How to Build a Powerful B2B Loyalty Program for a Channel Partner Network

By 26 August 2021August 31st, 2021Loyalty, Marketing Automation

Zsuzsanna Csuthi, Head of Sales and Marketing at AI6, shares why B2B companies with a global channel partner network can benefit from investing into a Loyalty Program.

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Zsuzsanna Csuthi, Head of Sales and Marketing at AI6, shares why B2B companies with a global channel partner network can benefit from investing into a Loyalty Program.

Why Do B2B Companies Develop a Channel Partner Network?

Few B2B companies have the capacity to sell only via their in-house sales team. Recruiting, hiring and managing an extensive, international direct sales team is expensive and challenging. Most companies therefore complement their in-house sales with an international channel partner network: they search, identify and appoint local or regional agents or distributors who market and sell the manufacturers’ products on their local market.

This indirect model offers great advantages for manufacturers aiming to market their products on the international market. The channel partners speak the local language, know the local market players, are familiar with the local laws and regulations and are capable of supporting the products with a skilled, local service team. In case the channel partner buys the products from the manufacturer and sells them in his own name to the end user we talk about a distributor, while if the partner only promotes the products and the transaction remains between the manufacturer and the end user, we talk about an agent.

 

The Challenge of Motivating an Indirect Sales Team

 Probably most Sales Managers would agree that motivation is one of the most crucial elements of sales management. Good sales people are extremely competitive. Without motivation even the most powerful sales machines slow down and stop achieving the target. To avoid this a company’s direct sales team can be motivated with commissions, bonuses, expensive company cars or career promotions. How about an indirect sales team? How can an Export Manager or Channel Partner Director encourage its distributors to better promote its products or services and increase year on year sales?

Traditionally there have been very limited ways to incentivise indirect sales. Annual achievement awards are the most common way to reward top performing distributors. An annual award, however, has very limited  incentivising effect. I have never heard of a channel partner who worked much harder just to become the distributor of the year. It is more of an acknowledgement than an incentive. So how can we better encourage distributor performance? How can an international indirect sales team be motivated?

 

Manual Management vs Automaton

Some companies have designed and implemented simple or more complex channel partner programs. Usually a sales administrator allocates points to the distributors based on their purchase and in some cases these points are further combined with tiers, or membership levels. More sales translates to more points and top performing partners become GOLD partners, while other, less performing distributors reach only SILVER or AUTHORIZED level. Some companies even allocate points for other KPIs, like margin level, payment punctuality or demo equipment purchase. The point allocation is usually done manually, therefore managing the loyalty program can become very labour extensive.

The regular communication about the points and achievements is another great challenge that can become the bottleneck of the entire, manually managed program. Without regular, personalized communication, however, the entire incentive program loses its purpose and becomes a bunch of data, a set of KPIs rather than a motivating and incentivising tool. And although measuring is the first step that leads to  control and eventually to improvement, a loyalty program should be much more than a distributor performance scoreboard. 

Many B2C marketers are familiar with the importance of a customer loyalty program, which creates a seamless customer experience, a journey with regular touchpoints, during which customer loyalty is increasing, giving the brand repeat business and valuable customer recommendations. But can similar benefits be achieved when the same principles are being applied in the B2B environment?

 

Creating a Successful B2B Loyalty Program

Creating a successful B2B loyalty program starts with a clear understanding of the company’s goals. The more clear and precise the goals are the more efficiently the program can be designed. Goals should not be general, like “increasing sales”, but more specific like “increasing the sale of high margin products”, “increasing collaboration on large deals” or “becoming market leader in the local market”.

The next important step is to create your buyer personas. Without analysing your channel partners, identifying the decision makers, influencers and creating the main buyer personas, your communication would be too impersonal, the challenges would not have the right effects and the rewards would not incentivise your distributors.

Everything should be made as simple as possible, but no simpler.

You most likely have heard this famous quote from Albert Einstein, referring to theoretical physics but completely relevant for a B2B loyalty program too. The best loyalty programs are intuitive both for your sales team and for the channel partners. Start with a simple loyalty program concept and make sure the instructions and rules are user-friendly. The base structure of the program should be simple too. It should be easy to explain and understand how many points can be earned by submitting a purchase order or by completing a challenge.

A successful B2B loyalty program requires the same digital-first mindset as B2C programs to boost customer engagement. An online platform should provide information for the members about their tier level, achieved points, available challenges and rewards.

The customer journey of an ideal channel partner should be carefully designed and different flows should be designed and set up in an advanced marketing automation tool, based on your strategy, with personalized messages. You should send regular, automated messages to your channel partners through their preferred communication channel, at the right time, encouraging them to move forward on their customer journey, towards becoming your ideal channel partner.

 

How to Create the Best Customer Experience

The best B2C loyalty programs create passionate fans and brand advocates. They are responsive to feedback and insights and create memorable, positive brand experiences. Although B2C customers have traditionally responded well to financial incentives, such as discounts, the same strategy cannot be applied successfully in the B2B environment.The best programs create engagement and long-term customer relationships with your distributors and demonstrate that you care for them. Providing them with performance-based incentives and with demand-generating activities, like Search campaigns or cooperative advertising can also deepen your distributors’ loyalty and eventually their customer lifetime value.  

It won’t be long before loyalty programs begin to take off throughout the B2B world across Europe, following many North American companies. Investing into customer retention and customer loyalty has been a smart and profitable long-term investment for B2C brands and it makes just as much sense in the B2B world, where there is less customer fluctuation or churn. 

Technology and digital marketing combined with loyalty strategy can make Channel Partners more loyal, more knowledgeable and efficient, winning deals worldwide for your brand, just like your best direct sales representatives would do it for you. Probably even better.

 

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Zsuzsanna Csuthi
Head of Sales and Marketing Zsuzsanna Csuthi is Head of Sales and Marketing, overseeing strategic development, global sales and marketing for the company. Zsuzsanna joined AI6 in September 2019 as Head of Strategic Development, and previously held international sales management positions at multinational companies like General Electric, Axis Communications and Motorola Solutions.

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