What is a Channel Loyalty Program?

A channel loyalty program is a critical sales pillars and a crucial element in the growth strategy of your business. Channel loyalty is focussed on transforming the relationship between a brand and its trade partners from that of a purely transactional one to a long term, emotional connect. This is increasingly becoming critical for a brand to succeed in a competitive market.

The most important factors in fostering channel loyalty are implementing value-driven loyalty schemes, transparent two-way communication, personalized incentives and driving emotional connects through constant engagement and experiences.

Why Brands Need a Channel Loyalty Program?

A B2B loyalty program is a powerful way to create loyal, long-lasting relationships with your stockists, dealers, influencers, resellers, and retail partners. They are critical for brands to survive in a highly competitive, globalized economy where competition is intense and multiple brands are battling it out for the attention of distributors, influencers and retail partners. 

A well-strategized channel partner loyalty program can positively influence the willingness, and motivation of your channel partners to recommend and sell your products and services. It can also unearth new sales and revenue opportunities as well  as function as a recruitment channel for onboarding new partners and increasing your overall distribution network

More than 80% of distributors confirmed that the opportunity to get rewards from the supplier is a critical factor in their purchase decisions.

Much like its B2C counterpart, the primary goal of a B2B loyalty program should be to elevate the relationship between a brand and its partner from that of a purely transactional one to one that of a long-term, emotional one. This can help your brand to create reliable, long-term revenue and more importantly, increase your brand mindshare amongst partners as well as your end consumer.

Why Partner Loyalty Programs Fail

Gaining the loyalty of your channel partner can be tricky but it’s not impossible. The biggest mistake most brands make with their channel loyalty programs is focussing heavily on transactional and monetary rewards.  

In fact, research shows that companies that implement non-cash reward and recognition programs for their channel partners record annual revenue increases averaging 10% compared to other companies which average 3%.

Here are some other pitfalls you should avoid while executing your channel loyalty program :

Lack of commitment

For a loyalty program to work, it must be well planned, have stakeholder buy-in and promoted extensively. It’s recommended to have a dedicated program manager who oversees the loyalty program and reports the sales and revenue impact to the senior management.

Lack of personalization

If your brands operate a complex supply chain featuring distributors, dealers, influencers, sub-dealers, retailers etc, it’s important to customize the rewards and incentives for each segment. It is also important for brands to have clarity about the behaviour they want to encourage; it could be different for a distributor than a reseller, for instance.

Not setting measurable goals

It’s important to attach measurable goals like increase in sales, revenue or higher market share to your channel loyalty program to ensure its success. The goals should also be communicated to your sales and marketing team. Also, it’s important to get an understanding of your channel partner’s goals and motivations. This will help you to sync your own business goals with that of your partner’s and thereby create a symbiotic partnership.

Complex program structure

The success of your channel loyalty program depends on how seamlessly it can integrate into the routines of your partners. Ensure that the sign up is hassle free and you list out the rewards and other terms/conditions upfront. Also, ensure that points and rewards are  attainable; making either of them too difficult to earn will disengage partners from the process.

Not leveraging data  

A channel loyalty program with advanced analytical capabilities can help you track the overall health and status of your loyalty program. To ensure the success of a program, it’s imperative to constantly check the participation and redemption rates along with its sales pipeline contribution.  An added benefit of tracking the progress of your channel loyalty program is it can uncover potential upsell/crosell opportunities for a specific region. 

Launch it and forget it approach

Most brands treat their loyalty programs as an autonomous entity that can function on its own once it’s launched. Unfortunately, this leads to the decline and eventual failure of a program. The primary reason is that there are several brands vying for the attention of the same partner and your loyalty program needs to be exceptionally good for it to stand out.

Strategies for Effective Channel Loyalty Program

While the actual strategy will vary depending on the target audience goals and aspiration of your specific audience (distributor, wholesaler, retailer etc), here are some key things which you will need to incorporate into your loyalty program to ensure its success.

Understand Partner Goals 

This is the first step in implementing a channel loyalty program and should form the core of your strategy. Make sure you segment your audience based on their goals and offer them unique, personalized goals and rewards.  If your loyalty program doesn’t sync with your partners’ strategic goals, adoption and redemption will suffer

Easy Reward Redemption via Ecommerce website/mobile app 

Whether it’s a gift card, a holiday or an appliance, make it easy for your partners to redeem their rewards, if not your program will slowly lose traction. The ideal way to do this is to setup a dedicated B2B ecommerce app or website, where your partners can login and choose from multiple incentives in a single platform.

Setup Member Events

Constant partner engagement is critical for the success of your channel loyalty program. Try to organize localized events and meet/greet sessions where you can communicate with individual partners. This is also a great way to build a long lasting relationship with your partners and ensure lower marketing costs.

Personalization & Segmentation

No two partner’s motivations and goals are alike, therefore it’s important to offer highly personalized goals and incentives. Make sure you set clear rule structures for each partner centered around their behaviour that consistently produces business results. The personalization aspect should also flow into your communication strategy. For instance, language barriers and other geo specific cultural nuances need to be taken into consideration for effective reach and engagement.  

Tier-based Incentives 

Tier-based incentives have been really successful in the B2C context and works very well for partners as well. This structure essentially aligns with the aspirational mindset that is core to human behaviour.  Start from a base tier for signups and offer higher incentives as the partner moves up the tier based on their sales and purchase volumes.

Leverage Gamification 

Gamification concepts like  Leaderboards, Spinwheels, Engagement Trackers and sporting event (IPL , World Cup) related activities can help boost engagement levels of your loyalty program. For gamification to be successful, it must sync with the user journey, your business goals, and communicated clearly to the partners through multiple channels like emailers, app notifications, SMS and sales visits.

Benefits of Channel Loyalty Program

Boost Sales & Reach 

A channel loyalty program directly impacts the sales and revenue growth of your brand by motivating influencers and retail partners to sell more of your products. 

Gain Channel Insights 

Data from your channel loyalty program can offer you insights into product sales and customer preferences in specific geos. These insights can be leveraged to gather best practises and optimize your inventory and supply chain in the long run.  

Real-time Partner Engagement

Advanced channel loyalty program software lets you engage with your partners in real-time. This can help boost brand mindshare, loyalty and ultimately sales and conversions.  

Efficient Channel Management

Get insights on the product preferences and sales across multiple channels and leverage it to identify bottlenecks, crosell/upsell opportunities and potential new markets. 

Lower Acquisition Costs

By encouraging existing partners to refer to new partners, an efficient channel loyalty program can significantly reduce your cost of acquisition.

Long-term, Profitable Relationships

This is the ultimate goal of a channel partner loyalty program and can have a major impact on your sales and brand loyalty.

Start increasing sales & partner engagement with Capillary’s Channel Loyalty Solutions

Dominic Machado
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