Program Peripheral Vision - Why Channel Programs Need to Look For Outliers

Many channel programs measure one or two things to determine who earns an award(s).  Commonly they will be either sales or product - either revenue or margin - either specific products or bundles of products.  The program is designed to sell, push, market, present - whatever the sponsor wants.  The program is an inside out program with little if any regard for what the participant wants/needs.  (I focus on channel here but it also holds true for other audiences.)  But tracking and following those metrics could potentially drive your business in the wrong direction - setting you up for failure in the future.

"What?" you say - "how can driving sales in a product I need to sell be a cause for failure?"

Simple - if you measure one or two things you're missing 100's of other pieces of information.  Most program analysis is designed to track the objectives of the program.  If the program rewards sales of Widget A - then the reports will show sales of Widget A - by region, territory, customer, etc.  When management reviews the program results each month/quarter/year they are looking to see if the program has achieved the objectives for Widget A.  That's good.  You should focus on program success.

But - if you only see data on Widget A you miss information on Widget B - which could be more valuable than the success of the program and sales of Widget A.

Innovators Dilemma

A very smart guy wrote a book called "The Innovator's Dilemma" - Clayton Christensen - back in 1997.  The book primarily looked at the technology industry and made the case that upstart companies have a knack for unseating incumbents.  His point was that the incumbents are focused on what they do now - the upstarts are focused on what will be done in future.  The focus on now made the big guys blind to the future and vulnerable to the market change.  By the time the incumbents saw the change it was too late.

So what does this have to do with channel incentive and reward programs? 

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If all you measure is the sales of stuff you want now you're missing the information needed to be prepared for the future.  But, by analyzing the data from your channel program over time you can be prepared for shifts in the market and be ready to capitalize on them.

When tracking your program results look for things that surprise you.  Does your traditionally top-performing distributor selling less of Widget A, but a little more of Widget B?  Is that normal?  If not, put a pin in it and see if it continues to be "abbey normal."  Watch the progression of that outlier.  Next reporting period - did Widget B sell more at that distributor again?  Was there a similar pattern with other distributors?  Make a call - understand what is happening.  It might only be a blip on the screen today - but it could be an invasion tomorrow. 

By forcing yourself to look at the outliers you can start to see patterns you wouldn't normally perceive.  Consider it your "peripheral" vision.  Peripheral vision isn't very good at specific images - but it is good for seeing movement - changes in the scene - allowing you to move your main focus to that thing you saw "out of the corner of your eye."

Next time you get the results of your incentive program (heck - any report on performance) as yourself - what is on the periphery - what are the outliers?

You just might find the next objective for your incentive program.

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