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The Impact Of Channel Maturity On Incentive And Loyalty Programme Design

May 22, 2024

Read on to learn how channel maturity can impact programme design and the strategies BI WORLDWIDE uses to support clients facing major sector transformations.

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An indirect channel or ecosystem of partners presents both opportunities and challenges for businesses looking to drive measurable results and go beyond a transactional relationship.

The opportunities

The opportunity for vendors with indirect channels of distribution today is to go beyond the transaction and identify and recognise the behaviours and points of influence that an ecosystem of partners exhibits and have over the end customer.

Recognising and incentivising these behaviours and touchpoints ensures sales are made in the right way and incentive spend moves towards rewarding overall customer experience which drives sustainable growth.

The challenges

The challenge in achieving that sustainable growth often stems from trying to do too much too soon or misaligned partner and vendor objectives.

At BI WORLDWIDE, our clients, across many sectors, with an indirect channel distribution model, are telling us that the challenges they face are being exacerbated by major transformation and evolution.

For example, new distribution models, as seen across the automotive sector, and new competitors or large-scale product evolution, as seen in high tech, can have a big impact on channel maturity. To mitigate, previously very established routes to market and operational processes may need to change or become less critical to the business. 

Strategically our clients are looking for value-add from their loyalty and incentive channel programmes, but what’s the impact of not moving with change? How can a programme continue to deliver?

What's channel maturity?

Simply put, channel maturity is a way to define and measure the level of development and enablement within a vendor's distribution organisation and is influenced by the many operational and geographical factors, as well as strategic business objectives. A vendor's channel and partners within it could also be at varying levels of maturity so the more understanding that can be had across your channel infrastructure the more effective the strategies that are deployed. 

At BI WORLDWIDE, we’ve simplified this into three main maturity segments:

 

A graphic showing the three maturity segments: transactional, life cycle and holistic

Transactional

Vendors may be new to reselling through an indirect channel or to date has had channel management tools in place that haven’t been effective. For partners, they may demonstrate irregular purchase patterns, not engage with the full range of products or services or lack of vendor-specific training.

Lifecycle

Vendors are likely to have a well-established channel organisation with good partner enablement tools and access to quality consistent data about their partners. Partners will likely demonstrate some consistency in their purchase behaviour, may engage in two-way communication or cooperation with the vendor, be effectively using MDF  (Marketing Development Fund) support, have an active in-demand or lead generation process, and engage with Vendor-specific sales training. 

Holistic/Ecosystem

Vendors will have a deep knowledge of their partners, possibly with many layers of classification of resellers and are likely to have an ecosystem of partners encouraged to collaborate on sales to customers.

Partners may be proactive advocates of the Vendor, participating regularly in events and product feedback loops. They may be early adopters of new products and may be collaborative with other partners in the channel to provide integrated customer solutions. 

Understanding your channel maturity and the variance in this across your organisation, your partners, and your markets is important, influencing not only the design of your channel loyalty and incentive programme but also the measurement of its success. 

How does channel maturity impact channel loyalty and incentive design?

The impact of designing a channel loyalty or incentive programme for the wrong maturity level will have consequences on the measurable result that it’s targeted to deliver. 

These are some of the indicators that your programme design and channel maturity are misaligned:

  • Lack of idiosyncratic fit for resellers/partners/distributors - Channel partners are looking for operational excellence so programme design should aim to work with the business-as-usual and not layer complexity to make the programme work. This will be visible as low engagement and confusion in the execution of Vendor processes.
  • Unattainable goals for participants- An obvious indicator of this is low issuance of rewards, missed objectives and low engagement but goals are not always as tangible as this. It is important to have aligned and well-communicated goals between a vendor and partner and this requires an understanding, partially achieved, by good partner profiling. 
  • Unsustainable for the vendor's business – Is the programme design pulling the organisation out of shape or causing frustration? This will be evident through a lack of visible results.

Examples of how to design incentives to drive loyalty at each stage of channel maturity

Transactional Partners 

For vendors with partners at the lower end of the scale, the loyalty goal may be to move them from infrequent to a recurrent purchase behaviour or to learn more about their purchasing behaviour. An incentive structure such as a ‘do this get that’ is a simple approach designed to reward each eligible sale, and when used appropriately, can be an effective way to drive incremental sales.

Claim form mechanisms can be an effective way to build a better visual of who’s engaging with your incentive. A blend of rewards-based cross-sell, upsell, targets and thresholds can be layered to promote desired behaviours amongst your partner segments and markets. 

Lifecycle

At this level of maturity, the loyalty goal is more likely to focus on getting partners to support the operational tools provided by the vendor, such as lead generation or MDF programmes. Here, an effective incentive structure may focus less on each individual sale but instead on influencing behaviours and the steps to the sale.

This may be with incentives that encourage wider adoption of the operational tools, processes and with partner enablement initiatives such as training with rewards aligned to the engagement as well as the aligned sales.

Holistic/Ecosystem

For vendors with partners at this stage, the goal may be to encourage partners to support the strategic objectives of the vendor and will be focused on how the partners are engaging with the end customer. Therefore, incentives may measure and reward collaboration amongst partners, customer acquisition and satisfaction results.

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Three tips for effective channel loyalty and incentive design

1. Get the right loyalty and incentive framework

Effective incentive and loyalty programme design must consider that one channel may have varying degrees of maturity dependant on market demands and capability. The design should be flexible and sensitive to current and future fluctuations to channel organisations and how that may affect the outcome.

This starts with using the right technology to enable your programme whilst built-in segmentation and consultative, insightful analytics in your chosen partner will lay the foundations for success.

Unlike productised solutions, BI WORLDWIDE’s ever-evolving, flagship channel loyalty and incentive framework, Channel Smart, is designed to meet the dynamic market demands of our clients’ complex, global channel infrastructures through highly configurable and customisable components that can be combined to meet the requirements of our clients’ unique channel. This is how we can deliver targeted and transformative solutions for all levels of channel maturity. 

2. Use rules structures and processes correctly

A frequent conversation we’re having with our clients is the impact of channel ecosystems on loyalty programme and incentive design, but it’s important to acknowledge that this might not be what a channel organisation is ready for or even needs; it really depends on the product or solution and customer.

Use rules structures and processes that support your partners in growth and have the flexibility to adjust to various market needs. As a provider of large EMEA and Global channel programmes, we ensure every programme accounts for maturity and future evolution.

3. Maintain your customer focus

Programme design should always be customer needs-centric with a focus on behaviours, and where an ecosystem is evolved, focus on collaboration that contributes to overall excellent customer experience.

This involves thinking differently about the rules structures and tools that you deploy in a channel incentive and what success looks like.

If the end-customer needs a smooth collaboration between partners supplying an overall solution or a channel has many influencers such as content creators, architects, and sector specialists then the programme design is likely to focus on an overall outcome with component parts and triggers considered rather than each moving part.

Drive partner loyalty with BI WORLDWIDE

Loyalty and incentive programmes are a critical part of channel enablement, effective design taking to account channel maturity will deliver increased sales, acquisition of partners and improved quality of how sales are made, and the diversity of solutions sold.

To find out more or discuss how BI WORLDWIDE can help drive loyalty within your channel get in touch.

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