The right recipe for channel rep loyalty

Every vendor that sells through the channel wants the recipe for channel rep loyalty. It is the secret sauce that boosts product sales above the competition. They strive for that same attitude and steadfast loyalty from their partners. It’s essential to increasing profits, building stronger brands and improving satisfaction with end-customers.

In an effort to generate and maintain loyalty from their partners, many vendors create incentive programs using typical promotional and market development funds. Although most companies use this approach, it’s not effective. Here’s why. Reps are easily swayed by a better promotion from a competitor, resulting in a lot of cash in the reps’ pockets and a constant shifting of brand strengths as copycat programs battle for rented mindshare. It is better that vendors place specific focus on developing loyalty and brand advocacy among partner reps, who ultimately determine vendor success or failure in the marketplace.

Continuing to offer blanket incentive programs to reps can result in limited partner participation, lack of rep engagement and lost opportunities. It takes more than typical “one-size-fits-all” programs and promotions to create true partnerships or brand loyalty. Vendors should move channel partners and their reps through an innovative approach that cultivates advocacy and true loyalty among their partners’ best reps.

Time to Expand the Menu

Vendors can shift channel partners and their sales reps beyond the traditional definition of loyalty by combining loyalty marketing with channel incentive best practices. Doing so is more likely to generate sweeping changes in attitudes and create real allegiance and brand advocacy.

There are three key principles that must be followed to achieve true loyalty. The first is to understand who the most valuable partner reps are now and will be in the future. The second is to enable the most valuable reps to be more engaged and effective, which leads to greater rep contribution and reduced turnover. Finally, targeted communications and incentives will create greater rep motivation and bring about partner support of vendor initiatives.

There is a fundamental difference between narrowly-scoped promotional programs and an approach that creates true loyalty. One is a tactic. The other is a strategy for lasting behavior change as a partner sales rep becomes more engaged. Well-designed programs move reps along a continuum from creating awareness and interest to encouraging initial participation. From there, it’s about driving active and long-term commitment, which culminates in reps becoming advocates.

Reps by the Numbers

To understand partner reps and determine where to focus investment, it is important to identify and segment sales reps by their “Lifetime Value.” Lifetime Value scores predict the Net Present Value (NPV) of a partner rep’s profit contribution over time.

Scores are derived from a statistical model that can be used in several ways including:

1. Estimating all future profits generated by a given partner rep.

2. Identifying rep segments for targeted communications campaigns.

3. Providing enhanced reward and recognition offers.

4. Identifying high-value and at-risk representatives.

5. Measuring partner rep loyalty and engagement.

Lifetime Value not only predicts who the best reps will be, but also identifies reps whose engagement is waning and who may not stick around. The model measures both NPV of future profit streams and the degree of individual engagement. Thus vendors can take steps to create greater loyalty among reps with high potential and can take steps to retain those who at one time were more engaged. The model also can be refined continuously as additional data is obtained, ensuring increased loyalty and rejection of competitive offers.

Once reps’ Lifetime Values are assessed, vendors can become less product-centric and more customer-focused. Partner rep performance data can be applied toward creating a segmentation strategy among different rep groups. The Lifetime Value process typically identifies between two and 10 unique segments. With this information, rep differences can be leveraged to create tailored marketing messages and treatments. This process is specifically designed to create higher levels of engagement.

For example, after assessing the Lifetime Value of its reps, an automotive parts manufacturer found that reps with the highest Lifetime Values use customer communication portals, take advantage of product-specific referrals and receive non-cash incentives to become product-certified. With this data, vendors can adjust incentive offers and communications plans to target their most valuable partner reps, driving greater alignment around these activities and ultimately greater brand loyalty.

Applying these strategies and principles will create stronger bonds with channel partners looking to vendors to help them build their businesses. Vendors are better able to identify their most valuable partner sales reps, and segment offers and communications to develop and maintain true loyalty.

Real channel loyalty comes when a partner rep is an advocate for the vendor’s product or service, and is resistant to competitive offers.

Combining partner Lifetime Value analysis with a continuum of engagement will breed better decision making by focusing on the reps that matter most.

Michael Spellecy can be contacted at [email protected], and Tim Crank can be contacted at [email protected].

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