Since incentive schemes are a big step forward in cementing channel and vendor ties, it is important that vendors keep in mind the market size as well as the potential of the partners in a particular market, to help them maximize on the benefit of these schemes

In the IT distribution business, the success of a company is directly proportional to the success ratio of its channel partners. Understanding the channel community and its relative intricacies are critical for an organization to strategize and efficiently tackle the challenges while doing business.
Collaboration along with the right ingredients of partner loyalty, satisfaction and trust will ensure a strong partner ecosystem that is essential for overall growth. Facilitating innovation at levels of solution providing, product bundling, marketing and branding and making a meaningful difference in skills development, acquisition of technical competencies and their successful deployment can help companies to cement relationships with their partners.

Among other things, incentive schemes are perhaps the most sought after as well as the biggest motivating factor that vendors provide their partners for doing business. Be it annual schemes, festive rebates or any other, incentive schemes serve the dual purpose of helping product sales as well as strengthening vendor-channel relationship.

Channel concerns
While the channel laps up most incentives schemes, there have been some areas of concern regarding schemes. One concern that has haunted the channel community is the need for customization of these schemes to suit the needs of the upcountry partners.

There is a general feeling among many upcountry partners that the prescribed targets, which the vendor company decides for them in order to qualify for the incentive schemes, are tough to meet. Targets seem to be more in sync with the metro and mini-metro markets and at times become very cumbersome for an upcountry partner to achieve.

According to Sarad Bawri from Lifeline Enterprises, “Sometimes it is very difficult for us to maintain proper stock. Either we are short of inventory or it exceeds our sales. In between if there is any price fluctuation, the situation becomes tougher and upcountry dealers find it difficult to meet targets and benefit from the incentive offered.”

Agreeing with him is Sanjay Jalan of Jalan Distributors. “When the scheme is same for metro and non-metro cities, it is difficult for our resellers to achieve the set targets since they have to pay for the transportation cost. Hence the pressure is more on their side,” he states.

Manish Jain of Ridhi Sidhi Computers noted, “Customizing incentive scheme targets for the upcountry market and simplifying them, would not only help partners benefit from the schemes, but also turn into an important growth factor for the local market.”

Make it simple and local
This implies that the channel would benefit if schemes or offers help partners give their customers a better pricing and enable them to achieve
sales targets. When schemes are designed to become cumbersome, it becomes very tough for a partner to understand them. By the time the process is clear, the partners could end up losing time to meet the targets. So it is very important for the vendor to streamline and make easier both the incentive schemes and the claim process. Otherwise the partners will face problems. While most of the upcountry partners agree with the
idea, there are others like Mano Agarwal, Director, Lipi Computers, who said, “It entirely depends on the vendors to set the incentive scheme as same or different for upcountry partners and metros. As far as customizing the targets is concerned, there are vendors who fix targets differently. Also whenever a partner faces the problem of achieving the target, we inform vendors and they do come up with flexible schemes.”

DK Mehra of Sona Infotech share similar thoughts. He said, “Vendors generally devise incentive schemes for a region keeping in mind the viability of that market. They are aware that the market size differs between metro and non-metro cities and differs from one market to another in upcountry also.”

Vendor's call
Given that partners feel the way they do, and also that market sizes vary from one non-metro city to another, it is critical that vendors frame schemes in accordance to the market viability of each place. Vendors must customize their schemes to reflect market potential of a particular geography and organizations which do not adhere to these basic fundamentals will never be doing justice to their channel partners.

Different vendors adopt different strategies while devising schemes for their partners. According to Prashant Prakash, Entity Head-East, HCL Infosystems, “We device our incentive schemes primarily based on our partners' category, ie, exclusive, focused and Opportunity-based partner and differentiate schemes for metro and non-metro partners. Our schemes are chalked out so that they suit all levels of partners catering to any market category. We have not received any negative feedback from our partners.”

Agreeing with him is Koushik Chatterjee, GM-Toshiba Mobile Computing, HCL Infosystems who said, “The difference in incentives schemes that we set for upcountry and metros is in the target and qualifying slabs whereas the incentives are same for all the partners. Our schemes are thus customized for partner needs.”

Sensitivity needed
To summarize, if vendors are sensitive to their channel's needs and work towards providing partners with relevant schemes, the latter would not just be happy but also motivated enough to meet all their targets. The onus therefore is with the vendors to make sure that none of the partners feel neglected. Like Bishwajit Sutradhar, Assistant Manager-Channel Business (East and Bangladesh), D-Link India put it, “When we develop any incentive scheme on a regional basis we have to always keep in mind the market size as well as the potential of the partners belonging to a particular market. Setting up universal schemes will definitely affect the upcountry market partners and they will never be able to compete with the metro city partners.”

Acknowledging the fact that partners in upcountry markets require different parameters than partners in the metros, vendors like Acer have revised their schemes to accommodate all partner requirements. Said S Rajendran, GM-Sales and Marketing, (Mobility and Display Products Group), Acer India, “For our regular schemes we have separate targets with regard to our metro partners and the upcountry markets. However we strive to maintain the payout level, so an upcountry partner will almost always get the same incentive for a lesser target which is the way it should be.”

Incidentally Acer has exclusive schemes for retail partners across the country where they go in for an even deeper segmentation. Partners are divided based on their association with the company (exclusive v/s multi-brand) and also segmented into geographies of A, B, C and D-category cities based on the market potential that exists for the product categories in these markets. “These help us to deploy targets which are realistic. Partners feel that the company is being fair to them,” Rajendran added.

SM Ramprasad, Manager-Consumer Products, Epson India said, “At Epson, we design schemes which take into account the smallest of small partners as well as bigger partners. Thus far we have designed our schemes based on different partner requirement across all types of locations.”
This means that most vendors have regular schemes, which are targeted to benefit the partners in the small towns as well as the metros. If the schemes have simple targets across product categories for each geography it would ensure that all partners are encouraged to participate in the programs. Unique multi-level reward schemes would garner a better participation and response and also encourage more partners to perform beyond expectations.

Subbalakshmi BM
(with inputs from Piyali Guha in Kolkata)

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