Are there common ‘pay-for-performance’ practices that suppliers use to motivate channel partner behavior?
Suppliers use a number of incentives or penalties to encourage certain types of channel partner behavior like co-op advertising allowances and specification discounts. Of course, not using incentives or penalties can have the opposite effect by encouraging the channel partner to exhibit the opposite behavior. Why do suppliers have trouble converting their channel partner discount structures to a ‘pay-for-performance’ program? First, unless specifically explained, channel partners often do not tie the discount received from the supplier to the activities the supplier has asked them to perform. When channel partners do not see the value in the activities, they focus on the costs of the activities. Second, many suppliers do not differentiate the desired activities and the relative discount amounts associated with those activ- ities. Channel partners that do perform the desired activities would like to be differentiated/rewarded for their support (versus those that do not perform the activ
Suppliers use a number of incentives or penalties to encourage certain types of channel partner behavior like co-op advertising allowances and specification discounts. Of course, not using incentives or penalties can have the opposite effect by encouraging the channel partner to exhibit the opposite behavior. Why do suppliers have trouble converting their channel partner discount structures to a ‘pay-for-performance’ program? First, unless specifically explained, channel partners often do not tie the discount received from the supplier to the activities the supplier has asked them to perform. When channel partners do not see the value in the activities, they focus on the costs of the activities. Second, many suppliers do not differentiate the desired activities and the relative discount amounts associated with those activ- ities. Channel partners that do perform the desired activities would like to be differentiated/rewarded for their support (versus those that do not perform the activ
