Loyalty & Rewards Basics

The Situation:

Customer loyalty is an obvious objective for companies in the B2C space. However, in the indirect B2B/Channel environment the importance of loyalty is less obvious. It is used to ensure a manufacturer’s partners, distributors, dealers, franchisees, brokers, resellers, etc. are properly informed, trained, motivated, supported and rewarded. Ultimately, channel loyalty programs empower you to motivate your intermediaries to sell more at the expense of your competition. In the channel, the loyalty program members are not employed by the manufacturing or vendor company, and therefore are not going to share the same enthusiasm about the business unless given an incentive to do so. Channel partners also have the ability to sell competitors’ products, making it critical for vendor companies to use rewards programs to gain mindshare and increased loyalty to their products and services.

You know your loyalty program should be easy to use, with tailored rewards for each audience, but there are oft-overlooked practices that can position your program for immediate success. Read through this to check them out and prime your program to deliver the results you need

Organizational commitment

Attaining company buy-in, both internally from the CEO down, as well as channel partners is essential for a successful channel rewards program.

Start at the top. When a CEO is outwardly confident in a loyalty strategy, partners will be more likely to buy-in.

Approach applicable departments – it is essential to align sales and marketing and to win the hearts of internal operations, finance and IT. With these teams on board your program will become a core component of your company’s winning strategy for the future.

Gain commitment by consulting, and listening to, your partners when determining how the program will work. After all, they will be the ones using it, so their input is vital

Find and appoint a champion

Your loyalty and rewards program will only deliver amazing results if someone in your organization takes charge of the initiative. Finding a manager who really “gets it” – someone who understands and believes in the value of the program – will ensure all aspects of the program are accomplished.

  • The individual driving your incentive strategy must be invested in, and accountable for, the program’s performance.

  • This person should be an articulate “change agent” who takes risks, has access to the executive team and understands how to drive buy-in

  • This champion will identify the most attractive partner groups and pinpoint the desired behaviors by reviewing metrics and interviewing top-performing partners

Understand what drives behavior

Recognizing what motivates the right partner behavior will help you reward not only achievements, but the actions and activities that accelerate the desired result. Without visibility into the behavior of successful partners, programs can only be judged by tactical measurements, instead of how well they support the real goal of increasing partner performance.

  • Start by Identifying best practices that already exist from within your channel, and define two or three behaviors that consistently provide one specific result (improvement)

  • Choose the length of your program cycles by determining the frequency of that behavior

  • Attach a consequence to those behaviors (rewards) with the result of driving performance improvement consistently and successfully across your channel

  • Make your expectations clear so participants know how to change their behavior to meet those expectations

  • Track behaviors and results so you can provide feedback to your partner’s sales representatives

  • Target each audience with the right value exchange proposition. Trophy style rewards stand out prominently in the memory of participants.

  • Select rewards that provide tangible evidence of their achievement, and fulfill their need for acceptance, recognition and personal esteem.

Design your incentive strategy around Tier 2 and Tier 3 partners

  • Offer individual, team and company-level incentives to ensure all stakeholders receive tangible benefits. All of these earning and redemption opportunities must align to the partner’s specific business model and generate an incremental shift in the desired partner behavior.

  • Your successful partners of the future may not be in your top tier today, making it necessary to pay attention to your Tier 2 and 3. In fact, these partners are often the most agile in adapting to business transformation

  • Rewards typically target Tier 1 partners, but they are usually already at business capacity, while Tier 2 and 3 partners are more apt to be “cloud focused” and centered on SMB business

  • Refocus your thinking on partner tiering and incentives – consolidate existing partner rebate programs with individual rewards built around solution selling

  • A sales incentive program should be targeted at an individual’s psychic income needs (their desire to grow as individuals, as well as boost their self-esteem)

Expand beyond sales only SPIF’s

It’s no longer enough to reward partners for closing deals. You need to incent them throughout the sales cycle, giving them positive reinforcement for every step prior to closing – from lead generation to opportunity registration. This will keep the funnel full, especially when individual deal value is lower in a recurring revenue services-focused business.

There are two main trends in deal registration:

  • Extending your program from deal registration to opportunity registration

  • Rewarding partners’ sales teams earlier in the sales cycle

Track your sales pipeline effectively by connecting your opportunity registration program to your lead sales funnel. Require partners to generate a specific number of qualified leads to maintain top tier status

Incent lead generation, lead qualification, lead conversion to opportunity, and your sales stages, but only pay the benefit on deal closing

Measure performance and provide feedback

Measuring performance is vital. It’s the only way you’ll know if your rewards program is driving the behavior and partner performance you desire. Dashboards should be available to both vendors and partners, allowing them to easily view the information they need. When partners can see where they stand, and the rewards for which they’re eligible, they will be motivated to hit their goals.

  • Measure program performance at many levels, including aggregate, promotion and partner tier

  • Provide graphical representations of progress to the partner and sales teams via performance dashboards

  • Make sure your rewards technology can provide reports with the following:

    Participant details including demographic data
    Summary and detail of all rewards activities (behaviors)
    Summary and detail of payout type activities
    Transaction summary and details – top earners by person and company
    Reports by region, country, partner, individual
    Cash balances and transaction details
    EGift card balances and transaction details
    ECash balance summary and detail by tier and company
    Redemptions summary and details by tier, and company
    Redemptions summary and detail by tier and reward product

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