Decentralized distribution, online mega-retailers, offsite construction, cheap offshore competition… How are today’s manufacturers and distributors supposed to compete? How can they keep the attention of dealers and other external sales reps, much less build channel partner loyalty? Are they doomed to a race to the bottom?
In an article published in Industry Today, Mark Herbert tackles how manufacturers and distributors can differentiate themselves and gain market share without dropping their price or devoting tons of time and money towards trying to personalize their relationships with dealers and contractors.
Factors That Make Price Less Important
Is channel partner loyalty totally dependent on price and reducing overhead? Or are there other factors at play that might make price less important? Citing the Harvard Business Review, Mark Herbert discusses other "Elements of Value" that influence B2B customers' purchasing decisions. Some of these include:
- Cultural Fit
- Component Quality
- Fun and Perks
As manufacturers’ offerings become more and more commoditized, these kinds of subjective factors take on a greater role in determining who channel partners choose to buy from. In fact, these “Elements of Value” can make price a secondary consideration by establishing brand preference on other grounds.
The Role of Incentive Programs in Creating Channel Partner Loyalty
However, these “Elements of Value” are a little bit harder to communicate than price, which can just be displayed in a catalog, over the phone, or on a company’s website. Communicating values such as connectiveness and trust, Herbert writes, is where a channel partner rewards program comes into play.
Incentive rewards help create a new value proposition for dealers, contractors, and other channel partners. Not only that, but incentive rewards affect those channel partners on a psychological level, capturing their attention, building relationship capital, and influencing long-term behavior. By reinforcing new behaviors (such as including end-customer contact information with warranty registration submissions) with compelling rewards, manufacturers have the opportunity to achieve their short-term goals, while building the channel partner loyalty that will set them up for long-term success.
Why is channel partner loyalty important? Mark Herbert writes: “In addition to creating stability for your bottom line, increasing account purchase volume, and gaining access to new verticals, loyal customers become advocates for your brand.”
Are You Interested in Learning More About Channel Partner Incentives?
You’re in luck. Incentive Solutions’ free e-book, Guide to a Successful Dealer Incentive Program, is available for download. In it, you will learn how to structure an incentive program that motivates your channel partners to put your business first.