How To Create A Profitable Dealer Loyalty Program For Your Business

WHO NEEDS DEALERS?

ANYONE WHO NEEDS A HAND GOING TO MARKET.  

Manufacturers, providers and founder teams - with production as their core focus – are often not in a position to handle large scale sales, distribution and market penetration on their own. Maintaining a large indigenous sales team may not make for a financially sound decision either. It may also not align with the broader organizational strategy. That’s typically when businesses turn to external help, seeking a partnership. In short, a dealer. In sales lingo, dealers are also called ‘channels’. Channel partnerships represent a sales strategy where a company or provider outsources its sales targets and responsibilities to another company or individual. Since the company or manufacturer’s own employees aren’t directly involved in the sales process, channel sales is also sometimes referred to as indirect sales. Technically speaking therefore, dealers are indirect channel salespeople for your business.

EXAMPLES OF INDIRECT CHANNEL SALES.

Any industry can take the indirect sales channel route to growth, and several of them do. Some sectors that have traditionally leveraged it to great success are automobile (the neighborhood car dealer is part of pop culture, featuring in countless Hollywood movies), insurance, pharmaceuticals, nutraceuticals and health products, healthcare, FMCG, furniture, education and learning, electronics & gadgets, digital appliances, beauty products, home care products, new brands and products and others.

Some of the most common avatars of indirect channel sales are auto dealers, resellers, white label resellers, franchisees like a Subway or a Gold’s Gym, multi-level marketers like Amway and Tupperware, partners and DSA’s who sell for commissions, call centres who undertake cold call assignments, alliances who sell complementary products, brokers who arrange transactions against a commission, vendors who act as intermediaries, and agents.

In the digital age, app stores, e-commerce marketplaces, subscription box services, social media selling, comparison shopping websites, daily deals sites, channel partner portals, affiliate marketing, directories and listings can variously be described as indirect sales channels as well.

Indirect sales channels are a subset of an organization’s larger distribution channel network. Let us take a quick look at THE BIG 3 of indirect channels in sales: Distributors, wholesalers, dealers. 

FROM COMPANY TO CUSTOMER : TRACING THE DISTRIBUTION VALUE CHAIN. 

In the commerce supply chain, several actors play a role in progressively transferring the product from its source to its destination, ensuring smooth movement from the tech lab or manufacturing floor to the hands or device of the end user. Do note that in an interconnected digital age, these roles are increasingly blurring or overlapping.  

Distributors buy products - also referred to as ‘inventory’ - in bulk by partnering directly with the manufacturing company, also called provider. They subsequently offload the products in large chunks to wholesalers who are the next link in the chain. In the age of e-commerce, we’re also seeing distributors tinkering with ideas and innovations to reach the end customer directly, bypassing the wholesaler.

Wholesalers buy product inventory in bulk from distributors, store them in large warehouses, and supply off smaller quantities down the chain to retailers and contractors. Sometimes, a wholesaler may also have a showroom that pitches products directly to the market and the end user. Certain wholesalers dedicate themselves to a specific product or business and may become specialists in that area over time, a common practise in sectors like industrial equipment and pharma.

Retailers, also sometimes referred to as dealers, act as the final mile in the distribution chain. They buy inventory in relatively smaller quantities from wholesalers. The products are displayed in showrooms, local stores or online marketplaces, from where they make their way to the final customer or end user. It is not uncommon for a retailer or dealer to skip the ‘middle men’ (distributors and wholesalers) and buy directly from the manufacturer.

Unlike distributors and wholesalers who operate via internal channels in B2B format, dealers – with a distinctly B2C flavor to their role - have to Go-To-Market every day and negotiate the volatile high seas on their own. Since they run their own independent businesses, dealers usually have their own way of looking at logistics, finance, marketing, sales and customer relations which they customize according to the local business climate. Constant and close interface with customer sentiments, market fluctuations and competitor heat keep dealers on the edge. The pressure to stand out from the growing noise and attract customers forces dealers to bring out their A-Game every day. 

DEALERS: THE FACE OF THE BRAND. AND THE DRIVER OF ITS CUSTOMER EXPERIENCE.

Distributors and wholesalers rely on an established and supportive inner circle of networks and connections to generate more sales. They usually have limited direct exposure to the public. Dealers and retailers, on the other hand, are the point of contact for the customer. They have to act as the face of the brand, and focus on the shopping experience. Dealers and retailers are the company’s personality people actually get to see and interact with. With everything they do directly influencing the customer’s perception of the brand, dealers wield a stronger grip over customer experience (CX) than many might realize.

REASONS WHY DEALERS ARE IMPORTANT TO A MANUFACTURER OR BUSINESS.

For the manufacturer or the company, dealers represent the X-Factor that can make or break their Go-To-Market (GTM) game. Here’s why.

· Dealers, a principal actor in a company’s indirect distribution mix, bring valuable external competence to the organizational fold. They measurably elevate vital business metrices like operational efficiency, cost optimization, customer affinity, competitive edge and expansion plans, playing a key role in both acquiring new and retaining old customers.

· With their large networks and targeted reach, dealers make the product accessible to a much wider set of prospects and customers.

· With their pre-built trust, dealers ‘transmit’ credibility from them to the brand.

· For the same reason, dealers and retailers can add unmatched speed and agility to delivery and customer support.

· Dealers often use their deep understanding of local market trends and shifting user demand to tweak and adapt parameters on-the-fly. They are forever experimenting with pricing structure, inventory management, in-store vibe, packaging and shipping to drive sales and profits aggressively.

· Dealers offer smaller companies and bootstrapped startups a realistic shot at scaling revenue – and taking the fight to bigger rivals - without the forbidding expenses of hiring an in-house sales team.

· Dealers have evolved beyond being a mere interface  between maker and buyer into a 360 degree, multi-sensory ‘provider of moments’ for end customers – revolutionizing touch point dynamics and brand awareness.

· Dealers will often have complex conversations with users to understand their pain-points, lifestyle and purpose of purchase.

· With their specialized knowledge, skills and resources (like trained teams) and a customer-first approach, dealers inform and inspire purchase decisions with insight and empathy, turning the act of buying into a rewarding experience.

· By controlling the last-minute relationship with the customer, skilled dealers can influence and skew shopping behavior decisively – impacting sales momentum, volume and revenue.  

· Dealers with long-running association with a sector or industry can develop a profound attachment with the product. These folks consider themselves custodians of the category, are often motivated beyond profits. They become champions and evangelists for the space, and are acknowledged as centres of trust and wisdom – advising the public on everything from how to judge quality to product usage to storage to reselling and beyond.

· In certain industries, dealers may provide after sales service and support – such as maintenance, repairs and parts replacement – to significantly supplement value.   

· With their intimate local presence, dealers can act as a pillar of knowledge and trust for the entire community. It is not uncommon for residents of the locality to develop special bonds with their dealers, and in exchange receive special privileges, flexibility and offers from time to time. 

INCENTIZING DEALER NETWORKS AND INDIRECT CHANNELS.

Given the heavy lifting they do, and their multi-faceted impact on revenue generation, the criticality of building strong relationships with dealers is a no-brainer for sales and revenue leaders. Wise brand and product managers know great dealers are an asset, and that it pays (often handsomely) to keep them motivated and happy. After all, it is easy for a dissatisfied dealer to sabotage company sales by bad-mouthing the product to customers, or promote other brands in the category instead. If push comes to shove, they can even quit ship.

Solution? A dealer loyalty program or dealer incentive program.

WHAT EXACTLY IS A DEALER INCENTIVE PROGRAM?

Capturing the essence of dealer loyalty programs.

A dealer incentive program, interchangeably referred to as a dealer loyalty program, is a sales and revenue strategy employed by manufacturers and brands. It leverages structured financial rewards and interventions to promote dealer motivation with a view to amplifying Go-To-Market efficiency, aligning sales partner behavior, building channel capacity, evoking higher levels of performance, getting more ROI out of sales related investments and building rock solid partnerships and collaborations. These rewards and compensations may be partially financed out of the organization’s Market Development Funds (MDF). 

The best dealer incentive programs acknowledge, recognize and reward effort, ensuring reciprocal gratitude and value generation from the dealer’s end – thus laying the foundations of a mutually enriching, long-term partnership. Astute managers look to position their dealers as brand heroes, astutely leveraging psychological instruments like public recognition and compelling incentivization to effectively turn dealers into sales drivers and profit centres.

CARROT POWER

According to Incentive Research Foundation (IRF),

➼ Incentive programs engineer a 15% increase in performance during the initial phases.  

➼ Coffers record a 44% bump-up in sales when an incentive program is used.

➼ 81% channel partners agree that the opportunity to earn rewards and incentives from manufacturers strengthens relationships.

HOW DOES A DEALER INCENTIVE PROGRAM BENEFIT  BUSINESSES?

In more ways than you might imagine. Take a look.

·  Helps sell more.

·  Optimizes sales efforts.

·  Brings down costs via shared efficiencies.

·  Clears out slow moving stocks and inventory.

·  Is able to push specific products selectively.

·  Prioritizes company’s product over rivals.

·  Enhances brand visibility and connect.

·  Empowers partners with better product knowledge.

·  Builds competitive edge.

·  Identifies gaps, gathers data, refines strategy.

·  Enhances customer experience measurably.  

·  Improves planning & predictivity.

·  Widens market coverage.

· Deepens customer loyalty.  

·  Increases market share.

·  Improves profit margins.

·  Supports special initiatives like launches.

·  Amplifies partner engagement.

·  Converts partners into trusted supporters and advocates.

·  Attracts best dealer talent to the company. 

WHY SHOULD YOU CREATE A DEALER INCENTIVE PROGRAM FOR YOUR BUSINESS AND SALES FUNCTION?

Let’s take a look at the standout benefits and advantages of dealer loyalty programs.

Goal alignment

When done right, dealer incentive programs seamlessly synergize channel efforts with brand objectives. Be it territory expansion, product refinement or a new launch, a thoughtfully crafted dealer loyalty program ensures everyone faces the same direction, creating a domino effect of efficiency.  

Performance amplification

Motivating your best dealers ensures they stay charged, prompting success behaviour and nudging them constantly towards better results. Dealers who cannot afford perks for their workers will be particularly appreciative of a dealer incentive program that lets them reward their team.

Better channel quality

A dealer incentive program that’s compelling, just and well-structured acts as a powerful value proposition for partners, making the brand the preferred choice of top dealers for the product or category. This helps the company build a robust competitive edge with a team of indirect sales partners that’s best-in-class.

Community building

Passionately built dealer loyalty programs are potent  instruments for building attachment. They go beyond the  transactional, fostering ‘tribe’ type belonging that unites members towards a connected quest. Dogged communication and interaction fans the sentiment, making for a self-sustaining community that snowballs into outcomes – be it PR or profits - for the brand in ways traditional strategies cannot.  

Building a dealer loyalty program with the right choice of incentives: The blueprint.

HOW TO DESIGN AN EFFICIENT AND EFFECTIVE INCENTIVE AND LOYALTY PROGRAM FOR DEALERS AND INDIRECT SALES CHANNELS?

Ask any team lead or HR head and they’ll tell you how challenging it is to keep employees motivated and focussed towards targets. Imagine the scale of the challenge, then, when it comes to stimulating dealers – folks who don’t even feature on your payroll and may stay miles away from the office location! A considerably tougher mandate. And yet, great companies consistently pull it off with the help of dealer incentive programs to expand profits and rocket fuel growth, proving that there’s a science and method to it after all. Which is precisely what we are about to decode.

LET’S BEGIN WITH THE BIG MOTIVE: EVERYONE LIKES A (EGO) MASSAGE.

Like all other stakeholders  in business, dealers too love and crave recognition. It tells them that they are appreciated, and elevates them to an elite peer group. However, remember that your dealers are probably being wooed and incentivized by other brands at the same time. To stand out, your dealer loyalty program must represent unique, genuine and consistent value. That means hitting the right blend, intensity and cadence of incentives and rewards.

Here’s a list of proven TO-DO’s to help you build your very own dealer incentive program. 

START SMART: SPECIFIC, MEASURABLE, ACHIEVABLE, RELEVANT, TIME BOUND.

A. Specific

The expectations and yardsticks you set at this stage will inform the structure, criteria and guardrails for the entire dealer loyalty program - so get the basics straight, right from the get-go. Eliminate ambiguity, remove guesswork and try to put a note, number or volume to every point.

Find out:

What are the overarching boxes you want your dealer loyalty program to tick? It is buyer acquisition, customer retention, sales volume, territory expansion, brand differentiation or returns-on-investment (ROI)?

What is the time horizon we’re talking about here? How frequently do you want to incentive outcomes? Monthly, quarterly, annually or ad-hoc?

What about the locational co-ordinates of your program? Do you want to incentive dealers locally, regionally, nationally or globally?

What are the eligibility criteria that make your dealers qualify for rewards?

What are the steps needed to reach the peaks you have assigned for yourself? Can you define the behaviors and design the errands that will accelerate them?

What are the platforms, tools and technologies you need to get things rolling?

Who has the responsibility of ensuring mission success? Spell out the names and document the roles.

What kind of budgets do you have? Is your benefit-to-cost ratio within manageable limits?

Your dealer incentive program will, directly and indirectly, impact your dealer profitability, margins and pricing strategy. Make sure your budget has factored all of them in.  

B. Measurable

What are the metrices you have set to understand the status and gauge the success of your dealer loyalty program? Accurate and consistent measurement is the cornerstone of a dealer loyalty program. You can look at this through three broad lens : Financial metrics, engagement metrics, dealer satisfaction metrics. Some common KPI’s for measuring dealer incentive programs are:

· Member acquisition rate

· Member acquisition cost

· Participation rate

· Engagement rate

· Retention rate

· Purchase frequency

· Upsell rate

· Churn rate

· Average order value

· Dealer lifetime value

· Program ROI

But here’s the bigger question. How will you capture, calculate and compare? Some factors to consider before you begin are:

Are program outcomes interpretable in standard measuring language and units?  

Are they visible, trackable and analysable?

Will you do this manually or take the help of technology?

Do you have an easy-to-use dashboard that anyone can operate?

Is there a reporting system in place?

C. Achievable

Does your dealer loyalty program carry pie-in-the-sky ambitions, or are your targets practical, well-informed and achievable?

What are the hurdles you foresee along the way and how do you plan to overcome them?

Are you empowering teams (both in your company and your dealer armies), establishing processes and communicating priorities?

Does it sound too hard or too easy?

Your program should strike a balance between achievable and ambitious, to keep complacency at bay and bring out the best in your dealers.

D. Relevant

Is your dealer incentive program consistent with the long and short term objectives of your business?

Why aren’t you choosing a different type of goal?

Why now? Why not later?

E. Time Bound

What kind of time horizon will your dealer loyalty program get to prove itself?

EMPAHTIZE WITH YOUR DEALER’S JOURNEY.

Start by placing the goalposts in the correct spot. Your dealers are the obvious and primary target of your dealer incentive program, so that’s where you must begin. The better you know them, and understand what they want, the better you can plan for outcomes that actually matter to them, and benefit both the parties – your brand as well as your partner. Try to walk a mile or two in your dealer’s shoes to get a sense of their journey. And the best way to do that, is to simply ask.

What is their backstory? What are their values and perspectives? What are the pains and challenges they are going through? Where do they need support and help? What are their unspoken aspirations and secret wish-lists? And finally, how can an association with your company help?

One-on-one sessions, group meetings, surveys, feedback forms, informal discussions, creating an industry or partner forum – there are several ways to get into your dealers’ mind. And prepare a deeply relevant blueprint that draws its juices directly from your partners’ context, urgencies and preferences. This will help lay the soil for a relationship that develops into a mutually rewarding journey.

DON’T FORGET THE END-CUSTOMER.

At the end of the day, it’s your customers who will face the ultimate impact of your dealer incentive program. Make sure it’s a positive and memorable one. The better you understand the undercurrents shaping your customers’ needs and preferences, the better you will be able to design a dealer loyalty program that prioritizes the customer value proposition and delivers exceptional customer takeaways. The ultimate purpose of a dealer incentive program is to favorably influence customer touchpoints with data driven, seamless and personalized interactions.

KNOW WHAT TO INCENTIVIZE.

What are the actions and activities that needs to be mapped to rewards? Specific milestones, dealer behavior, brand visibility, customer experience, activities (like deal registration and product demos), bottom-of-the-funnel achievements (such as upselling, cross selling, renewals and so on), overall growth, profits, short term ROI, long term ROI - what’s important to your business at this stage?

Great dealer loyalty programs take a higher order and holistic view, aiming to improve results by ‘fixing’ the root cause. They peer beyond mere finish line performance and focus on incentives that have the power to rewire core mindset. By selectively re-engineering pre-sales behavior that have a high correlation with end results, they drive mammoth transformational outcomes with relatively less effort and investment.

KNOW WHOM TO INCENTIVIZE.

Hard customize your incentive to the different individuals involved in your dealer incentive program. This increases chances of goals being met despite the frictions that exist from differences in background, speciality and function.

A company may sell through an extensive indirect middleman network, but that doesn’t mean it needs to include every dealer or reseller in their dealer loyalty program, or incentivize every participant equally. Pareto’s principle suggests that the top 20% of your dealers drive 80% of your sales. So prioritize your rewardees accordingly. Analyse strategically and handpick only those who you know will influence your outcomes directly and substantially.

Once this match-making exercise is out of the way, zoom in to the nitty-gritties. Try to understand the departments and roles where incentive intervention will move the needle the most, and yield the maximum marginal returns. Leaders and managers in your dealers’ organization? Their frontline staff? Members of your own company in charge of running the dealer incentive program? Someone else? All of them?

Challenges in running a high performance Dealer Incentive Program.

WHEN SHOULD YOU DEPLOY A DEALER LOYALTY PROGRAM.

When business is launching. 

An ‘external force’ can provide the all-important initial push.

When sales are sluggish. 

An experienced dealer network can plug the gaps and add strategic firepower.

When profits are soaring. 

Motivate your dealers to multiply the momentum.

When ROI is low. 

Ready-made networks can help you bypass expenses of in-house teams.   

When warehouses are overstocked.

Dealers can selectively drive sale of slow moving products, clearing out warehouse space.

When entering new markets. 

Dealers can leverage local market knowledge to introduce your product to new buyers.

DOWNSIDE OF RELYING SOLELY ON DEALER CHANNELS.

While a dealer partnership can open up lucrative new horizons and possibilities for manufacturers and brands, the format is not without potential hiccups. Here are three flipsides that, as the manufacturer, you need to prepare for.

· Distance from customers and therefore less control over customer experience.

· Lack of direct exposure to market and therefore less data about trends, what’s working and what isn’t.

· Low agility owing to potential communication gaps and because scattered dealer networks often take time to adjust, realign and pivot to change. 

WHAT ARE THE VARIOUS TYPES OF INCENTIVES AND REWARDS NORMALLY USED IN A DEALER LOYALTY PROGRAM?

Let’s take a look at proven dealer incentive program frameworks and rewards formats that can help you activate a meaningful partner strategy.

PERFORMANCE BASED INCENTIVES

A straightforward, OTE (On-Target-Earnings) type dealer incentive structure where the rewards increase proportionately to preset yardsticks such as sales volume, customer acquisition or revenue. Performance driven dealer incentives and rewards can be:

· Predictable incentives driven by pre-agreed milestones.

· Surprise bonuses given at the discretion of the management – usually as a derivative of overall relationship and performance of the dealer.

· Loyalty Funds that are set aside for top performers and typically awarded at the year end. 

· SPIFS – Sales Performance Incentive Funds – that are special or additional bonuses given to the dealer’s management cadre or frontline sales fleet for meeting or exceeding extraordinary sales targets. Since it laser targets specific individuals with incentives, SPIFS can be a powerful mechanism for generating short term growth, motivating reps and countering the moves of rivals.

The Vonage Channel Partner Program is a good example of SPIFS. It provides training assistance and tool support, while allowing partners to earn up to 8X MRR per month, based on pre-set sales success parameters.

REBATE INCENTIVES

These are post-transaction, cashback type ‘refunds’ given to dealers who cross a specific sales target. Rebates tend to be volume driven, which means the dealer needs to make a certain amount of purchase from the manufacturer to qualify. This generates more demand for the manufacturer or brand. By passing on a part of the discount to the end-customer, the dealer is also able to sway purchase decisions and notch up elevated sales numbers.

Salesforce empowers partners towards rebate program attainment by automating rebate calculations, accruals, and payouts, and also by providing dealers with improved visibility. Amazon has a goal driven partner program with annual revenue target for each cloud migration. The company spends up to 15% of the post-migration income to help customers reduce expenses.

FREE SAMPLE INCENTIVES

Discounted or free ‘Demo Units’ can help dealers showcase the features and benefits of the brand’s products to prospects. This supports customer facing initiatives like product demos and presentations, sparking point of sale  impact and chances of conversion.

This kind of dealer loyalty program is somewhat similar to Solution Development Funds which supports demo and presentation costs of dealers and other indirect channel partners, and are effective for products and industries with complex development loops and lengthy sales cycles.

PRODUCT BUNDLING INCENTIVES

When manufacturers bundle products from the same category ecosystem into a convenient, high value, all-in-one package, it creates an attractive proposition for customers and lifts chances of a buy. Examples are bundling shampoo, conditioner and soap, or bundling mobile, protective screen and earphones. Dealers are able to upsell more easily, clear out inventory and generate greater sales volumes.

VARS INCENTIVES

VARs – or Value Added Resellers – are dealers and sales partners who repackage and resell tech products with additional software or features. For instance, if you are a tech firm, your VAR may develop an app that complements and enhances your core product experience and benefit. Incentivizing VARs can boost sales by upto 9%. While this can add great value and make the original product more ‘complete’, there may be a flip side of trust issues associated with an ‘outsider’ (third party) getting involved with the product.

Cisco’s award winning channel partner program supports VARs with training, tools, and support to sell more and grow their businesses along with Cisco. Cisco’s VIP (Value Incentive Program) also rewards partners with rebates and promotional support that’s linked to sales performance.

IBM has invested USD 1 billion to empower and incentivizing dealers and networks with advantages like incentives for proof-of-concept (POC), no cost access to software catalogs for new partners, and so on.

DEAL REGISTRATION AND REFERRAL INCENTIVES

Manufacturers and providers often incentivize channel partners for referring high quality leads and prospects to the company. 92% of consumers trust referrals from people they know. With their local connect and trust networks, dealers are well placed to do this. They often act as powerful influencers, helping to broaden reach and expand opportunities by pulling in high-intent referrals. Once the pedigree of the referral or lead is vetted by the company, the dealer partner may get a certain amount of time and support to close the transaction. This kind of dealer loyalty program can be instrumental in improving lead quality and building future pipelines. A win-win concept, there are nevertheless caveats to be mindful of in a model like this. Some of them are loss of transparency, operational complexity, compliance issues and high costs (since commissions for referrals tend to be higher than that in an affiliate program).

Dell’s Technologies Partner Program incentivizes channel partners with deal registration incentives, proposal based marketing funds as well as valuable product & solution training. Canva runs an affiliate program to that allows partners to earn dollars against every new Canva Pro subscriber that comes in through their unique referral link. 

TRAINING AND EDUCATIONAL INCENTIVES

This type of dealer loyalty program involves empowering dealers and partners with product knowledge via coaching and training. Instruments used for knowledge transfer are custom-created educational content, tutorials, demos, presentations, lectures, courses, workshops and quizzes. Exposure to trade shows, conferences and industry connect forums are also common.

This type of dealer incentive program builds product, compliance and market knowledge. Some also focus on inculcating ancillary skills and abilities in areas like communication and presentation, customer interfacing,  go-to-market strategy, operations, problem solving, warehouse management and the effective use of modern digital devices and tools.

Some training programs may be tiered, and feature rewards like certificates and recognition, financial stimulus and other incentives.

HP's Blue Carpet incentive program Gem Club incentivizes dealer partner and sales representatives for completing various pre-sales and post-sales activities like demos, surveys, training, etc. Reps are rewarded with ‘elite’ status in the GEM club. Post program competition, top performers also get to enjoy a luxury getaway in an exotic locale.

VOLUME DISCOUNT INCENTIVES

Dealers who purchase in bulk from manufacturers and providers may be eligible for a special discount depending on order quantity. 

MARKETING AND ADVERTISING FUNDS INCENTIVE

Businesses may make a certain portion of their promotional and outreach budgets - typically a part of their MDF (Market Development Funds) - accessible to dealers and channels.

Another closely resembling program is Co-operative Funds, or Co-Op Funding. Co-Op Funding refers to a financial contribution (made in recognition of continued loyalty to the manufacturer) for supporting the dealers’ advertising and marketing spends.

Both the above enable the manufacturer or brand to unleash the full potential of their dealers’ local networks and category knowledge, while boosting brand visibility and lead quality. While this can help small businesses level up fast and punch above their weight, it may put a strain on the supplier’s finances if not planned well.

Amazon’s AWS Partner Network (APN) program allows partners access to Marketing Development Funds and Partner Opportunity Acceleration Funds in exchange for driving leads and business to the company.

RETENTION AND LOYALTY INCENTIVES

Sometimes, channel partners and dealers are not just  incentivized for sales related impact, but also for displaying attachment to the parent company. Brands run retention and loyalty programs to reward high performing partners who have stayed on beyond a certain time horizon. These kind of programs cement affinity with the brand, and impact long-term ROI. They can create a loyal league of dealer-cheerleaders who demonstrate solidarity with the brand well beyond the rites of duty. These programs can positively affect everything from customer perception to attracting high quality partners to the network to preventing rivals from poaching the company’s best dealers to, ultimately, sales figures.

Dell's partner program rewards long-running dealers and resellers with points that can be exchanged for e-vouchers against co-branded marketing materials or future Dell orders.

Another kind of loyalty program – a customer facing one similar in spirit to the above - may exist for dealers who are able to retain customers for the brand.  

AWARDS AND ACCOLADES INCENTIVES

Companies will often acknowledge and reward high performing dealers publicly to boost ego, lift morale and generate positive attachment.

TRAVEL AND MERCH INCENTIVES

Trips to charming destinations and branded merchandize are a great way to build swag and pride amongst dealers and channels. They are also shared spontaneously on social media, additionally generating free promotion for the brand’s dealership program. Trips and merch also offer a potent way to build a close-knit dealer community for the brand.

ACTIVITY BASED INCENTIVES

Some brands may incentivize specific dealer actions and behaviors that lead to success. Examples of activity are researching prospects, making calls, scheduling meetings, distributing leaflets, completing training courses, smart use of technology like CRM, submitting sales and customer data such as warranty registrations and invoices, properly qualifying leads, and so on. These activities shape profitable business habits, generate an ongoing sense of achievement, and construct foundations for long term for success.

TIERED INCENTIVES

This is a VIP Club style hierarchical incentive structure where dealers earn more with every performance threshold crossed. This is an aspirational tactic that work particularly well for dealers who relish exclusivity. For instance, a manufacturer may offer a 5% discount for selling 100 units of a product, 10% for selling between 101 to 200 units, 15% from 201 to 300 units, and so on. Each level may be ‘color coded’ – silver, gold, diamond, platinum, etc -  to signify progressive promotion to the next higher level of privilege.  

POINTS BASED INCENTIVES

A straightforward, simple dealer loyalty program format where partners earn points based on pre-agreed performance parameters. Points are redeemable against rewards. This is a model aimed at perpetuating success activities and driving sales.

QUICK RECAP.

A CHECKLIST OF PERENNIALLY POPULAR REWARD CATEGORIES FOR DEALERS AND INDIRECT CHANNEL PARTNERS.

· Cash bonus.

· Rebates and discounts.

· Loyalty funds.

· SPIFS.

· Product launch allowances.

· Early access.

· Exclusive previews.

· Gift cards.

· Coupons.

· Titles, certificates, citations.

· Events, lunches, shows.

· Team experience days.

· Exclusive merchandize.

· Travel and holidaying.

· FMCG items – appliances, gadgets and gizmos.  

· Office and showroom enhancements.

· Promotional and marketing support.

· Co-operative Funding.

· Free tools and resources.

· Coaching and education.

· Flexible terms & conditions.

· Co-contributions to charitable causes.

· Cross marketing.

· Lease deals.

· Stock options.  

REWARDS 101

Understanding what makes a reward great.  

Rewards are the backbone of a dealer incentive program. This is not a one-size-fits-all play. Use pulse surveys and feedback mechanisms to understand the extrinsic and intrinsic motivational triggers of your dealers and channel partners to figure out the kind of incentive that will resonate most strongly with them. Categorize rewards by role, hierarchy and perceptions of meaning and value, which may differ from dealer to dealer. When it comes to incentives, leaders and senior managers (inside dealer organizations) tend to prefer meaningful recognition and personalized experiences, while execs, SDR’s and frontliners tend to be happier with cash and gizmos. Dealer loyalty program rewards should also sync with the type of behaviour they are expected to trigger. Rewards should be flexible, scalable and tailored to hit the right notes, and make the best use of your dealers’ capacity, potential and ambitions.

MATCH REWARD WITH PERSONALITY SEAMLESSLY WITH XOXODAY.

Xoxoday uses AI to personalize your dealer loyalty programs, ensuring incentives are minutely matched to every individual dealer’s situation and preference. 

KEEP THESE IN MIND WHILE DESIGNING YOUR DEALER LOYALTY PROGRAMS AND DEALER INCENTIVE PROGRAMS. 

According to Forrester, 58% of channel incentive programs fail to achieve their objectives. Here are some proven techniques and approaches to help you sidestep the common traps.

Bridge the gap.

Dealers aren’t employees. As an ‘external stakeholder’, your dealer has other options and priorities. A dealer’s primary allegiance is towards his or her own business. Which means their own customers and profits will always come first. Naturally, this creates a gap. A stubborn one that brands need to be cognizant of, and continuously ‘fix’ with a sustained mix of monetary and non-monetary gestures.

Coach, coach, coach!

Dealers are busy folks. They juggle multiple brands and manage countless customer accounts all day. Chances are, they don’t remember your product that well, or only have a partial understanding of it - especially the complex parts, or the recent updates.

Half-baked product knowledge does not breed raving fans. It is therefore the sacrosanct duty of product and sales managers to conduct regular initiation and coaching sessions to stay top-of-mind of their channel partners. And give the latter a reason to believe in the potential of the product.

Plug strategic training at multiple points of your dealer loyalty program. Webinars, offsites, live chat, asynchronous tutorials they can consume at leisure – pick a training format and framework that works for them.  Create visually arresting content to actively engage the imagination, and use storification techniques for an immersive and lasting learning experience. Evaluate the efficacy of your training via gamified activities like quizzes. And finally, establish expectation yardsticks by rewarding partners who enthusiastically participate and make a genuine effort to learn.

Always be communicating (and promoting).

Maintain direct and frequent communication with your dealer partners so that you are all on the same page. Pick an appropriate media to reach out by experimenting with formats like whatsapp, emails, DM’s, social media and newsletters. You must promote your dealer incentive program aggressively. Drum up excitement about cool features, remind them about the privileges of participation, invite feedback and honor suggestions, address concerns nimbly, embrace divergent opinions, establish transparency at every point, personalize the  messaging, and share success stories to maintain engagement and buzz.  

Adrenalize with gamification.

Gamification employs game thinking and game dynamics to intensify involvement. It taps into the primal human urge of to compete, solve challenges and establish supremacy. Introducing a subtle layer of gamification can make things exciting in nearly every business function. In sales, it is a proven way to boost sticky and sustained engagement amongst channels and teams. Add adrenalin to your dealer loyalty program with fun contests, leaderboards, progress bars, badges, certifications and other gamification elements.

Keep dealers close, but rivals closer.

Barring the most loyal ones, dealers are ‘free agents’ who aren’t above switching camps if someone comes along with a better offer. It is therefore important to closely monitor your competitors’ activities. Are they wooing your dealers, weaning them away secretly, or seeding negativity about you? Relentlessly reassure your partners that an association with you is worth their while – and put your money where your mouth is - so that partner showrooms and outlets are stocked with your, and not a rival’s, brand. 

Keep it fair.

A dealer loyalty program should be just and transparent, with rules that are consistently and uniformly applied. People in sales invest more time and effort when they know their hard work has a fair shot at being suitably compensated. Make sure program incentives are equitably accessible to all eligible members on your dealer team. Take this opportunity to help laggards and average performing dealers to increase participation and level up.

Design a simple program that hits the ground running.

Breezy user experiences are addictive, stimulating repeat use and adoption. Double down on your UX – user experience – and you’ll have a better-than-average shot at creating a program that’s a superhit with dealers and channels. Make sure instructions are simple to follow, rules are easy to implement, benefits are understood by all and participation is easy. The program should be able to integrate with third party systems and technologies seamlessly, be payment-gateway friendly, and enable the company to monitor and manage progress in real time.

Crack down on spends

Is your dealer incentive program in danger of overshooting budgets? Here’s a tip. Try a variable compensation strategy where, beyond a point, rewards decline – instead of increasing - with performance. This can help rein in payouts and keep costs in check.

Stay compliant

Ensure that your dealer loyalty program isn’t trespassing laws and is compliant with statuettes and regulations.

Secure approvals

Make sure you have buy-in from ‘gatekeepers’ such as the CEO and senior leaders, the accounts department and dealer leadership teams. 

Does phased incentivization work for you?  

In industries with multiple buyer stakeholders and complex purchase processes, closure cycles can be long. In B2B sales, on average, 7.4 decision-makers are involved in a typical purchase. To keep dealers motivated, manufacturers may create a phased incentive program. They can incentivize baby steps and reward mini successes to sustain momentum and focus. The larger prize may be broken down and mapped to intermediate activities such as demo registration, lead generation and deal closure.

Make teamwork easy

For complex solutions and high-ticket products, it is not uncommon for multiple functions and profiles - such as tech influencers, domain coaches and subject matter experts – to be involved in the conversion funnel from the sales side. Each plays a distinct role in influencing the buyer’s mind and taking the deal forward. To make success happen in teamwork scenarios like this, dealer channels need to move in lockstep and collaborate in a balanced, sensitive and seamless manner. Your dealer loyalty program must therefore design incentives in a manner that synergizes teams frictionlessly towards common milestones, instead of creating cracks and fissures of grievance and rift that create distance between team members. This means ensuring rewards are commensurate with effort and contribution, opportunity is democratized and compensation is commensurate and swift. 

Go omnichannel

With potential buyers now living on multiple online platforms simultaneously and demanding unbroken experiences across all of them, dealer incentive programs have a mandate to measure up. They must be compatible across a variety of digital channels and destinations. The hiccup is that this may act as a barrier to entry for some partners – particularly folks who are not conversant with new tech platforms and tools. Organizations must address this gap by providing training, upskilling and educational  resources for these partners. They must also be open to reimagining compensation frameworks to accommodate variance in dealer aptitudes and practises.

Run parallel campaigns.

You don’t need to restrict yourself to one dealer loyalty program. You can segment channel partners and run separate incentive programs for each group. This allows you to build more targeted and textured programs, and extract more out of your dealer network potential.   

Involve dealers in planning.

Add dealer insights to elevate your program. Invite your key partners to joint planning sessions to get their hot-off-the-barracks opinions and recommendations. Not only will your program strategy be enhanced with actionable inputs, your partners will feel valued too, resulting in closer, richer bonds.

Unlock the power of tech.

With their layers and variations, dealer incentive programs aren’t always the easiest to manage. An intuitive tech platform can solve the program by dynamically adding convenience and control. It will also generate marketing ‘gold’: High quality data on customers, sales reps, market movements and various other aspects. You will be able to

· Track dealer behaviour in real time

· Customize equation variables like budget, messaging and incentive amount on-the-go

· Introduce new offers at any time

· Identify hidden opportunities, and

· Keep partners engaged.

With alerts and notifications, surveys and feedback, user-friendly app interfaces, granular statements and manual error free automation, the right tech can make a big difference when it comes to monitoring, managing and optimizing your dealer loyalty program. Pick a platform that’s easy to use and integrates smoothly with systems and technologies you currently use, train teams regularly on features and usage, democratize participation and insist on performance reports at regular intervals.

XOXODAY Loyalife  helps you increase sales from your dealer network with effective incentive solutions. With Loyalife, you can design incentive plans of any scale, automate the incentive calculation to arrive at accurate amounts by giving no room for errors and motivate your dealers to achieve more.

Stay consistent.

It may take a little time for the different moving parts of your dealer incentive program to fire on all cylinders in unison. Be patient, keep egging your partners on, and don’t waver from promises made. It is important that your dealer see that you’re committed. Trust is the most valuable currency in business, and difficult to mend once dented. Change is often messy and slow initially, but building a passionate army of dealer evangelists who will root for your brand in front of customers (and behind your back) is a priceless asset in business asset no amount of money can buy. From upgraded marketing muscle to free PR to glowing revenue statements - the upside is endless.

Go beyond transactions: Create moments that matter. 

While money is the big incentive for most partners, it may not be the only one. The following can also act as a spur for your dealer.

· The opportunity to add value to the manufacturer or company’s grand mission - be it business expansion, increasing loyal customers or creating social impact - by dint of their native expertise and unique experience. This is especially true if the brand is a well-known one, which can add a swag-worthy feather to the partner’s cap.

·  The sense of fulfilment that comes with contributing to a worthy cause such as launching a groundbreaking innovation that improves lives.

·  Recognition by media, peers and community.

Companies must recognize these motivational sources as a window of opportunity to plan beyond profitability. They should elevate their dealer loyalty program ethos with a layer of substance and meaning which creates moments that truly matter to partners. The goal is to create a shared playground where both parties – brand and dealer – are equally geared and kicked to excel, rise and shine.

DEALER LOYALTY PROGRAM EXAMPLES. 

General Motors' Dealer Loyalty Program: This program incentivizes dealers with marketing funds and cash rewards against parameters like customer retention and sales figures.

Bacardi's BarTALK: A B2B loyalty program for the brand’s vendors, as well as nightclubs and bars. It lets Bacardi dealers earn points by uploading invoices, which can subsequently be redeemed for rewards through the program portal.

Philip Morris Retail Leaders Program: The program offers dealers and partners stock level linked incentives such as financial rewards (discounts and payments), educational tools, support services and equipment.

IKO's ROOFPRO Loyalty Program: The program provides dealers and partners access to rewards and rebates based on purchase volume discounts, as well as preferred rates with third-party providers for services that enhance members’ roofing business.

HP’s dealer loyal program: This program features specific marketing funds available only through approved distributors who ticked customer satisfaction and sales parameters.

Sony Electronics: The well-known brand incentivized Best Buy stores with in-store marketing support during key sales periods throughout the year. As part of the program, customized Sony display fixtures exclusively showcased the brand’s high-end TV and audio systems.

Carnival Cruise Line: Their ‘Loyalty Rocks’ program offers reward points for attending their Carnival tradeshows & events, participating in their promotions and completing online training. They even leverage API integrations to create exciting digital catalogs their partners can choose rewards from. 

Reimagine dealer loyalty with Xoxoday Loyalife. 

Loyalife brings new opportunities for channel partners to achieve higher goals with smarter compensation management, incentive plan automation and real time notifications and alerts. Trusted by global behemoths like Coca Cola, Mercedes Benz and Pepsi, Loyalife can help increase sales productivity by as much as 80%. To find out how to unlock the power of dealer partner strategy and zoom your sales to the next level, Book a demo today!!