How to Evolve Partner Program Levels & Tiers

Ellen Linkenhoker
Ellen Linkenhoker

Is tiering still relevant? Should it be relevant? Can we ever move away from it?

These questions float around in the minds of many channel leaders. The answers depend on how the partners use the program, focus the program on specific areas, structure the tiers, and utilize program tools to make effective changes.

Let’s Start With Tiering Fundamentals

Tiering (program levels inside a vendor channel program) dictates the requirements, awards and benefits partners earn based on their performance. Historically program creators label tiers by types of metals (Bronze, Silver and Gold).

chart showing an example of tiers by types of metals

Tiers were developed so vendors could easily manage and prioritize partners in their ecosystem.

Tiers and levels are a tool to productively scale things like rebates, margins, service and support levels, marketing tools, training, enablement and vendor resources. The higher levels are often unlocked by meeting a threshold for transactional revenue and training criteria.

If you’re dealing only with product resellers, tiers are great. These partner types represent the brand, put products in the hands of customers and help reach new markets. Program tiers are an easy way to manage straightforward investment levels based on reseller revenue and profit.

Why Partner Program Tiers Need to Evolve

On the surface, tiering programs seem smart—and the goals behind them are smart. But most haven’t evolved with the world and way people buy and sell products now. Consider, for example:

  1. Industries are adding recurring and service-based revenue. These recurring revenue streams take many forms, including XaaS, SaaS, MROs, consumption or premiums.
  2. There’s been a decline in relationship-driven sales. Companies now need to market themselves as a brand, have a strong digital presence and sell on quality or price.
  3. Solutions are getting more complicated. Technology is changing how people do business, adding complexity and new roles to channels. Buyers want niche expertise. With so many ways to buy products, competition is fierce.

Because of the changes in how people buy and sell, traditional tiering programs can seem outdated instead of rewarding. Channel leaders don’t want partner programs that feel irrelevant or only significant to a small fraction of partners.

Tiering is also ill-equipped for adding new partner types. Because new partner types have different needs, you may be prompted to add additional programs with new tiers inside of them. Unique programs mean additional tracking, numerous log ins and extra rule structures to navigate for partners. They also increase workload for the internal teams who must maintain the systems.  

Tiering From the Partners’ Point of View

When working with vendors, partners are looking for ease of doing business, relevance to customers and meaningful awards.

graphs showing what partners are looking for from vendors

Traditional tiering doesn’t align well to those needs. Yet it’s still often used for program portal creation, communication, value propositions, enablement and incentives. Using tiering as a foundation starts to create layers upon layers of misalignment in a program.

Related: Dive deeper into new channel research on how to increase partner effort. Read the findings from our commissioned Forrester study.

3 Steps to Move Away From Tiering to Evolve Your Program

Let’s say partners provide feedback that your program tiers feel inflexible, complicated or built for a different partner type. The next question would be “How do we fix it?”

The trick is to focus on segmentation instead of tiers. Start with these three steps.

1. Evaluate Current Programs

You need a solid grasp of where you are before you can plan for the future. Ask:

  • How many programs do you have in place?
  • Who is eligible?
  • What are the requirements to participate?
  • What benefits are available?
  • How are benefits earned?
  • What benefits are being used and by whom?
  • How many partners does the program reach?
  • What roles inside the partner channels are you focused on (e.g., partner owners, sales reps, marketing, technicians, etc.)?
  • Are there top-level financial earning opportunities? If so, what are they, how much and what’s the criteria to earn them?
  • Are there additional incentives and promotions? If so, what are they, how much and what’s the criteria to earn them?
  • How do your internal teams feel about the programs?
  • How do your partners feel about the programs?
  • What are your competitors doing?

Compare the answers and see where they overlap. Then add partner and internal feedback about what partners liked, disliked, tolerated or missed altogether in the current program.

Use this data as a foundation for what’s worth keeping and cutting.

2. Align Your Current State to Future Goals

With your foundation in hand, layer in your business goals.

  • Where are you trying to go as a company?
  • What specific goals do you have for your channel?
  • How do you hope to grow revenue? (e.g., in new product areas, specific high-margin products, services, different payment types, etc.)
  • How can you grow partner capabilities and competencies?

Knowing where to take your business will help determine how to re-structure your channel program successfully. It’s useful for identifying partner types, coverage gaps and alternative roles to focus on inside your program.

The process might create the impression that you need even more programs to meet your needs, but that will increase administrative headaches. Tiers alone can’t solve the problem.

The good news is that it’s possible to encompass multiple goals and partner roles inside a single program with technology already in the market.

3. Redefine Tiering & Levels to Focus on Segments

The third step takes all the information and ideas gathered in the first steps and revamps the tiering and levels to match—by kicking them to the curb in favor of segmentation. The key is to account for all the variation in a single program by using advanced segmentation.

In a consolidated partner program, segmentation is like flipping the complexity on its head. It makes the program simpler for partners to use and internalizes the rest of the details.

For example, compare the two following charts. In the first, many independent programs force partners to track and earn in several areas and direct their participation efforts.

chart showing two examples of basic tiering

In the second, partners have increased flexibility, relevance and scalability across multiple roles. Your team will cover some of the complexity in favor of making the partner experience simple and customizable to specific focus areas.

chart showing a flexible and scalable tier structure

Letting partners join the program and choose their focus areas gives your brand powerful insight into partners’ go-to-market strategies and alignment to corporate goals. Focus areas could be:

  • Customers (who they sell to)
  • Industry or vertical (what they specialize in)
  • Go-to-market strategy
    • Selling (they want to sell products only)
    • Servicing (they want to sell and service clients)
    • Intellectual Property Creating (they want to create joint market strategies)
    • Advising & Consulting (they want to council)
    • Referring (they want compensation for leads)

Segmentation, Not Tiers, Allows for Personalized Channel Programs

Collecting partner information can help deliver relevant benefits, enablement and promotions by allowing for personalization. With more personalized channel programs, partners are more inclined to increase sales and influence the purchase of your brand’s products and services.

graphs showing how personalization increases sales

Related: Curious how personalized channel programs impact sales? Check out the data in our commissioned Forrester study.

As partners grow their business to add new products, services and capabilities, segmentation lets you grow with them without needing a new program.

Not quite ready to tackle tiering and levels? See how you can evolve your SPIFFs instead.

Ellen Linkenhoker

Ellen Linkenhoker

Ellen is a life-long learner who finds joy in exploring new ideas and thrives on disruption in all forms. She is an award-winning marketer and navigates all things channel, incentives, and tech. In her role as an Insights & Strategy Leader at ITA Group she keeps a pulse on the changes in the market to direct the vision, position, and evolution of their incentives portfolio. Her position as a leader on the American Marketing Association board keeps her immersed in the latest trends and advances in the marketing field. When she’s not working or volunteering you can find her competing on the volleyball court or working on home renovation projects with her husband.