Channel Loyalty Program Disconnect

Channel Loyalty Program Disconnect

Brands and channel partners often see channel loyalty different making it hard to create successful programs to address it. This disconnect starts with how each party defines loyalty and sees the purpose of channel loyalty programs. This article explores the disconnect.

What is channel loyalty?

Neither Webster or Wikipedia have a definition for channel loyalty. The closest thing is Wikipedia’s page on loyalty programs. Loyalty programs are described as structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.  Unfortunately, this defines a marketing tactic not loyalty itself.

Finding an unbiased definition for channel loyalty isn’t easy. There is no definitive source for it, and vendor descriptions have natural bias. Webster defines loyalty as a feeling of strong support for someone or something. Wikipedia describes loyalty in a similar vein as a devotion and faithfulness to a cause, country, group, or person.

This is a good place to start, both brands and partners want to feel devotion and strong support. They want to feel the other side is strongly committed to their success. Therefore, channel loyalty is the level of commitment of channel partners have related to brand success.

What is the purpose of a channel loyalty program?

This simple question is frequently at the root of why channel loyalty programs fail. Brands see the purpose as making their channel partners more loyal. Channel partners often think these programs are a brand’s way of showing their loyalty to the partner.

The brand and channel partners seeing one program as having two different purposes almost ensures one side will wind up disappointed. When it comes to loyalty, if one side is disappointed both sides lose. Success cannot be achieved when by definition success requires each side feels the other is strongly committed to them.

Why creating a successful channel loyalty program can be a real challenge?

When you want to move from one place to another you need to know two things: where you’re starting and where you’re going. When it comes to channel loyalty programs the second part is easy. A brand wants to feel a channel loyalty program makes their channel partners strongly committed to their success.

To illustrate this challenge better let’s look at it in the context of a points program. As Wikipedia stated loyalty programs are designed to encourage customers to continue to shop at or use the services of businesses. The idea is award points for each use or visit can be redeemed for incentives to drive repeat purchases.

If the channel partner in this illustration signed up to sell the brand’s products and had a bad first experience will this work? Earning points is unlikely to change the experience. Points programs work best when the partner already has an affinity to the brand.

Loyalty points programs also frequently get launched by brands with products that have grown stale. If a brand hasn’t been keeping up with the market and a new, more progressive competitor has emerged, is a points program the best course of action? The answer is probably not, addressing product issues will likely have more impact.

These are just a couple of examples of where the start is not conducive to a specific marketing tactic. The first example is a challenge creating loyalty with a new partner and the second is with maintaining it with established partners. A large channel will have many types of partners and at any given time large segments won’t be impacted by one marketing tactic or another.

How do I design successful channel loyalty programs?

Large channels tend to be complex organisms with many different facets. Rarely will one program or tactic address all the needs of a well-established channel. Developing a successful channel loyalty program involves segmenting channel partners, determining the best tactics for each segment, and deciding what you can afford to do and what tactics will have the greatest impact.

Learn more about channel incentives or channel loyalty reward points programs.