VAR loyalty is about rewards

Building customer loyalty is an elusive goal that many seek. Resellers work to earn the loyalty of their customers so, for example, they don’t turn to Tiger Direct to get the cheapest deal.

In the distribution channel, stiff competition and direct vendor-to-VAR relationships make loyalty even more essential. So Ingram Micro Canada has found a unique way to build that loyalty through its Partner Smart Rewards loyalty program, which was developed in conjunction with American Express.

So how receptive will resellers be to this type of program? Think of all the people who complain about Air Canada, yet fly with the airline so they can collect Aeroplan miles for their next vacation. However, a lot of people gave up on the Air Miles reward card because it would take at least a decade to get enough points to actually fly anywhere – let alone buy a rice cooker or a couple of movie tickets.

The key to a successful loyalty program is to make the rewards worthwhile – and attainable. And membership should be free, which in this case it is.

With Partner Smart Rewards, resellers gain points for goods and services accumulated through qualified purchases from Ingram. The more products purchased, the more points accumulated. Each point is equal to one Canadian dollar and, according to Ingram, can be redeemed at more than 100 locations across North America – including retailers, restaurants, hotels and travel agencies.

Vendors can award points as they see fit and partners can pick rewards as they see fit. When a reward purchase is made, points are deducted from the card, just like any other debit card.

The program is open to all solution providers in Canada. Sponsors – to date – include HP Canada, IBM Canada, Lenovo Canada and V7, though more will likely be added.So why did Ingram choose to launch this program in Canada over other regions? Perhaps it’s because Canada is performing better.

While Ingram Micro has been doing well financially – it made sales of US$8.85 billion in the fourth quarter ended Dec. 30, 2006, an increase of 11 per cent over the same period in 2005 – some of its regions have been causing headaches, particularly Brazil and Germany.

In Brazil, Ingram is setting aside US$33 million, which may be required to pay extra tax caused by changes to software import laws. And in Germany, the distie had issues with a warehouse management system that will affect its bottom line – though it says these issues have now been resolved.

In that same period, North American sales made up 42 per cent of its total profits, and those profits were up from a year ago. Europe made up 36 per cent of that total, but profits fell in the region from the previous year.

In other news, Ingram has set up shop in South Africa – confirming the rumours – and is partnering with local distie MB Technologies to distribute PC components. No news yet, however, on whether its partner loyalty program will crop up outside of Canada.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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