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b'Over the last decade or so, a new category of software called partner relationship management software or PRM software has been evolving rapidly. What\\u2019s the primary driver behind this evolution? Organizations are recognizing the need to build a direct sales force that can increase their reach and drive sales at a lower cost. PRM software tends to address four basic areas of partner lifecycle management: partner recruitment, partner engagement, partner enablement and partner management.\\nIn this article, we will explore how to effectively manage incentive programs that are designed to enhance partner behavior and performance. As part of that discussion, we\\u2019ll examine the core requirements and capabilities of PRM software in more detail. But before we begin to specifically address incentive management, let\\u2019s talk a bit about channel management, and why it\\u2019s so complex. (For a more detailed discussion of the challenges of channel management, please refer to our on the topic.)\\nChallenges\\nAt a high level, when a company is selling through an indirect reseller channel or a franchise network in multiple cities or even countries around the world, it will likely have to deal with various types of partners who sell into different segments and verticals, and these partners may have different sales philosophies. Some may sell a lot, some may sell a little and some are in between. Different organizations may have different sales requirements. Most importantly, the sales programs may also be changing on a quarterly basis. As an organization introduces new products, and as it acquires new companies and capabilities, it may have to drive sales by launching new programs designed to change behaviors and by offering rewards for specific behaviors. Just as employee incentives are critical in driving performance within the organization, partner incentives are an essential element in driving the performance of partners.\\nThere are basically three types of incentive programs that companies need to manage:\\n\\n\\n \\tMarket development funds (MDF). These are funds that are given to a partner\\u2014usually based on their sales volume\\u2014to engage in additional marketing activities to generate demand.\\n \\tRebates. These are provided when a partner\\u2019s sales exceed a specified level: the higher the level of sales, the larger the rebate and the better the partner\\u2019s margin.\\n \\tSales rewards. These are typically given to individuals who achieve large sales volumes. The goal with these rewards is to ensure that each sales rep or technical rep is financially incentivized to drive adoption of certain products and solutions.\\n\\nInterestingly, most vendors today still manage these incentives using email or Excel files or other types of tools, and they lack an automated infrastructure to drive the process. Because these tools are not integrated and not designed specifically for handling partner relationships, managing and measuring the ROI from incentive programs is a major challenge for many organizations\\u2014and that\\u2019s where PRM software can make a significant difference.\\nSolutions\\nHow can PRM software solve this problem? It allows a vendor to significantly streamline activities associated with people, processes, programs and automation.\\n\\n\\n \\tPrograms: Channel programs tend to fall into the categories we discussed earlier: MDF, rebates and sales rewards. For these programs to be effective, they need to be closely aligned with sales and marketing objectives. For example, when a company launches a specific product, it may want to provide incentives of various types or levels simultaneously. They may offer development funds to a specific group of partners who are most capable of selling those products. In addition to MDF, they may give rebates to partners that sell at a certain level. They might also offer sale rewards to reps, who will likely have to learn how to sell a new product and may be motivated by financial incentives to do so.'