Channel Loyalty Programs – Top 3 Reasons They Fail
Channel Loyalty Programs – Top 3 Reasons They Fail
Why do channel loyalty programs fail? The reasons run the gamut from poorly conceived programs to lack of organization commitment, through execution. Today, we’re going to address the big reason these programs fail.
Channel loyalty programs are important and shouldn’t be taken lightly. If you’re like many brands half to all of your revenue comes from channel partners. Your best partners are invaluable to your business. They are the face of your business to customers, they know their local market better than you, and your competitors are trying to steal them away. The following are some common mistakes to avoid when planning a program to keep your channel partners loyal.
Channel Loyalty Program Failure Reason One: Lack of Partner Perspective
When planning a Channel loyalty program, a good place to start is the partner’s perspective. This is often overlooked up front and doing so leads to failure. Who is your brand to the channel partner? Are you just one of many brands they carry? Do they carry any of your competitors? Why do, or would, they choose to promote your brand before other brands?
Understand your channel’s industry and their industry landscape. How can you help them perform better against their competition? Also, understand their employee’s mindset and create a program that capitalizes on that. Are they driven and rewarded by internal competition? Are they driven and rewarded by their company’s success against competitors?
Not all channel partners are the same. If you have a well-established channel, you likely have a disproportionate amount of revenue coming from a small group of partners. These channel partners are likely already loyal and totally vested in your business success. You probably also have a large group of partners who produce little to no revenue, and amongst them are an even smaller subset that are new to your distribution network.
Which one of these three groups are you targeting a loyalty program at? This question is often at the heart of why channel loyalty programs fail. The majority of programs don’t differentiate between the various partner types. They target every partner equally, even though the partner’s needs and motivations are very different.
Top tier channel partners likely got there by working very hard to develop their business. They won’t abandon that effort on a whim. Offering loyalty points they can redeem for a camera also won’t change their point of view. Their perspective has been developed over an extended period of time working with your brand. Their motivations will be very different from other partners.
Channel partners in the mid-tier have likely been around for a while, and are likely more opportunistic than invested. The emerging partner that is new to the channel is probably best described as entrepreneurial. Programs to motivate businesses that are committed versus opportunistic versus entrepreneurial are completely different. If you haven’t thought through the channel partner’s perspective and developed your program around it, you will almost certainly fail.
Channel Loyalty Program Failure Reason Two: Lack of Clear Goals, Objectives & Measures
If the goal of your channel loyalty program is solely more revenue, it’s really not a loyalty program. Channel loyalty programs should be focused on making sure partners are committed long term, so you shouldn’t be looking for immediate gratification. Goals and objectives should be two sided, taking into consideration the needs of both the brand and channel partner.
Channel loyalty program goals should focus on moving emerging partners to top tier partners and building deeper ties with the existing top tier. For example, you might be looking to get emerging partners engaged in local marketing. You might be looking to get a top tier partner to expand their relationship with your brand by taking on a new product line. Goals and objectives of the programs should be clear and tactics to achieve those goals should be aligned.
Once you’ve got clear goals and objectives in place you need to determine the best way to measure the impact the loyalty program is having on achieving them. Each goal should have a measure and the measure should reflect progress toward the goal and ideally be quantifiable and not subjective.
Failure Reason Three: Organization Commitment and Resources
If you truly want to move the needle with a channel loyalty program, you need to make a commitment at the top of the organization of both time and resources. This rarely happens, and is why so many programs make so little difference.
Here’s are some easy ways to measure if your organization has truly committed to a channel loyalty program:
- Channel loyalty metrics are reviewed by senior management every month
- The field organization’s performance goals are tied to loyalty metrics
- The company has invested in a technical infrastructure to support the channel loyalty program
- A program manager has been assigned to manage the day to day program and it is at least half that person’s job.
- Targeted partners participated in the program’s creation and are also reviewing metrics and working to refine the program on a regular basis.
If the program is owned by a first level marketing person, and that’s the only person that lives or dies by its success, or if partners aren’t invested in the program success, expect it to fail.