Channel partners are part of the mainstay for a number of companies. Knowing this fact, Avaya, a privately held New Jersey based telecommunications company, initiated a growth program to help boost quarterly sales.
In an effort to expand the Avaya brand into new markets, the company’s channel sales incentive program will take advantage of new and improved marketing and sales strategies.
Discussing how the incentive program is structured, Paolo Del Nibletto explained, “If a channel partner grows its Avaya business by $100 in the first quarter and $30 of that $100 is in new solutions, then in the second quarter the business jumps to $120 of which $50 is in new solutions the channel partner will be paid on the difference in growth between the quarters, which is $20 amounting to 10 percent of margin.” He added, “That margin will be then doubled because the channel partners was able to grow the business in new solutions, which also grew by $20 in this scenario.”
While this may sound like an effective channel partner incentive strategy, Barat Dickman, the director of Avaya’s global channel programs, has his concerns. He advises that a profit-based incentive, such as this, might easily become problematic. With success will come heft rewards checks being paid out by the company.
The incentive industry has long squabbled over the pros and cons of non-cash and direct cash incentives.