Leadership Strategies

Modernize Your Partner Incentives to Promote Indirect Value Creation in the Channel

Support Shifting Partner Roles and Business Models
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Recognize Indirect Partner Value in Indirect Sales Channels

As more vendors and channel leaders recognize and accept how indirect value and demand generation impact the wider ecosystem, measures of partner success are being redefined. Revenue-centered metrics remain critical, however, traditional one-size-fits-all approaches are giving way to more nuanced and intelligent ways of recognizing and rewarding partners. By 2025, IDC predicts that two-thirds of vendors will deploy an incentive stack framework that recognizes different partner roles and rewards them intelligently.

Simply put— separate partners can play specific roles with different levels of value attached at various stages in a single customer journey. As a result, the value partners create is no longer viewed as solely tied to revenue generation; it extends across different spheres of influence, transaction, consumption, and optimization (see Figure 1).

Figure 1: Sample Ecosystem Sales Model

This complexity arises from the multitude of sales motions, purchase models, and solution deployment options available to customers. As a result, incentive stack models must be capable of allocating value across the entire customer lifecycle. The allocation depends on the type of solution, deployment model, partner involvement, and the relative importance of each function within the customer journey.

The Evolving Channel and Incentive Models

As we move towards everything-as-a-service and subscription models, traditional incentive models are losing relevance. Many vendors find themselves in the challenging position of maintaining relationships with partners who have built their business models around the traditional incentive stack while adapting to the changing demands of partners with next-generation incentive stacks.

In this evolving landscape, the concept of partner value will evolve beyond the simplistic assessment of revenue and sales volume and extend into spheres of influence and long-term value creation. Partners who prioritize building lasting relationships with customers will see increasing value attached to their roles as financial metrics within the incentive stack are recalibrated. 

To keep pace with these changes, vendors must encourage and facilitate the detachment of partner roles within the ecosystem. This detachment can lead to improvements in customer acquisition, retention, and overall experience.

Recognizing Influence as a Valuable Role

One of the most significant shifts in partner value metrics is the recognition that some partners influence customer purchasing decisions without desiring the transaction or consumption revenue on their books. This influence role is complex and challenging to quantify. It often involves processes like partner of record and deal registration, which are already surrounded by significant complexity. 

Consider a distributor, for example, acting as an influencer by generating customer demand through partners, while procurement and provisioning occur through a cloud marketplace. The value of SaaS-based Independent Software Vendors (ISVs) within cloud platform partner ecosystems often stems from the indirect demand generation they drive through underlying Infrastructure as a Service (IaaS) cloud consumption. 

Ensure Continuity with Transactionally Focused Partners

Partners that drive transactions and revenue continue to play a pivotal role, particularly in the context of CapEx-based technology spending by customers. However, the shift toward OpEx-based technology spending is becoming the driving force behind the design of “next-generation” incentive stacks. 

Some vendors are currently navigating both worlds simultaneously. Still, there’s a growing acceptance that creating relevant and future-proof partner value metrics is essential for the overall health and vitality of the wider partner ecosystem. 

For vendors, it’s imperative to ensure that the evolution of the partner incentive stack aligns with anticipated or planned changes in customer purchasing and deployment models. Building flexibility into the incentive stack allocation between partners remains crucial as models continue to evolve.

Vendors must also inform existing transaction-focused partners of proposed changes to the incentive stack and create pathways that enable them to transform their businesses in alignment with shifts in customer behavior and preferences. The intelligent allocation of the incentive stack, based on partner function and the value this provides to both customers and vendors, is the cornerstone of an adaptable, flexible, and future-focused ecosystem-based partnering approach. 

Inform Your Incentive Models with IDC

The future of partnership strategies for enterprise tech vendors is rapidly evolving. As vendors look to gain a more nuanced understanding of how changing partner activities create value across customer lifecycles, it is critical to examine partnership dynamics both internal and external to your own ecosystem. 

IDC’s Channel Partner Ecosystem (“CPE”) provides an in-depth view of the channels and partners of tech vendors, giving you insight into competitors’ partnerships, areas of technology coverage, industries served, geographic location data, and much more. Learn more about IDC CPE here.

While the journey toward redefining partner value metrics is already underway, it’s one that all enterprise tech vendors should be prepared to navigate. To help get you started, be sure to check out IDC’s Starter Guide: Modernize Your Incentive Stack for Channel Partners.

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,200 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives.