Channel Loyalty

Back To Results

File Download

(pdf / 2 MB)
Free Download

Channel partners are a critical extension of a company’s sales force. In the manufacturing and service sectors they are referred to by many names, including but not limited to: dealers, distributors, value added resellers, brokers, and franchisees. In building an effective channel it is imperative that the relationships be built on trust and cooperation in order to drive success. Whether the channel partner is exclusive or independent (with non-controlled distribution) a loyalty strategy embraces the elements of building partnership credentials; delivering messaging that demonstrates understanding and empathy for the channels business issues; and the fundamental principle of mutual benefit.

We have seen a resurgence of cooperation between marketing and sales in general, but it is very important in creating channel loyalty. The most successful programs create loyalty to the brand and the channel by strengthening the strategic partnership. This is achieved with marketing resources devoted to education, training, and clear communications of the desired behaviors and performance. Focusing on one or two specific overall performance improvement objectives aligns the partner with the brand’s business model. Sales efforts are then incented and rewarded based on the partnership. Truly each entity wants each other’s businesses to be successful: employees are trained; customer service is improved; cycle times are reduced; margins are jointly monitored and there is overall collaboration. It is not just about sales, it is about the overall channel and customer experience.

Juxtaposed to this, but having reasonable success is the notion of mutual benefit vs. partnership. A channel partner may be incented to increase a certain behavior (sales), however, the program is less strategic. Building loyalty in this case has a lower lasting expectation while reducing the investment in the loyalty program. Caution in this area must be exercised so that it is not viewed by the channel that an incentive program is self-serving to the brand and is indifferent to the impact it has on the channel. Token efforts to engage a channel without holistically looking at their business and making the channel feel important will not drive loyalty.

Making sure the channel program is strategic will translate to a loyal end-user or customer. Customers are buying based on trust and value. Typical channel partners represent an array of products/services, however, only about 10% are considered strategic channel partners. A customer seeking help within a channel will quickly see the difference between a promotion and loyalty based sales experience.

The March 2009 Cutting-Edge Customer Loyalty benchmark report by Aberdeen Research found that only 24% of all of all retail organizations surveyed utilize a centralized cross-channel customer loyalty platform, which consists of consumer insights, offer creation, redemption, and performance metrics. Yet, 58% of retailers plan to implement a centralized cross-channel customer loyalty program in the next twelve to eighteen months. These findings support the notion that manufacturers and service providers realize they have not structured their loyalty programs as strategically as they should and it would suggest that they are planning to rethink and revamp their channel loyalty efforts. This approach takes more resources in the way of time, effort and funding but will certainly pay dividends in the long run.

The strategic approach will ferret out the quick kill artists only looking to make a “buck.” Customers are looking for long lasting meaning partnerships. Companies that have an eye on their own business success and that of the larger social community will earn the loyalty of customers and channel partners. There is a need to have a purpose that goes beyond profit, but does not ignore it. There is a need for a sense of conscience. It really isn’t outlandish or absurd. There is a growing desire to be successful, but with the greater good in mind, a purpose that takes into consideration those outside the organization and not at the expense of someone. It is the essence of all human beings and business. It is the essence of loyalty.

The Federal Government issued 104 pages of rules to enforce the Credit CARD (Card Accountability Responsibility and Disclosure) Act signed into law last year, mandating changes in disclosure, fee structures, card-expiration dates, and related areas. The rules cover gift certificates, store gift cards, and general-use prepaid cards (as opposed to prepaid cards used for incentives, sales, rewards, recognition, etc.). Under the bill, retailers are required to inform consumers, beginning in August 2010 (it is now extended until January 2011), that they will not be charged dormancy fees and gift cards cannot expire. Disclosure to consumers will be required via toll- free numbers, Web sites, and signage in stores, and retailers must continue to inform customers of those changes through January 2013.

The distinction to keep in mind is that the use of prepaid cards in loyalty and performance improvement programs should be clearly noted on the prepaid card. The placement of words on the cards such as, but limited to: Sales Award; Reward; Recognition; Incentive; or Loyalty Program distinguishes the use of the card from that of a gift. This designation allows the card to be treated separately from gift cards, and thus can have the attributes needed to be part of a performance program such as an expiration date and associated funds management.

Rick Blabolil is president of Marketing Innovators International (MI), a full-service people performance management and measurement organization dedicated to helping companies drive improved business results by building engagement across their extended enterprise – employees, channel partners and customers. Under his leadership, MI has grown to become one of the most respected incentive/motivation companies in the U.S.  


Providing thought leadership to the performance improvement industry, Rick is past president of the Incentive Marketing Association, and past president/founding trustee of the Forum for People Performance Management, dedicated to research and education about business motivation and employee engagement. Rick is also past co-chairman of the Incentive Research Foundation, member of the Performance Improvement Council, past president of the Incentive Gift Certificate Council, advisor for The Incentive Federation, and serves on the National Advisory Committee for The Motivation Show.

A Certified Professional of Incentive Management (CPIM), Rick is a respected expert and in-demand speaker at major trade shows across the country.  His marketing and motivation savvy is energy-charged and engaging. He holds an MBA from Northwestern University, J.L. Kellogg School of Management.

Download the article here.


Comments 0 comments

There are no comments for this post...

Leave a Comment

Please log in or register for a FREE online account to comment on this article.

Existing Members

Auto-login on future visits

Forgot your password?

Register Now

Your free online account lets you:

Read full articles and post comments, view multimedia and poll results, access job postings and post your resume, receive our weekly newsletters and much more!

Register Now