How to Develop a Successful Channel Incentives Program

How to Develop a Successful Channel Incentives Program

Channel incentives are business incentives that aim to motivate the people working for manufacturers and vendors, including distributors, resellers, and dealers. Most businesses in the manufacturing industry rely on these partners to sell their products; 76% of industrial marketers rely on an intermediary to sell their goods to the end consumer.

With specific sales goals and business growth in mind, it makes sense to offer rewards to help achieve this and stand out from the competition. Like with any incentives program, the rewards should be unique, because channel incentives are becoming more and more common. 

According to a Marketplace Study by the Incentive Federation, between the years 2013 and 2015, the use of channel rewards among businesses rose 15%, with companies spending upwards of $17 billion on channel programs alone. 

If most brands are offering channel incentives, how can you make yours worthwhile? First, let’s start by looking at the programs channel partners tend to respond to most.


Types of Channel Incentives


Sales Performance Incentive Funds (SPIFs) are performance-based incentives designed to inspire sales teams to promote a specific product. 

This type of incentive is commonly used by vendors who are looking to introduce a new item to the market, efficiently moving a product backlog, or increasing sales within a specific time frame.


MDF (Marketing Development Funds) have grown increasingly popular among manufacturers. A recent survey conducted by Baptize & Company found that 72% of respondents are running these types of programs. Unlike SPIFs, which businesses provide after a partner has achieved a specific sales goal, MDFs are in advance of a partner’s performance to encourage a particular behavior.

MDFs are typically used to create awareness about a brand offering. Partners can use these funds to pay for the marketing materials training needed to promote the vendor’s product or service.

Like MDFs, Co-ops (Cooperative Marketing Funds) are intended for advertising purposes. They are earned over time as a percentage of prior sales and awarded after a certain behavior has occurred.


Rebates are run-of-the-mill in terms of rewards. They target distinct product promotions at specific moments to drive a volume of sales. Rebates encourage partners to sell more products because they will receive a percentage of the sale. The survey conducted by Baptize & Company found volume rebates to be among the most effective incentives for partners.

So, now that you know the different types of channel incentives, how can you create a successful program that works to enhance your business? Here are a few effective techniques to consider when crafting your program.

Structure Your Program

Like any rewards program, it’s necessary to look at your company’s specific goals before implementing channel incentives. Consider what is most important: do you need help driving leads, creating buzz around a new product, or ramping up sales to meet end-of-quarter goals? No matter what your goal is, your incentives should work to achieve this.

If you’re looking to create buzz around a new product, MDFs or co-ops might make the most sense. If you’re trying to boost sales in a short amount of time, performance-based rewards like SPIFs might work best to push sales teams forward in the final stretch. 

Offer Practical, Personalized Rewards

Whichever incentives program you choose, it needs to be practical. The rewards should also vary from time to time. If your partners are always receiving the same reward, they will likely lose motivation. New, unique rewards, however, can spark hard work and drive the intended behavior.

Offering personalized rewards can help to alleviate the repetitive nature of channel incentives. It can be beneficial to learn as much as you can about those helping you meet your goals so you can incentivize them most effectively. 

Measure Your Program’s Success 

You always want to know that your channel incentives are working toward your end goal. Having a system in place that helps you measure your partners’ performance against your strategic intentions will highlight whether or not you need to amend your program.

One way to measure your programs’ success is to look at ROI. This will reveal which programs are driving business and which are not.

When you offer rewards through Virtual Incentives, you can easily monitor and track your channel program’s success. Reach out to a rewards expert today to learn more about our incentives opportunities and to start driving sales growth to your business.