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Picture this: supermarket shelves brimming with your favorite snacks, essential personal care products, and beverages – all readily available, thanks to a complex web of distributors, retailers, and wholesalers working tirelessly behind the scenes. Channel partners are the lifeblood of the FMCG industry, ensuring that your go-to items are within arm's reach.
But here's the secret sauce that sets some FMCG companies apart from the rest – their channel partner engagement strategy. In today’s world, consumers expect convenience and variety, and competition is as fierce as ever. The key to success lies in forging unbreakable connections with those (channel partners) who bring your products to life on store shelves.
Moreover, motivating and engaging channel partners is no longer a best practice—it's a necessity.
And the outcomes of doing so are high yielding:
- Outcome #1: Reach a wider customer base by distributing products to diverse geographic locations and market segments
- Outcome #2: Leads to higher sales volumes as channel partners actively promote and sell FMCG products, boosting revenue
- Outcome #3: Reduce operational costs related to warehousing, logistics, and inventory management, improving cost efficiency
- Outcome #4: Provide valuable market insights and consumer data, enabling FMCG companies to make informed decisions and adapt to changing consumer preferences.
If you need more convincing, here are some compelling statistics that illustrate why now could be the ideal moment for your business to update your channel partner engagement strategies.
👉 63.5% of the companies stated that channel partners contributed to their annual revenue and 24% of the surveyed organizations stated that it takes over a year for them to become fully productive. — CSO Insights
👉 36% Of companies say that the top 20% of their channel partners are generating over 70% of all channel revenues. — CGS
👉 Approximately one-third of businesses utilize a sales channel, yet only a portion of them have a successful channel partner engagement program in place. — Aberdeen
That said, let’s delve into some of the most prominent channel partner engagement strategies in the FMCG industry.
But before we explore the nuances of channel partner engagement in the FMCG industry, it's essential to define what this term entails.
Understanding channel partner engagement in the FMCG industry
Channel partner engagement refers to the collaborative and mutually beneficial relationship between FMCG manufacturers and the various channel partners in distributing and selling their products. These channel partners typically include distributors, retailers, wholesalers, and e-commerce platforms.
This collaboration is crucial for several reasons:
- Wide distribution: FMCG products need to reach a vast and diverse customer base. Channel partners help manufacturers to distribute products efficiently, ensuring they are accessible to consumers across various regions.
- Market penetration: FMCG companies often rely on channel partners to penetrate local markets effectively, as these partners possess a deep understanding of local customer preferences and purchasing behavior.
- Cost efficiency: Collaboration with channel partners allows FMCG manufacturers to minimize operational costs related to warehousing, transportation, and inventory management.
- Customer Insights: Channel partners are often the closest touchpoint to consumers, providing valuable insights into changing consumer preferences and market trends.
While channel partners play a crucial role in the FMCG industry, they continue to encounter numerous challenges, solving which is essential for the overall success of the business.
Challenges that impact the performance of Channel partners and the business bottom line
Here are the 3 most common and neglected challenges that impact the performance of channel partners and the business bottom line.
1. Partner disengagement
Channel partners may have multiple vendor relationships, making it challenging to keep them engaged and committed to your products or services. This can lead to reduced sales and negatively impacting the bottom line.
If channel partners aren't well-informed about your product updates, marketing strategies, or sales targets, they may not align their efforts with your business goals, leading to reduced performance and sales.
How to deal with this: Frequent and transparent communication with your channel partners is crucial. By keeping them informed about product updates, marketing initiatives, and industry trends, you can foster a sense of engagement and involvement.
2. Lack of performance transparency
Without real-time data on partner performance, it's challenging to identify underperforming partners, missed opportunities, or areas that need improvement. This lack of visibility can result in missed revenue potential.
In the absence of performance data, it's challenging to fine-tune incentive programs. This can lead to overcompensating underperforming partners or not adequately rewarding high-performing ones, impacting the bottom line by increasing costs and diminishing ROI.
How to deal with this: Develop clear performance metrics and reporting systems to provide partners with insights into their performance. This data can help them understand their strengths and weaknesses, allowing for targeted improvements and fostering transparency.
3. Earnings & incentive accuracy
Creating effective incentive plans tailored to the unique needs and characteristics of various channel partners is complex. Failing to do so can lead to misalignment and reduced motivation among partners.
Delays in calculating and disbursing partner incentives can result in frustration and dissatisfaction among partners. They might lose motivation or seek opportunities with more punctual vendors, affecting the bottom line through lost sales and partner turnover.
How to deal with this: Utilize an automated system to track and calculate partner earnings and incentives accurately. Automation reduces the risk of errors, enhances transparency, and ensures that partners are fairly compensated for their efforts.
7 Strategies to improve channel partner engagement in the FMCG industry
Here are 7 effective strategies to improve channel partner engagement in the FMCG industry.
1. Clear communication and training
Effective communication is the foundation of successful channel partner engagement. Ensure your channel partners fully understand your product offerings, sales strategies, and marketing campaigns.
Provide regular training sessions to educate them on product features, benefits, and unique selling points. Use webinars, online courses, or in-person workshops to keep them updated.
2. Incentive programs
Motivate your channel partners with well-designed incentive programs. Incentives can come in various forms, such as bonuses, commissions, rewards, or product discounts. Establish clear and achievable sales targets and tie rewards to achieving these targets. Ensure the incentive structure is competitive and aligned with the interests of your partners.
You can also create tiered incentive programs that increase benefits as channel partners achieve higher sales targets. Partners who consistently perform well can access higher commission rates, more significant bonuses, or additional perks such as exclusive training or marketing support.
This tiered approach not only incentivizes growth but also rewards loyalty and long-term commitment to your brand. It encourages partners to invest more in your products and services, creating a win-win partnership.
3. Gamification for sales contests
Implement gamification elements to create friendly competition among your channel partners. Organize sales contests with attractive rewards for top performers. Use leaderboards, badges, and point systems to track and showcase their progress.
These gamified contests can boost motivation and engagement while encouraging partners to strive for excellence in selling your products. Be sure to vary the types of contests, such as monthly, quarterly, or annual challenges, to keep the excitement alive.
4. Collaborative marketing initiatives
Partner with your channel distributors and retailers on marketing campaigns. Provide them with marketing collateral, point-of-sale materials, and promotional support to help them effectively market your products.
Co-branded campaigns, joint advertising efforts, and localized marketing strategies can create a sense of partnership and shared success. Additionally, consider developing a loyalty program for end customers those benefits both the channel partners and the end users, as this can further boost engagement.
5. Regular feedback and support
Establish a feedback mechanism that allows your channel partners to voice their concerns, provide suggestions, and report issues. Act on this feedback promptly and transparently. Address any challenges they encounter, whether related to product quality, delivery, or sales support.
Regularly check in with your partners to ensure their needs are met and offer support to help them overcome obstacles. Building a supportive, two-way relationship can create trust and a sense of partnership that drives long-term engagement.
6. Technology integration
Embrace technology to streamline processes and improve engagement. Implement a robust Customer Relationship Management (CRM) system that allows you to track sales, inventory, and customer preferences. This data can help you provide better support and more personalized marketing strategies for your channel partners.
Moreover, consider utilizing digital platforms for order placement, inventory management, and performance tracking, making it easier for your partners to do business with you.
7. Data and analytics support
Offer your channel partners access to data and analytics tools to help them make informed decisions. Give them insights into consumer behavior, market trends, and product performance.
Sharing data on product demand, regional variations, and inventory turnover helps you to empower your partners to optimize their stock levels and make strategic business decisions. This data-driven approach can improve their profitability and strengthen their loyalty to your brand.
3 steps to automate channel partner incentives for FMCG businesses
Here is a 3-step guide to defining channel partner incentives for FMCG businesses and how Compass can help.
Step 1: Understand your stakeholders & clearly define objectives and automate incentive plans
Identify the stakeholders you work with before creating an incentive plan, such as distributors, wholesalers, and retailers. Understand their regional nuances, objectives, goals, pain points, and expectations.
Plan your objective, KPIs, type, tiers, and run time. Design and manage incentive plans and automate calculations to arrive at accurate amounts for your teams.
With Compass, you can design and manage incentive plans of any scale, number, region, hierarchy, and tier. The product has powerful capabilities to integrate with a data source of your choice, process millions of data, and offer a seamless incentive management experience.
With our calculation engine, you can set up formulas and automate the calculation of incentives for your partners in real time and arrive at accurate amounts every time.
Step 2: Communicate regularly and make selling fun for your partners
Engage partners and Improve brand recall with game-like elements in your incentive plans. Communicate critical updates and help partners plan their sales process effortlessly.
Compass’s leaderboards, scorecards, points, & badges are launched to instill competitive spirits in sales teams. You can also set up timely nudges and notifications to inform your partners about pending targets and their earnings, and plan updates regularly.
Step 3: Analyze performance in real-time and help your teams sell more products
Monitor the KPIs in real-time, get the pulse of partners about incentive plans through surveys and feedback loops, and keep optimizing the incentive plans for better results.
Compass’s intuitive reports & analytics dashboards help managers track partners’ real-time performance. This gives them ample data to optimize areas that are giving results and need improvement.
7 strategies on how to engage non-engaged channel partners?
You might think that non-engaged partners aren’t a big deal, but they can actually drain your resources. Their disengagement means missed sales opportunities and can diminish the collaborative spirit of your partner ecosystem. Plus, if you're pouring time and energy into partners who aren’t reciprocating, you could be neglecting those who are eager to contribute.
1. Understand their reasons
First things first: dig into why they’ve pulled back. Are they strapped for resources? Do they feel unsupported? Or maybe your offerings just don’t align with their needs anymore? Understanding the root cause is key.
2. Categorize your partners
Next, take stock of your non-engaged partners. Some may have untapped potential or unique expertise that could benefit your ecosystem. By categorizing them based on their value, you can focus your efforts where they’ll make the most impact.
3. Start a conversation
Reach out and chat with them! Find out what challenges they’re facing and what they need to get back on track. Make sure to communicate the benefits they’ll gain from re-engaging with you.
4. Offer tailored support
Once you know their pain points, provide them with specific tools, resources, or incentives that address those issues. Whether it’s additional training or marketing support, targeted help can make a huge difference.
5. Ease them back in
Start small! Involve them in less demanding activities to rebuild their confidence and interest. As they start to engage again, gradually introduce them to bigger initiatives.
6. Track progress
Keep an eye on their engagement levels. Regularly assess whether your efforts are paying off and if they're becoming more involved.
7. Prioritize wisely
With everything on your plate, focus on non-engaged partners who align with your goals and show a willingness to collaborate. If someone continues to be disengaged despite your best efforts, it might be time to shift resources toward more active partners and let go of those who aren’t interested.
By following these steps, you can breathe new life into your partner relationships and enhance the overall strength of your ecosystem!
Automate Your Partner Engagement Strategies
Utilize Compass's AI-powered analytics to track partner performance in real-time, allowing for data-driven decisions that optimize engagement efforts. The platform supports 85+ integrations, enabling seamless data centralization from various sources like CRM and ERP systems, which helps in maintaining a unified view of partner activities and performance metrics. By automating the incentive compensation process, businesses can ensure that partners are rewarded promptly
Case Study: India’s largest chai-led beverage company builds a high-performance sales culture
The world’s largest Chai-led beverage platform with an omni-channel brand. With over 180 stores and 3500 workplace communities spread across 43 major cities, the company has a large business development and distribution network.
Challenge
The retailer incentive programs were complicated due to manual tracking of consumption data for various products. This complexity extended to differing incentives for the Business Development team (machine deployments) and distributors (deployment and consumption). Additional variables like security deposits, minimum maintenance charges, pullouts, and store agreements affected end-user incentives.
The lack of visibility into sales performance and transparent sales commissions caused delayed payout disbursements.
To remedy this, they were searching for an intuitive sales performance management solution.
Solution
Using Compass, the company was able to simplify commission calculations, boost the visibility of the sales team's performance, and increase sales commission transparency to the end users.
Compass sales performance management solution provides:
- Users' visibility towards their target vs achievement and their incentives in real-time.
- Complexity was solved by providing visibility to the incentive calculation and transparency on how the incentives are calculated.
Result
Using Compass, the company could:
- Provide the business development and distributors with real-time visibility into sales commission.
- Get real-time insights into sales performance and automate incentive payouts.
- Improve consumption revenue by motivating the BD and distributors to perform better with sales commission transparency.
Impact
This led to:
- Incentive payouts increased by 200%.
- Consumption revenue growth on average is 4% QOQ.
- Machine deployment increased by 40% in 6 months.
- Incentive qualifiers increased by 115% in 6 months.
Key takeaways
Channel partner engagement is a critical factor for success in the FMCG industry. Establishing solid relationships with distributors, retailers, and other partners not only ensures the efficient distribution of products but also fosters brand loyalty and growth.
Providing the right incentives, support, and communication channels, FMCG companies can empower their channel partners to thrive in the competitive market. A well-engaged network of partners can drive sales, enhance brand visibility, and contribute to the overall success of the FMCG industry.
With Compass, FMCG companies can:
- Engages and helps channel teams stay on top of the game with industry-leading gamification elements.
- Build transparency with a solid digital communication strategy.
- Calculates incentives on time and accurately.
- Helps partner managers make informed decisions with insightful dashboards and performance reports.
FAQs
1.What is a channel partnership strategy?
A channel partnership strategy is a planned approach that businesses use to establish, manage, and optimize relationships with external partners who help market, sell, and distribute their products or services. It focuses on leveraging partners' strengths to expand market reach and drive sales growth while ensuring alignment between the business's and partners' goals12.
2. What are the channel partner rules of engagement?
The channel partner rules of engagement typically include establishing clear agreements that outline roles, responsibilities, expectations, and performance metrics. They also involve setting mutual goals, providing comprehensive onboarding and ongoing support, and fostering open communication to maintain strong relationships.
3. What are the three main criteria for channel engagement?
The three main criteria for channel engagement generally include:
- Partner alignment: Ensuring that the partner's goals and capabilities align with the company's objectives.
- Performance metrics: Establishing clear metrics to evaluate the partner's success in promoting and selling products.
- Support structure: Providing adequate training and resources to empower partners in their sales efforts.
4.What are the three types of channel partners?
The three types of channel partners are:
- Resellers: These partners purchase products from a vendor and sell them to end customers.
- Value-Added Resellers (VARs): They enhance the original product by adding features or services before selling it.
- Managed Service Providers (MSPs): These partners offer ongoing management and support services for products sold to customers.
5. How to improve channel partner performance?
- To improve channel partner performance, companies can:
- Provide comprehensive training and onboarding programs.
- Implement incentive programs that reward performance.
- Foster regular communication to address challenges and share best practices.
6. How do you incentivize channel partners?
Channel partners can be incentivized through various methods such as:
- Offering financial incentives like discounts or commissions based on sales performance.
- Providing marketing support or co-branding opportunities.
- Implementing performance-based rewards that recognize top-performing partners
