Channel Awards 101: Which Channel Incentive Is Best?

Channel Awards: Which Channel Incentive Is Best?

Channel awards are key for driving sales and increasing product awareness.  However, participation and overall channel award program success will only be as good as the incentive offered.  Matching the right channel awards to the program goals and to the participant base is critical.

Should you use travel or merchandise?  Will cash help you achieve your goal?  What about a plaque?  In today’s competitive channel environment, there are many options available, but only the right one will make your channel awards program a winner.

The following summary can help you get started by introducing you to the fundamentals surrounding some of the more popular channel incentives.

Cash: Bonuses and Spiffs

Over the years, much has been said about cash as channel awards.  However, through all the commentary (both positive and negative), cash in the form of bonuses and/or spiffs has maintained its place as a valid channel incentive.

Cash awards work best in quick-hit situations.  Cash is easy to implement and its value is clear to participants. It offers participants a maximum choice of awards and provides short-term lift.

Cash awards also have pitfalls.  Cash can be matched or beaten by competitors. And it is frequently confused with compensation, making it difficult to discontinue.

Merchandise: Catalog and Select Items

A woman who earned a pair of gold earrings for her performance in a channel awards program said that for years after, every time she wore the earrings, she thought of how she earned them and the organization that presented them to her.  This is trophy value, and this is what merchandise awards offer more of and more consistently than any other channel incentives.

These awards leave participants with tangible reminders of their effort and the brand’s appreciation of a job well done.  Merchandise awards can be utilized in long or short-term channel programs, and with nearly every audience type.  Participants in channel awards programs with merchandise tend to set higher goals for themselves and stay focused on their goals in order to earn desired awards.  Then inspired by an exciting merchandise award, a participant will develop a plan and drive to meet their goals, rising above normal channel performance levels.

Merchandise Catalog

Merchandise catalogs promote themselves with the dazzling images and colorful descriptions of all the awards participants can earn.  With something for everyone, catalogs appeal to all, and invite participation in goal setting and award selection.  Once earned, merchandise promotes a trophy value and a residual connection with the sponsoring organization that lasts.

If there is a negative aspect to merchandise catalogs, it is in comparative shopping.  While most merchandise catalogs are set at or near retail prices, they are guaranteed for a year to a year and a half, and thus don’t allow for sales as discounters do.  Participants may see a difference in some items if they shop around.

Selected Merchandise

Specially selected merchandise is an excellent augmentation to a channel award catalog, focusing on the unique characteristics of an audience.  This type of award is also helpful when tied to special activities within a larger channel program (“do this and win this”), and this often helps establish the goal setting for the participants.  Big-ticket, selected merchandise is easy to promote and inspires participants to be both goal and task focused.  Unfortunately, specially selected merchandise, due to its nature, will not have universal appeal.

Debit & Gift Cards

In general, debit and gift cards work in the same situations in which merchandise catalog awards work.  Depending on the card’s s usage and acceptance, it may offer more flexibility than catalog awards.  These types of awards also eliminate any issues surrounding price comparison.

On the other hand, many of the drawbacks that apply to cash also apply to debit and gift cards.  For example, the card or certificate may not be used for a physical award, and thus trophy value and connection to the sponsoring organization over time are lost.  In addition, any issues with card acceptance or award delivery are out of the sponsoring organization’s control.  Also, the cards do not encourage goal setting (similar to cash), and there is a high rate of loss.

Travel: Group and Individual

Travel awards have traditionally been the most fun and exciting to promote.  Exotic and fun-in-the-sun locations paint pictures of adventure and relaxation for participants.  Both group and individual travel awards make good channel incentives in the right settings, and frequently the performance improvement incurred throughout the program can cover the cost of the travel award.

Group Travel

Group travel awards work best in longer programs (e.g. one year) designed to motivate top performers.  Programs with these awards are often competitive rather than open-ended in nature.  Group travel awards work best with affluent, experienced travelers who have the time and inclination to travel.   These awards create a memorable experience that award winners will want to repeat.  Group travel awards provide opportunities for recognition ceremonies, business meetings and relationship building between top dealers and senior management, for example.

Group travel does have limitations and drawbacks, though.  Such an award will not have universal appeal.  On average, 30% of trip earners will opt for award options.  And there are always participants who would like to travel but are unable due to schedule conflicts.  In addition, the cost of the award will be partially required up-front in the form of deposits, and will limit the number of possible winners.  Also, additional expense and time is required of the sponsoring organization for the trip hosts and site inspections.  Finally, travel, particularly international, raises uncertainty and concerns over safety and security.

Individual Travel

Individual travel awards are particularly useful as secondary awards in larger programs and in recognition for special achievements.  Like group travel, individual travel is highly promotable, but it is a better fit for less traveled participants.  Individual travel is also more flexible than group travel and may be more cost effective.  However, the organization sponsoring the travel will have little control over the participant’s experience, and again the travel award will not have universal appeal.

Premiums and Logo’d Merchandise

Premiums and logo’d merchandise add positive motivation when the organization’s logo carries with it meaning, significance and value to the award earner and those around him or her.  Audiences that are not normally targeted for award winning opportunities are generally the most receptive to these awards.

This type of merchandise is best used to support or promote special programs, or for a spurt activity, versus as stand alone awards.  As logo’d items, the awards are unique and cannot be comparison shopped by participants.  However, the items may be viewed as advertisements for the organization rather than as true awards, and they will not have universal appeal.

Recognition Awards: Crystal, Gold, Marble, Plaques & Trophies

Nothing proclaims a top performer like the glint of crystal or the shine of gold.  Recognition awards provide a highly visible way to recognize top channel performers.  These awards are excellent additions to open-ended programs, motivating high performers to maximum performance by providing the ultimate trophy value channel award.

Recognition awards work well when combined with travel programs; when awarded at presentation dinners they are sure to put the recipient in the spotlight.  Recognition awards offer glitz and glamour and they are cost effective; their costs are typically covered by the increased performance brought about through the channel program.

However, these types of recognition awards do not appeal to everyone.  Only a limited percentage of the audience will be motivated by these awards, and in fact, recognition awards could have a negative impact on a channel program if they are the only awards being offered.

Each type of channel award has something to offer.  And one type of channel award alone may not meet your needs or inspire all of your channel.  The biggest return on your channel award program can only be reached when the right awards are there to motive and excite your channel.

Now that you know some of the basic fundamentals about many of the channel award options, learn more about how we can help you match your unique audience with the most complementary combination of channel awards.  This drives return on your channel program and builds excitement for your brand.  The future is yours to make; together we can make it successful.