Learn more about how B2B loyalty and channel incentives are different from traditional sales incentives, and how incentive programs are helping companies adjust to technological advancements in the channel. Incentive Solutions’ VP of Sales, Luke Kreitner, sits down with Alex Palmer at Incentive Magazine, to discuss channel sales and B2B loyalty program best practices in this week’s episode of Incentive: What Motivates:
A full transcript of their conversation is below:
Alex Palmer: Thanks so much, Luke, for joining us. Let’s just start with, if you could give us some background on Incentive Solutions and the kind of work you do with channel sales incentives.
Luke Kreitner: Yeah, I’d love to, Alex. And thanks again for having me on. Really, our story at Incentive Solutions starts back in the early 90s. Our founder decided to start his own incentive business. The reason why he did that is a bit interesting. So he was a bit of a maverick and a frequent challenger of the status quo. He kind of pushed that to the limits, and ended up getting fired. But things happen for a reason, and this was, to him, absolutely liberating. And his mission in life really became to build a better mousetrap and prove that he could do incentives better.
When you think of the incentive industry, it’s rooted in rewards. But at Incentive Solutions, we are more than just rewards. That’s certainly an important component of what we offer, but at the core of what we do is providing a marketing strategy and a software platform to help B2B companies stand out in a crowded market. So our company’s mission is really to simply help manufacturers and distributors grow their channel.
How B2B Loyalty & Channel Sales Incentives are Different from Traditional Incentives
Alex: Then what would you say is a distinct challenge or benefit when you’re talking about channel sales, specifically? How do motivation strategies maybe differ from a more standard sales program at an organization?
Luke: Sure. This could take about an hour. But I’ll try to keep it brief because there’s a ton of challenges for manufacturers and distributors. And the answer is, it depends. If you think of the supply chain – so a manufacturer makes a widget. They may sell to a distributor, who then sells to a dealer, who then sells to a contractor – and eventually, it gets into the hands of the end-user. So the challenge is unique depending on which entity we’re talking about.
To keep it simple, I’ll focus on the manufacturer. But, really, what I feel their number one challenge is influence. The manufacturer doesn’t have access to the person sitting across the kitchen table, thinking about, for example, purchasing an HVAC unit. Who they’re talking to is the contractor or the installer. So that person really has the most influence over the sale. So the manufacturers' dilemma is, “I don’t know that contractor, I don’t know that end-user. But I want to get to them. So can we put an incentive program in place for the contractor to influence their recommendation to the end-user, to the person sitting across from them at the kitchen table?”
And ultimately the manufacturer – the benefit to them – is they’re going to get this data, which is really the holy grail to marketers: to have this end-user data so that now I can send a lifetime of communications to the end-user about new products, understanding more about their preferences and habits, and really become a smarter, more effective marketer. So that number one challenge is really influencing and getting access to that end user.
B2B Loyalty Program Best Practices: Technology & Gamification
Alex: How would you say that challenge has evolved as technology has increased, and data mining, and tracking of behavior, and all these aspects have taken a bigger role in a lot of areas of business? How has that affected channel sales particularly?
Luke: Yeah, great point. Technology is key and another challenge that is part of this technology solution is data collection. So I still have to ask that contractor to provide valuable data. Again, when you put yourself in the contractor's shoes, you have to make it simple. So they’re on the road all day, going from job to job. And I need a simple mechanism to help me take a picture of an invoice to show that I just sold this to John Doe, and here’s the information you want. So this is where the Mobile App comes in. And this has really been God’s gift to marketers for the past 10 years. Rather than going back home and logging this all on at my computer, I can simply push an icon on my smartphone to take me to the rewards program, take a picture of the invoice, upload it right there in my car after the job and, boom, I’ve got my points instantly loaded after some kind of validation is done. So technology has played an enormous role in the evolution of incentive programs.
Alex: And, certainly, for the offering from Incentive Solutions, as well. It seems like you’re really evolving in what you’re able to deliver. What would you say, from your experience, is an example of technology or an effective strategy that’s worked well for inspiring a channel sales team?
Luke. Sure. Really, I would point to a couple trends in our industry. One is gamification. So a lot of it now is about, of course rewards are important, but it’s about the experience. It’s about making it fun, user friendly. And gamification means different things to different people, but salespeople love playing games. And they love winning. So we’ve organized a number of contests to say, kick off a program and generate excitement, where the top three salespeople earn an iPad for getting their customers enrolled.
But you really can’t stop there. You always have to keep it fresh. We often organize another contest for the year based on sales growth. And visibility is important here, so we have a leaderboard that charts progress. And if you’re on the bottom of that leaderboard, I guarantee you’re going to do whatever it takes to get to the middle or the top by the end of that promotion, because you’re really – One, you’re motivated by the reward. But, two, you’re motivated by not being last, or moving up that leaderboard. There’s a bit of peer pressure that comes into play with the gamification.
Alex: And obviously the competitive aspect really plays a big role too when you’re talking about channel sales. Those salespeople are representing, say, a number of manufacturers. What are some dos and don’ts around that?
Luke: It really comes down to planning, actually. And a lot of clients we work with, they have an idea of, “I want to do an incentive program,” and they want it done yesterday. But really the value is spending enough time, understanding the audience, aligning the program with the objectives that you’re trying to accomplish, and structuring a program that’s going to make a difference. So we’ve got a few critical success factors that we guide our clients through, during the planning process to make sure that we’re doing enough due diligence upfront to make sure we’re successful down the road.
The first thing it starts with is you have to have buy-in from your management team. If you don’t have that, you’re just stopped. And one of the ways to get there is to build an ROI model. So that’s something that we’re well-versed in and we work on, but you also need buy-in from the group closest to your customers. So it’s important to get a few internal stakeholders that will be your champions in building this program down the road, and get the word out. It may be an internal sales rep from a team or somebody from the marketing team or somebody from the digital team who really get involves and defines the program.
And you have to keep it simple. Again, people are enrolled in 15 plus different reward or incentive programs, so you don’t want to overcomplicate the program, especially to begin with. Another item you have to think through is, my favorite acronym is, WIIFYM: What’s in it for me? You need to put yourself in the distributor sales rep’s or contractor’s shoes and determine what’s in it for me? “What value can I earn in a year by doing the behaviors that you want me to do, Mr. Manufacturer, Mr. Distributors.”
That’s another huge piece; you’ve got to hone in on the value proposition. And you have to keep it fresh, you have to keep it exciting, you’ve got to focus on communications, in many different channels. It’s not just email, it’s snail mail, it’s texting, it’s push notifications through the app. It’s multiple avenues. And then, last but not least, you’ve got to have a dedicated team to measure the program and monitor performance so that you can continually improve and keep the program fresh.
B2B Incentive Marketing for Different Generations & Types of Promotions
Alex: Let’s talk about demographic differences. You’re talking about a real veteran sales person that you’re trying to connect with, versus somebody who’s maybe just getting into it. You have to target different interests, or demographics. Even within the same salesforce you might have some very different things that appeal to different sales reps.
Luke: Yeah, there’s so many different levels you can use to splice the different audiences. But really the shift that we’ve seen is within the generations. So now in the workplace, we have five different generations working side by side. All the way from Baby Boomers now down to Gen Z, which are digital natives who don’t know a world without an iPhone, right? I’m a Gen Xer, and I consume information different than a Millennial or a Gen Z or a Baby Boomer. So that speaks to your communication methods. I prefer email. Millennials, it’s texting. And now Gen Z, it’s Snapchat and instant messaging, and all that, whereas the Baby Boomers, they appreciate a phone call. Those are general stereotypes, but they’re generally true. That’s why they’re stereotypes. So a huge piece of tailoring your program is you really need to understand your demographic, especially on the generational front.
Alex: What about if you’re trying to promote a particular product or a short-term promotion? What’s an approach that Incentive Solutions has found effective?
Luke: It really goes back to what you’re trying to accomplish. You should always begin with the end in mind and start with ‘why.’ Are you trying to drive short-term sales? Maybe you’ve got a new product that you’re just rolling out and you really need to generate a lot of excitement and buzz around it. So you need to amp up the value propositions to the audience, and spend a little bit more money educating them and reinforcing how great of a product this is so that they’ll push this through their channel. So that might be a short-term approach.
And, again, if you’re looking at your audience, that top 20% of your business, you want to retain from a loyalty perspective. You don’t want to lose their business to a competitor, so that’s where you might put in more of a long-term loyalty program, which is more about the benefits and the relationships that you garner by doing business with the distributor or manufacturer. A lot of the time we do group travel incentive programs for that top 20%, because they’ve got all the bells and whistles and cool things in their garage. So the experience that lasts the most is that trip down the Rhine river on a river cruise or a trip to the Dominican Republic. And that’s more a long-term relational program.
Effects of Digital Transformation on Channel Sales & B2B Loyalty
Alex Palmer: And an opportunity to meet others in that area, too, I imagine. The social aspect is attractive, too. How would say inspiring motivation in this sector has shifted in the last few years – or has it? Are there new challenges you’re facing? We talked about technology a little bit earlier, but are there other areas where, maybe when you’re looking at 10 years ago, how have things really changed?
Luke: I mentioned the generational shift, but the other thing that we’re really experiencing right now is what people are calling this Fourth Industrial Revolution, or digital transformation, or whatever kind of buzzword you want to associate with it. But the point is is that it’s really all about the integration of these disparate systems that these big companies are using. So they’ve already got a CRM system, like a Salesforce.com. They’ve got a marketing automation tool like a HubSpot. A learning management system, business intelligence tools. So all these tools are at their fingertips, and the question is how do they all piece together, and, actually, an incentive program as a platform can be a launching point for many of those systems. So if you think, this is going to be our distributors' sales portal or our contractor portal launching point that we’re going to drive people to because they’re earning rewards. And then, while we’re there, we’re going to offer them this great community that they can share ideas with and get access to different collateral to help them be more effective selling. So it’s kind of the puzzle that you have to put together and really that’s where we’re at from a digital transformation perspective.
Effects of the Economy on B2B Loyalty Program Best Practices
Alex: How are channel sales incentives especially valuable, either when the economy’s a little rocky or maybe when it’s strong? Where does it fit in when things are getting a little unstable or if you’re a manufacturer who is getting a little concerned about the state of the economy? Why are incentives a valuable tool?
Luke: Because it can be used in so many different ways. It’s something that evolves based on what’s happening in the global economy. So, again, I mentioned earlier, it’s important from a retention perspective to have a program. So there might be a loyalty angle that when times are tough: “I’m with you, we’re partners in this together, we need to collaborate and ensure that we’re creating demand.” And it’s that kind of spirit that’s important within a loyalty program. Whereas in a growth market, we may want to focus on that middle 60% of your current customers that has the most opportunity to grow, and really steal market share from your competitors. So that might be more of an incentive approach, where we need to put some dollars behind educating that middle 60% about the benefits of our program, our products, and really try to capture some market share when times are good.