Do SPIFFs Work?

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Do SPIFFs Work?

In a conversation with IPR Channel chief, Kirk Horton, this question arose: Do SPIFF's work? It isn't a yes or no answer. It depends.

When a new product is launched, spiffs help to draw attention to the new product. It helps to get some early traction in the marketplace. To drive that 90 or 120 day hockey stick.

In a hyper-competitive market - like Hosted PBX or DIA - spiffs can work where differentiation does not. If a master agency carries 10-20 service providers (SPs) who offer the same kind of service (in this example DIA (dedicated Internet access) or HPBX (hosted PBX)), then a spiff can get the attention of the agent or VAR long enough for the SPs to get a chance to pitch the partner on why this SP versus the others. Or the spiff will at least get the attention of the more financially motivated partners.

One example of an SP doing this is Megapath, which just re-launched its Hosted PBX service and is offering SPIFFs to gain some traction / attention.

If you have a specialized product like a data center in Cleveland or Kansas City, you probably don't need to spiff partners. If you have a data center with much empty space in NJ or Atlanta or Miami, then you probably do need to add a spiff (or some other incentive to get agents to take note and point customers your way).

If you examine the situation, it means that you are using Spiffs in place of positioning (marketing). In a hyper-competitive market, you might want to re-think your message to the channel.

I would suggest a more creative approach would be to charge for training - training necessary to sell, position, understand the product - and offer back 3x what the training costs as a spiff for the first sale IF it occurs within 90 days of the training.

If you are a TCA member, why not align that SPIFF with TCA membership or even better with the TCA certificate program? I'm just trying to get creative.

I've seen the contests for President's Club. Those work particularly well with a partner who is going to align his business with a carrier for at least a year. And alignment is part of the success of a channel program.

What do you think about SPIFFs?

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