Vendors have always thought carefully about how best to encourage channel partners to commit to their line. In the past, most vendors incorporated volume deals into this strategy, thinking that the more product a partner had, the more loyal it would be. But while this strategy was often successful in the short term, it often led to long-term damage such as stock outages and false demand. A potential solution, some vendors are finding, are partner loyalty incentives.
Loyalty incentives usually result in discounts or rebates to the partner in the range of 2% to 10%. While there are a number of ways these programs can be structured, you might consider rewarding partners that exclusively carry your brand, support your full product line, or carry your product line as the lead in a category. You could also reward partners in direct proportion to how much they purchase from you, how large a share your product line plays in their business, or by specific situation.
So, should you consider offering partner loyalty incentives? The answer is “Yes,” if:
- You are a major player in your industry
- Your product category is strategic to your channel
- You are launching new technology or products
Would you consider incorporating a partner loyalty incentive program into your channel strategy? Why or why not?