3 Reasons Your SPIFF Program May Not Be Working

How Effective Is Your SPIFF Program?

Vendors selling through the channel face an ongoing multi-dimensional puzzle: how to be more effective, how to differentiate their products, and ultimately, how to drive profitable growth. Layered atop this puzzle is the need to pull the right financial levers, at the right time. One of those levers is the use of channel incentives and rewards. Many vendors use a SPIFF Program or SPIF’s (Sales Performance Incentive Funds) to influence behavior with their channel partner’s sales teams.

A SPIFF is a short-term incentive, tied to driving sales in a set period of time. It can be dollar rewards, prizes, or loyalty points. A good SPIFF program is aimed at one thing, and one thing only – driving your sales.

Any kind of activity can be rewarded. Examples include Sales, New Logos, Certifications, Recruitment, Meetings, Distributor activity, and YoY growth to name a few. All of which can vary by Partner Type, Geography or any characteristic or attribute the user wishes to add as a level to the program.

Sounds good, right? But anyone who has experience working in the channel will tell you that if it were that easy, they’d use Spiff programs all the time and just call it a day. The simple truth is…. it’s not that easy.

Often, and after a lot of analysis, vendors will launch incentive programs they believe will accomplish their immediate objectives. And yet they just don’t pan out.  So, what goes wrong?  Channel Mechanics has a lot of experience working with companies that have come to us for help in getting their SPIFF programs right. Based on what we’ve learned, these are the 3 most common mistakes vendors make when it comes to getting SPIFF Programs right:

3 Common Mistakes in Getting SPIFF Programs Right

Mistake 1: It’s too Difficult to Consume (Ease of Doing Business)

The best SPIFF Program in the world will fail if it’s not communicated to channel partners in the right way. Or if it’s too difficult to take advantage of, once the audience becomes aware of it’s existence.

• In the best SaaS programs for SPIFFs, targeted channel partners will receive, at the very minimum, an email notification along with alerts on the vendor’s partner portal.
• Once the channel partner’s sales person is aware of what’s on offer to them, they need to be able to quickly and easily take advantage of it. To be successful, a web or app-based function providing an efficient redemption process, works best.

Mistake 2: It’s not Targeted Properly

The reward being offered has to be relevant to the sales person. Offering rewards that are misaligned with the recipient’s needs or interests leads to non-redemption. But probably worse still, a disinclination to participate in future offers from that particular vendor.

• Knowing your target audience is essential. Tailoring of a SPIFF program will be dependent upon the target audience – a sales floor team will respond to different offers than business owners. Also, in some cases, loyalty points are key, whereas in others, gift cards are more effective as an incentive. So do your research.
• Timing is critical. Vendors need to be aware of their channel partner’s fiscal quarters and use this calendar to drive desired results. A great SPIFF program launched over a holiday period will get very little traction. Whereas one launched in the last week of the sales quarter, will drive sales.

Mistake 3: Results Not Correctly Measured

Some companies launch a SPIFF program with no simple way to measure the outcome. This often leads to misreporting or non-reporting of results back to management. And if management aren’t seeing the ROI on a SPIFF program, it likely won’t be repeated.

• A major problem with SPIFF management is that it’s a manual process. Therefore, it comes down to spreadsheet tracking and reporting to stay on top of the offer. But this doesn’t scale well and leads to countless errors.
• The best way to simply, quickly and efficiently launch and track targeted SPIFFs is by using a SaaS platform specifically designed for that function. The Channel Mechanics program for example, provides vendors with the ability to specifically target recipients. It offers real-time views of how much of the SPIFF offer is being consumed and by whom. The end result is an exact ROI for each SPIFF Program.

To Summarize

Some mistakes are consistently made when it comes to SPIFF Programs. Three of the most common we’ve seen revolve around making it hard to consume the offer, improper targeting, and ineffective measurement of results. But the good news is these are all easily solvable!

Once you’ve figured out the right SPIFF targeting for your channel, ensure to communicate it well and that you have a way to measure the impact it’s having with your partners.

Channel Mechanics is one SaaS provider with extensive experience in designing and implementing channel SPIFF programs.  If you ‘d like to learn more about how Channel Mechanics optimizes vendor SPIFFs in a closed-loop cloud-enabled environment, more information is available by requesting a demo.