Has COVID-19 Destroyed Channel Incentives, or Simply Changed the Landscape?

As COVID19 continues to impact the business landscape, many companies are finding unique ways to react, cope, and adapt. Brands who sell all or part of their products indirectly are seeing changing tides effect how they manage their channel partner network in a new selling environment.

With most teams residing remotely and markets becoming increasingly more competitive, channel tactics that seek to reach and engage performance of those teams are taking a spotlight – like promotions, sales incentives, training, communications, and more.

WorkStride took a dive into our database of channel leaders to further explore just how practitioners are reacting to changing circumstances and perhaps treating their channel operations differently than before. We conducted a brief survey of a random sampling of channel marketing professionals to collect valuable input, which has revealed some meaningful insight to share.

Companies engaged for the survey were all midsized-to-enterprise-level OEMs focused primarily in the industries of Technology, Industrial, and Building Materials. The target companies all have indirect channels in their supply chains, consisting of either Dealers, Distributors, Agents, VARs, and/or Contractors.

Here Are the Three Key Takeaways From Our Results:

1) Budget allocation is predominantly unaffected, but that may change.

When asked about how budgets are changing in channel management, a vast majority of respondents saidthat they have no implemented budgetary changes compared to before. However, roughly 65% of responders do plan to look at how dollars are being spent for the remainder of the year.

This suggests a reaction to economic conditions as well as shifting grounds beneath the channel landscape. Reaching, engaging, and educating partners in a post-COVID world likely warrants changes from that of pre-COVID, at least in the short term.

As uncertainty fills the air, channel leaders are staying cautious of their budgets and are open (or actively planning) to reassess how dollars are being spent in channel. For some, these changes are likely to be simple redirection of budgets, rather than cuts completely. For example, Co-op budget in-store advertising has unsurprisingly been redirected to go to use in other more digital forms of channel marketing.

The thoughts or plans on reallocating budget have not yet affected a majority of the groups’ immediate spending during the thick of COVID19 – with a majority our sampling indicating no reductions in allocated SPIFF dollars during Q2.

2) Reward redemptions are changing.

With the virus hampering physical experiences and travel, it’s not surprising that, amidst shifting program strategies, reward options that are centered around those areas within popular channel incentive programs are becoming less prevalent, while more digital forms like gift cards, visas, and cash becoming more utilized.

Since many sales incentive reward budgets in the group have not yet reduced, the shift in reward types further suggests reallocation as the dominant budget strategy- spending at a similar level but more wisely relative to the current circumstances.

3) Training incentives are stepping up.

An inopportune time for selling is creating an opportune time for training. OEMs are keeping partners with reduced workloads occupied by leveraging time for training and development.

Outside of selling, other important partner behavior is valuable to keep momentum up. Content consumption, like training videos, quizzes, and other materials are often incentivized – and now seem to be at larger scale. That means focus on building more brand and product knowledge now, in order to hit the ground running once the pandemic is over.

The overall trends represented suggest that there is, in fact, changes unfolding relative to channel selling– however it is not an end, but rather a strategic reallocation. Companies are observing and adapting; putting budgets towards the most effective uses possible to drive performance through the uncertainty. Companies are getting creative, strategic, and seeking to best position themselves to whether a storm and perhaps even come out stronger in some way at the other end.

Want to dig deeper into these statistics and how to navigate a COVID-19 channel environment? Learn to optimize your channel strategy for more effective use of SPIFF and Co-op budgets in our upcoming webinar with BrandMuscle, a leader in integrated local and channel marketing.