and did some financial analysis. And while they were pumping more money into the rewards budget every year, they weren't getting any more productivity or performance out of their channel partners. So we, we, uh, we came up with a hypothesis that if their channel partners were more engaged with them that they would actually be more productive. So in fact, what they did is they, they took their channel partners, they had about 10,000 channel partners at the time, and they split them in half. So 5,000, their channel partners, they continued to incentivize in the form of rebates for sales. The other half, they actually took that incentive away. And instead, they started incentivizing them for taking training, for logging into their partner portal, and for participating in their online community, right, that they had. So, you know, um, posting their, their thoughts or their ideas or their content to the, uh, to their channel partner community and attending their events. And so they, they tried this out for 6 months and Lo and behold, what they found was that the second group that they were incentivizing for engagement actually produced— were 12% greater in revenue production than the first half, the one that they were just rebating, rebating, rewarding for the, for the result of that being a sale. So engagement can be a great thing to incentivize. Marketing. We have a customer that's actually, you know, since they've moved— and there's a lot of companies have moved to an as-a-service model— oftentimes the deal close is not contractually done by the channel partner anymore. But the channel partner is still a big part of that sales process, and in fact can be part of the marketing process as well. And so they are incentivizing their channel partners for actually gearing up on the marketing front and doing more in terms of local marketing activities, taking advantage of market development funds that are being offered to them, and the number of leads and referrals they're actually making. So in this case, this particular customer's program is actually replacing their old sales rebate program. Training, I mentioned, is part of the engagement. You can focus in and hone in specifically on training. If you have, if you have products or solutions which are fairly involved or technical in nature, you probably want to invest here. I mean, I don't— can't imagine— I'm going to switch back to customer experience here for a second. I'm guessing a lot of people have had a bad customer experience with some retailers for which their— the, the retail staff are not well trained in the products that they're supposed to be selling. I'm not going to name any brands. I'm sure we've all had our own particular experiences. I typically walk out of those stores and don't have anything to do with that retailer, that company, any longer. So if that's the case, to incentivize training can be a very important factor in terms of long-term customer relationship, customer experience. And customer growth, right? And then selling. I don't want to leave selling out, right? But in addition to selling more, so rewarding them for each transaction they do, you can also incentivize them for their selling process or their selling methodology. So, are, you know, are you— did you do register the deal? Are you doing demos in a timely manner, right? Are you scheduling demos within 15 days of the initial contact? How about your time to close? Are you meeting your time to close targets? Is it taking you less than 90 days to close new business? We have customers that are incentivizing their, their channel partners along those lines. And here's some real examples of some incentives that our customers are doing, right? So they're paying them more for doing the things that actually result in more closed deals, right? So, um, I started off when I was talking about the stacking examples, you know, if you close a deal greater than $100,000, you get 3%. They're doing that, but they're being additive, right? They also have an incentive rebate that says if you close a deal that's greater than $100,000 for which you generated the lead, now your rebate is 6%. And a third example, if you close a deal for greater than $100,000 that included a product for which you completed product training and got certified, well, now your rebate is 8%. So you can see that how this is still rewarding channel partners for their performance, their productivity, their, their revenue generation, but it's also taking into account those things that contributed or attributed to that deal, that sale. And if they do those things, rewarding them at a higher level. Thirdly, I want to talk about budgeting. And it's, it's, it's been surprising to me how little attention, again, over the past years, and this goes back to my years with Forrester as an analyst, how little attention has been paid to budgeting when these actually rebate rewards can get to be substantial. Maybe this isn't you, but I mean, there are large tech companies, large manufacturing companies for which their rebate payouts are in the tens of millions of dollars a year. Now, again, that may not be your case. But, you know, when you are successful, and, and you will be successful if you, if you follow these, these, you know, the, these, these concepts and apply them, your, your incentive program is going to grow, your channel partners' participation is going to grow, their revenue generation is going to grow, which is great. But that also means that your rewards budget will grow. Along with it. And so budgeting is, I think, is very important. And a lot of our customers now, well, all of our customers now, since we introduced our budget, our budget planning capability at the first of the year, are now aggressively using this to monitor how they're doing, right? Because they need to know, they may have an incentive that they put in the field in the fourth quarter. Of this year. And they're going to run, run it through the second quarter of next year. So they're going to do three quarters, Q4 this year, and Q1 and Q2 of next year, three quarters. Well, they want to know, at any point in time in that 9-month period, how they're doing, how that incentive program is doing in terms of the rewards payout budget, right. And so they are now using aggressively to understand again how their incentives are doing. But if they need to course correct, you know, in the middle of an incentive period, for example, if there are— they can now analyze which channel partners are performing at a higher level than others and put out communications campaigns to those underperforming partners to urge them, to remind them, to give them benchmarks or examples. Of what other channel partners are doing. And they are also able now to tell which products are actually performing across all their various incentives as well. So that's key for them. Now, a new capability that we introduced along with our, our budget planning is budget earmarking. Now, I don't know if everyone here today knows what earmarking is. Earmarking means that you designate a certain part of the budget for a specific purpose, right? So, you know, for those of you in the US, the Senate recently— the US Senate recently passed an infrastructure bill. And there's lots of earmarks in that bill, right? There's so much of the budget that's going to go for roads and bridges, and a certain amount that's being earmarked for high-speed internet, and so on and so forth. So, you know, earmarks in terms of managing big budgets like federal governments do have been used for a long, long time. You have this— you now have this capability as well. Our customers have this capability, and they're using it. So, let me give you an example of how they're using it. So they're actually, when they build their budget at the beginning of the year, or at the end of the year, end of this year, like they should be for next year, they're going out to all the different business units and getting them to participate in the incentive rebate program by contributing to the overall budget. So in this case, Product Group A, you know, might give $100,000 for incentives that involve the sales of Product A, right? And that goes into the budget. Product Group B, we're going to give $80,000 for any incentive that involves the sale of, of Product B. The marketing department in this example is giving $75,000 for those incentives involving marketing activities or leads or referrals. And then the customer experience or the customer support department is giving $65,000 or incentives involving customer satisfaction and on-time delivery, things like that. And so, when you actually go to create an incentive, you can actually determine what the overall, you know, budget for that, the rebate budget for that particular incentive is. And you can pull from different earmarks if you want, right. So, if this is, if this is an incentive about marketing a particular product, You could pull from the product group A earmark, and you could pull from the marketing earmark portion, or one or the other, or you could do 50/50 or 70/30 or however many you want to split. You have this ability now to pull certain earmarked portions of your budget for incentives, and then, you know, the business units are going to get, you know, charged accordingly. Last but not least, and I think this is the most important thing with respect to this notion of how important the partner experience is, is being able to put the power of choice in your partner's hands. Now this goes well beyond a portal where you are sharing the information about the incentives to your channel partners. Which of course we've, uh, Fiala, we've done for a long time now. Again, it's earlier this year we introduced our Partner Incentive Planner product, which really puts a lot of the power of all these different incentive rebate that they have at their option in an analytical tool that's now in their portal, right, in the partner portal. So let me give you— let me show you what that actually looks like. They call the partner incentive planner, and this is the, you know, this is actually what the partner sees. So they have a number of opportunities that they have in their pipeline, and all these opportunities are listed. They can have filters so they can look at them by particular date ranges or opportunity amounts. Or what have you. And, you know, for— so whatever filters they apply, they'll get a list of all the opportunities in their pipeline that meet those filter criteria, right? And, you know, they'll see of those opportunities that they selected, and they might probably start by selecting all— they want to see all of them— then maybe they'll winnow it down, but they'll see how much, how much rebate earnings potential there is in their pipeline, right? So you can see here on the right over here where it says rebates, 2 point— there's $1.08 million in rebates for which they're eligible, $2.3 million that they're remaining— that they could be eligible for if they did certain things, right? And that makes it a maximum of $3.38 million maximum of rebate earnings for them. Pretty big amount. And then to the right of that, you'll see this box called Bucks. And we have a new capability where a reward can consist not just of a rebate, but of a virtual currency, right? So you're actually giving them virtual currency that they can use then to pay for event tickets or to pay for sponsorships if they want to participate in your annual customer conferences, or if they want to get discounts on training. We've added the virtual currency capability as well. So this is an example where, you know, programs— reward programs consist of both rebate rewards and virtual currency rewards. So what they do then is they go through this analysis of opportunity by opportunity to see what is the rebate, what is the incentive condition for me to earning this rebate. You can see in the lower left, get total amount, opportunities amounts in the fourth quarter. That are 10% greater than in the fourth quarter of the previous year, you will earn an additional 3% rebate, right? And that actually applies to 3 different opportunities that are currently in their pipeline. So, they can decide of all their opportunities in pipeline which ones they want to aggressively work for this quarter and which ones they might be willing to push out potentially to a subsequent quarter. To maximize their earnings. And this has been phenomenal, right, in terms of how partners are using and embracing this to do their own financial planning, to do their own pipeline planning. It is— I've had many channel partners that I've had the opportunity to talk with have told me this is the best thing their companies have ever supplied to them. And you can imagine the results that those companies are getting from supplying such a valuable tool to their partners, much higher engagement, much higher, much higher satisfaction, much higher revenue production. And quite frankly, some are actually using this to go out and steal channel wallet share from, from their competitors. So Absolutely, you know, key, absolutely successful, and partners love it. So let me just give you— I told you I'd give you some proof points at the end, and here they are. I'm going to give you 4 examples. This is data that we've taken from our customer base, again, employing these techniques that I've talked about here. So, uh, let's start within the engagement center. So members, that's your channel partners. Channel partners are your members, program members. Channel partners who, uh, are, that are being given some sort of engagement incentive, you know, to log into the partner portal or to attend events, you know, or take training, something like that, are actually engaging with the brand more than 15 times per month. I have to tell you, I don't know what your current experience is of how many times per month your channel partners engage with you. I can tell you what it was 5 years ago when I was at Forrester. It was less than one, less than one time per month. And so this, this fact that, you know, Fielo's customers are getting its channel partners to engage with them is 15 times per month is extraordinary, right? So just incentivizing them to do engagement is, you know, leading to that— that the result of that hypothesis that I told you about, that tech company who applied an engagement incentive against the sales incentive and got 12% higher productivity or revenue. You can see that it has you know, the cascading effect. Sales incentives. So sales incentives, these are conditional sales incentives that they've started to do and how to incentivize selling behavior, not just the selling results. So how quickly they do demos, right? How long it takes for them to close a deal. So those companies that are employing these types of innovative sales incentives are getting 4% higher revenue. Than their peers, right? Tier attainment incentives. So you can do— you can incentivize through rebates your channel partners to move up from bronze to silver tier or to move up from silver to gold tier. And, you know, the benefits they're realizing here is that, you know, those that, that reach the top tier are 5 times more productive than lower tier members. So it's a great— it's a great behavior to incentivize because you're going to get much higher, much higher productivity once they've reached that, that higher tier. A training incentive here. So here the point is that members that take and complete training generate 23% more revenue than those that don't. Remember I talked about the retail store, my own experience, where the, the, the staff, the clerks didn't really understand or know about the products they were supposed to be selling. Extrapolate that to your own channel partners and look at this number. Channel partners that take and complete training generate 23% more revenue than those that don't. Why wouldn't you be incentivizing training completion with that sort of number on the board? And then, you know, at the, at the, at the end of the path, you know, when you take all these together all these different centers together across all of our customers, their— the, the revenue generated by their channel partners increased by more than 13% over the initial period of the program, right? So huge numbers, you know, proves that innovation works, and innovation makes you stand out. It not only works, it works because you've Partially because it makes you stand out, right? So that you can— now, if you are competing actually for channel partners or channel partners' wallet share with your competitors, you're going to be more successful, right? You're doing something that they're not, and you're actually doing something that supports the business that the channel partners want to be in. They don't want to be just a sales channel anymore. They want to be seen as that marketing, sales, delivery, support, and service partner of yours and want to participate with you financially in developing that fully fleshed out model and delivering the, the, the capabilities of that fully fleshed out model to theirs and your customers, right? With that, thanks for giving your time today to hear. Hopefully, you've gotten some ideas that you can take away to apply to your own incentive rebate programs. Let me turn it back to Ivantia and see if there were any questions that came in over the chat while I was talking.

Yeah, Tim, so we have a couple of questions. The first is, can you give another example of a behavior conditional rebate, maybe one involving the customer experience?

Oh yes, so I think we were using an example of if you do a deal, if you close a deal over $100,000 and there was a condition applied to that, that where you could actually increase the rebate payout if you met that additional criteria. So in terms of customer experience, you might say, well, if you close a deal for over $100,000 and your customer sat rating for the last quarter was above 95, then you get an additional rebate. Or you can say if you close the deal for $100,000 and your, your delivery time was on time and under budget for the last quarter, then you can pay out an additional rebate as well. So because of VLO employs a rules engine, you can essentially build out any sort of attributional criteria rule for that, that you add on to that, that, uh, that closed one sales rule. Okay, uh, all right, anything else, Ivantia?

Yeah, and, um, they want to know when is your part— when is the partner incentive planner product going to be available? Oh, it is available.

Actually, it was first made available in Q1 of this year, I believe in February, February, March. And of course, you know, we roll out 3 new releases each year. And so what I showed you was actually everything that is available today. What we'll be adding to the Partner Incentive Planner in the future is an API capability for those Salesforce shops. We're a Salesforce native application, by the way. So for those Salesforce shops or systems integrators that want to extend the value themselves, and then we are also adding more analysis type of capabilities in the forms of graphs and bar charts so that they can actually do some graphical mapping of their opportunity pipeline. If you will. Okay, so I want to thank you again. That's all we have time for today. I'm always available for, for questions, not, not now, but, you know, going forward as well. You can either email marketing@fiolo.com, or if you want to email me personally at tim.harmon@fiolo.com, you can do that as well. And check out our website, please, fiolo.com. Particularly our resources page where you'll find not only all of our webinars in the past that have been recorded, but our ebooks, our infographics, our videos, and our interactive tools that you can use to get a better grasp on what you can be doing to make your program more successful. So thank you, everyone.

Thank you, everyone. Have a great day.