Channel Rebates: Turning Buyer Preference into Customer Loyalty

by: Mark Herbert January 9, 2020

Many manufacturers and distributors use channel rebates as part of their channel partner marketing strategy. After all, price is the part of your overall customer value proposition that is most easily quantified and communicated. Channel partner rebates are a way for manufacturers and distributors to compete on price, while offering several key advantages over price reduction:

  • Channel rebates can be structured to prioritize high value partnerships.
  • Channel rebates can be awarded based on incremental growth, switching over to higher margin products, or other behaviors whose value offsets the cost of the rebate.
  • Price cuts become associated with the overall value of the product, resulting in a negative perception of a ‘price raise’ when the promotion ends.
  • Channel rebates can be used as a data collection tool to round out your channel partner profiles with contact data, demographic, firmographic, and purchase information.
  • Channel rebates are harder for competitors to find and match than price cuts.

However, is a lower price enough to create loyalty? Are channel rebates enough to build customer retention?

Buyer Preference vs. Customer Loyalty

When it comes to channel rebates, the rebate itself merely influences buyer preference. The lower the cost, the more likely a channel partner is to purchase the product. Makes sense, right? But what happens if your competitor offers an even better price point for a similar product?

Consider this: Most B2B companies use channel rebates or discounts to entice customers, and yet 71% of B2B customers report that they are considering jumping ship for a competitor. That’s because buyer preference can be rooted in cold, hard logical factors like price or convenience, whereas loyalty has an emotional component. Customer loyalty appeals to higher order, subjective values like trust, personalized value adds, connectivity, and engagement. Channel rebates can create buyer preference, but customer loyalty and customer retention require something more.

How to Use Your Channel Rebate Program to Go Beyond Buyer Preference

So while a rebate, in and of itself, is only a short-term solution, your channel partner rebate program provides tools to appeal to the higher order values that ultimately build customer loyalty. Below are several tips to maximize the value of your channel rebate program as part of a loyalty-building strategy:

  • Provide fast and seamless sales verification and rebate delivery – Remember, the experience partners have with your channel rebate program will become part of their overall perception of your brand. It’s important to create the perception that your brand is reliable, trustworthy, and customer-oriented.
  • Use channel rebate data to personalize your value-adds for partners – Use the datapoints you collect through your channel rebates to personalize your marketing to channel partners. Monitor their engagement and what products they are buying to spot relevant cross-sell, upsell, and training opportunities.
  • Enroll your channel rebate program participants into a loyalty marketing program – When channel partners claim their rebates, invite them to join a true loyalty program. Provide digital platforms for them to connect, learn more about your product offering, and receive relevant training that will enable them to be more successful in moving your products through the channel.
  • Engage and communicate channel rebate participants at every touchpoint – Communication is extremely important in making emotional connections and cultivating the kind of partnerships that result in lasting customer loyalty. Make an effort to engage your channel partners and give them opportunities for brand interactions beyond just fill out rebate submission forms.
  • Use non-cash rewards in addition to your channel rebates – They say “cash is king.” However, it’s not very memorable or emotionally impactful. Non-cash rewards have been shown to result in more meaningful and longer lasting changes in behavior at far lower cost. Rewarding top performers with group incentive travel or high-end merchandise, as an added bonus, gives additional depth and personalization to your channel rebate program.
  • Inspire channel partners to grow with you – Finally, it’s important to structure your channel rebate program to motivate your partners to grow with you. Setting and tracking personalized goals for incremental growth, and rewarding channel partners for longevity, helps to align rebate incentives with your long-term vision for your channel partnerships.

Growing Your Channel Sales

Channel rebates are just one of many strategies you can use to increase your indirect sales and build channel loyalty. To explore the perfect channel partner program for you, we’re happy to offer you a free planning session and tech demo.

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About Mark Herbert

Mark Herbert is President and CEO of Incentive Solutions. He has more than 30 years of experience overseeing business operations within the incentives industry, helping companies increase channel sales, build customer loyalty, motivate employees, and grow their business.