As AI becomes embedded in partner operations, vendors should rethink tokens as benefits, incentives, and MDF investments that drive productivity and measurable business outcomes.
By Larry Walsh
IT vendors and their channel teams should study streaming services more closely. Telecom carriers were among the first to capitalize on recurring-revenue contracts and high switching costs. But streaming services have mastered something equally important: periodically adjusting packages and pricing to offset rising operating costs while keeping subscribers engaged and loyal.
When Netflix emerged as the first truly successful streaming service, the value proposition was straightforward. Customers could cancel expensive cable subscriptions loaded with unwatched channels in favor of ad-free, on-demand content they actually wanted to watch.
Following Netflix’s lead, Amazon, Disney, Google, NBCUniversal, Paramount, and others rushed into the streaming market. They quickly discovered that attracting subscribers is difficult but keeping them engaged with a steady stream of high-quality content is even more so. Over the past several years, nearly every streaming service has introduced tiered pricing, advertising-supported plans, premium subscriptions, and usage restrictions to generate additional revenue and offset escalating costs.
The same dynamic is beginning to emerge in channel programs as artificial intelligence becomes embedded in partner operations.
While the public is most familiar with chatbots such as Microsoft Copilot, Claude, ChatGPT, and Google Gemini, the real innovation is happening through AI agents, application integrations, and automated workflows. Every time an application connects to a large language model, it consumes the fundamental currency of AI. And those costs can accumulate quickly.
Channel organizations are racing to incorporate AI into partner management. They’re deploying applications that automate administrative tasks and information flows. They’re building agents that help partners find information, generate reports, create content, qualify opportunities, and accelerate sales activities — all with the goal of making the go-to-market process faster and more efficient. Every time a channel account manager or partner uses one of these AI capabilities, however, it burns tokens.
Enterprises are now discovering the true cost of token consumption. Much like the costs incurred in the early days of cloud computing, AI expenses are rarely fixed. Because utilization fluctuates, token consumption — and therefore costs — are highly variable and often difficult to predict. Many AI providers impose token limits or usage quotas to help customers manage consumption. Those controls also create natural upsell opportunities by encouraging customers to move to higher-priced plans.
Those same economics will inevitably reach channel organizations, creating an opportunity to rethink incentives.
Rather than viewing tokens solely as an operating expense, vendors should begin treating AI access and token allocations as performance incentives. Partners could earn additional token allotments based on sales performance, customer acquisition, renewals, revenue growth, or other measurable contributions. If AI delivers tangible value by identifying opportunities, generating content, accelerating quoting, improving customer support, or streamlining fulfillment, then access to AI becomes a meaningful benefit.
Using tokens as an incentive doesn’t eliminate a vendor’s AI costs. The money still has to come from somewhere.
This is where tokens become a new form of channel currency. Rather than simply absorbing AI expenses, vendors could offset them by reducing traditional discounts, rebates, or other cash-based incentives. Instead of compensating partners exclusively through margin, vendors could provide a combination of financial rewards and AI resources that improve partner productivity.
An even more natural comparison is market development funds. MDF has traditionally paid for activities intended to create demand, generate leads, support campaigns, and improve partner sales performance. Token incentives could become a new form of MDF — one focused less on funding promotion and more on funding productivity.
Rather than giving a partner money to run a webinar, digital campaign, or customer event, a vendor could provide AI resources that help the partner identify prospects, personalize outreach, create proposals, accelerate quotes, improve service delivery, and increase customer retention. The objective remains the same: Help the partner generate more business. The mechanism simply changes.
Vendors could fund those token allocations through existing MDF budgets or create a dedicated AI enablement fund. They could also structure token incentives as contra-revenue programs. Under that model, the expense would be covered by revenue generated through the receiving partners and recorded as a reduction in net revenue, similar to other rebates, discounts, and incentive programs.
That approach creates a direct relationship between partner production and AI consumption. A partner that generates more revenue, closes more renewals, expands more accounts, or creates more qualified opportunities could earn a larger token allocation. The vendor would not simply be paying an additional operating expense. It would be reinvesting a portion of partner-generated revenue in tools designed to produce even more revenue.
The model could also impose greater discipline than traditional MDF. Vendors frequently struggle to determine whether partner marketing funds generate meaningful returns. By comparison, token consumption can be tracked at the user, partner, application, workflow, and outcome levels. Vendors could measure which partners use their allocations, how they use them, how those activities affect productivity, and whether token consumption correlates with pipeline creation, sales velocity, renewal performance, or expansion revenue.
At first glance, replacing part of a discount, rebate, or MDF payment with tokens may seem counterintuitive. Reducing hard-dollar benefits typically creates dissatisfaction among partners, yet Channelnomics research consistently shows that partners place enormous value on ease of doing business and frictionless engagement.
Partners often prefer working with vendors that are simpler and faster to do business with — even when those vendors offer slightly lower margins — because efficiency allows them to close more business and generate higher overall profits through greater speed and volume.
Viewed through that lens, AI and tokens become an extension of the ease-of-doing-business story. A token has value not merely because it provides access to an AI model but also because of what that access enables. If the token eliminates manual work, reduces sales costs, improves customer responsiveness, or increases revenue capacity, it becomes an economic benefit to the partner.
The economics of tokens, however, will remain dynamic. Continuous infrastructure investment by LLM providers could keep operating costs elevated and place upward pressure on token pricing. At the same time, advances in model efficiency, hardware optimization, and intense competition among AI vendors are steadily driving down the cost per token.
These opposing forces mean token pricing is unlikely to remain static. Vendors that use tokens as part of their partner programs will need to monitor pricing, consumption, utilization, and business outcomes continually. They also will need to recalibrate allocations as market conditions, partner behavior, and AI capabilities evolve.
Streaming services learned that they couldn’t preserve their original economics indefinitely. As content costs rose, they adjusted their packages, introduced new tiers, added advertising, and changed the value customers received at different price points.
Channel organizations will need to do something similar.
The bottom line is that vendors should begin thinking of tokens not simply as a cost of doing business but as a strategic channel asset. AI tokens can serve simultaneously as a benefit, a reward, an MDF investment, and a form of currency. Properly structured, token incentives can help vendors offset AI expenses, reinvest partner-generated revenue, improve ease of doing business, and give partners a new kind of reward — one that directly enhances their productivity, efficiency, and long-term profitability.
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Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.
