Design Loyalty Programs Around Channel Partners
By Mike Spellecy
If you’re like the majority of companies, you go to market through one or more channels of distribution, which means it’s critical for you to generate loyalty to your brand among channel reps. Channel reps are the people who make the ultimate sale. The're also the people who say “So, you want me to be loyal, huh? Well, you’d better give me a good reason." Now what do you do? A recent study by our company demonstrates that a rep incentive program can be a great way to build loyalty — long as you do it right.
In the study, Maritz found that the answer to the question “Do rep incentive programs work?" is a resounding “Yes!" An impressive 77 percent of reps said incentive programs have a high influence on what they sell, and about the same number indicated that they make an average effort of 80 percent to succeed. And most importantly, channel rep incentives have a positive impact on results — reps, on average, attributed approximately 1/3 of their sales to the incentive programs they participate in. These programs really do get attention, effort and results.
That’s the good news. Now for the not-so-good news. About 70 percent of reps report having two or more manufacturer-sponsored programs from which to choose. You know that a rep incentive is a good way to build loyalty, but how do you stand out from the competition? Start by listening to the rep.
Building loyalty with channel reps is a process that requires that they be put at the center of the design. Rather than trying to determine a way to get them to “do something" on your behalf, start by trying to determine what they want, enable that, and then look for a way to benefit. Think of fitness trainer Jillian Michaels, for example. She doesn’t go around in search of overweight folks, offering to help them become more fit. Rather, she finds people who have decided that they want to be in better physical condition and enables that. And she benefits when they engage.
Reps in the study indicated that they want incentive program rules to be easy to understand and fair, rewards to be a mix of cash and non-cash (with 41 percent non-cash only) and communications to be more than just email. They also want sponsors to “Ask me what I think." Doing so makes a lot of sense.
There are other steps that will help you stand out and ensure that your program helps to generate rep loyalty.
Be sure that your program reflects an enhanced understanding of what motivates people. Maritz supports the 4-Drive Theory outlined by co-authors Dr. Nitin Nohria and the late Dr. Paul Lawrence, both of Harvard University, in their book, "Driven: How Human Nature Shapes Our Choices." This theory holds that, at any given time, four drives are at play in humans: the drive to acquire stuff and status, the drive to bond, the drive to create or comprehend and the drive to defend. Thus, the most successful rep incentives incorporate performance tiers with perks and privileges as a means of appealing to the drive for status and stuff, electronic forums and other vehicles for reps to share information and success stories, surveys that allow reps to weigh in on their preferences and rules that are perceived as fair and equitable. Many reps in the survey commented that the chance to stand out among peers and the ability to compete fairly were critical to their satisfaction with a program. We couldn’t agree more.
Use data analytics to identify the traits of top performers, then create differentiated communications and offers designed to encourage all reps to exhibit these traits. One-size-fits-all programs don’t work anymore, and using data to ensure that you are incenting the right things is critical to your long-term success, particularly given the longer selling cycles facing a majority of companies. Using something other than “gut feel" to determine the right behaviors to incent will also help to improve your credibility with reps, as the good ones know what works best. And now, so do you.
Personalize communications in style and delivery vehicle and think like a game designer. While 80 percent of reps indicated that they prefer email communications, 60 percent admitted there was a chance they might well delete it without reading the content. Reps also indicated a desire for sponsors to ask (and act upon) their preferences regarding communications vehicle and for the manufacturer to personalize the information; that is, discuss the individual rep’s performance, individually.
Reps are also advocates of game theory, so you’ll need to think like a game designer. This is a newer way of discussing certain mechanics that have been a part of incentive programs for a very long time. Leaderboards. Progress reports. Success stories. And now, virtual rewards for exploring websites and training materials, providing product input, giving feedback on selling direction and a host of other behaviors that help reps to blend with your brand in a way that they choose.
So, is it possible to generate loyalty in channel reps? Absolutely. Make sure you have an incentive program that incorporates these steps and soon reps will be averse to any offers but yours.
For more insights on channel loyalty programs, visit the Maritz Motivation Solutions blog.
Mike Spellecy, vice president of solution thought leadership for Maritz Motivation Solutions, is responsible for solution consulting with a particular focus on channel loyalty and sales incentive solutions. With more than 30 years of experience, Spellecy helps clients achieve objectives by developing programs that create a win-win for sponsoring companies and the people who impact results. He has contributed to the development and delivery of points of view and performance improvement programs for such companies as Konica Minolta, Cisco, AT&T, HP, Dell, Anheuser-Busch/InBev, Shell, Comcast, HON, Kimberly Clark Professional* and Honda.