Distributor Loyalty Program: Is Your Approach All Wrong?
In an HVAC sales channel set-up, manufacturers stand to benefit greatly from relationships with distributors. Not only do distributors deliver suppliers’ products to contractors and consumers, they influence the degree to which manufacturers can engage with purchasing-user consumers. Well-managed, mutually beneficial distributor relationships lead to increased reach and revenue on the supplier’s part, while the distributor has access to a trustworthy brand with a steady supply of excellent products they can promote. There are some hindrances to a thriving supplier-distributor relationship, namely the fact that the two parties’ interests often aren’t exactly mutual. A channel sales incentive program can help establish some common ground, however, and allow each group to work toward their most important shared goal: increased sales.
Obstacles to the Supplier-Distributor Relationship
As an HVAC supplier, you’re probably familiar with some of the things that stand in the way of distributor loyalty and cause friction. One of the issues in the supplier-distributor partnership is the greater degree of influence distributors have. Consumers are more sophisticated, with a wealth of product information readily available. They are very sensitive to pricing and customer reviews, so HVAC distributors play a large role in influencing their brand choices (Frost & Sullivan, “Distribution Channel Optimization”).
Disharmony between suppliers and distributors also comes from differing priorities. Your objective as manufacturer, for instance, may be to sell your full product line through your distributors for maximum profits. Your distributor, however, is typically more interested in having a range of suppliers to choose from in order to offer consumers ideal options for their specific issues (Frost & Sullivan, “Distribution Channel Optimization”).
Overcoming Channel Sales Barriers with Incentive Programs
So how can you improve your relationships with distributors? By rewarding them for increasing sales and promoting your products. An incentive program that fosters distributor loyalty can be a tremendous advantage. Incentive companies like Loyaltyworks can create and manage online reward programs geared specifically toward channels sales management. These programs make your brand more appealing to distributors by supplying them information about your products and offering them incentives for promoting your brand.
Many suppliers implement customer or channel partner loyalty programs in order to increase market share and boost sales. However, the process is not as simple as merely executing the program and watching it works its magic. Effective incentive and loyalty reward programs play various roles: communication medium, marketing tool, and sales motivator included. They must be updated and monitored so that they reflect your company’s specific goals.
In order to operate the most successful distributor loyalty program possible, avoid these common mistakes:
1. Setting up a program with lackluster rewards and payouts
What you are rewarding participants with matters a great deal in loyalty reward programs. If the rewards and payouts aren’t noteworthy, participants will ultimately decide the program isn’t worth their time and effort. Outdated rewards like cash bonuses don’t make impressions on distributors. Extra cash is tossed in with the rest of the distributor’s income and is spent on gas, groceries, and bills. Sounds dull, doesn’t it?
By partnering with a company like Loyaltyworks to build your reward program, you can offer distributors exciting and tangible non-cash rewards. Participants are more invested in non-cash rewards like new golf clubs, HDTVs, and power tools because they can see and touch them, use them, take pictures of them, and show them off—in short, they carry a more lasting trophy value that cash simply can’t offer. Loyaltyworks provides program users an in-depth online catalog with millions of travel and merchandise rewards to earn.
2. Using an interface that’s not engaging
Today’s distributors are informed and on the move. They have to choose between products all the time, and there is no shortage of options. You need reward program interaction methods that engage them and keep them informed. A Loyaltyworks reward program offers features like a Mobile App module that integrates seamlessly into a busy distributor’s daily activities. They can input claims immediately with the app, wherever they are, and access the online reward catalog at all times. With such accessibility at their fingertips, distributors are more likely to use your program habitually.
3. Promoting objectives that aren’t specific to your organization’s unique needs
The participants of every reward program are different. Successful programs are created with these users’ unique needs and interests in mind. If your typical reward program user is a middle-aged man who likes camping equipment and fresh-on-the-market electronics, you can guess which rewards you should advertise to snag their attention.
Loyaltyworks offers reporting and program measurement tools and a communications package to help you track program usage, gathering data about participants’ interests and preferences. This information is vital to your program’s success and helping you refine your objectives, marketing to your participants effectively. Participants can choose how they want you to communicate with them upon enrollment—whether by email, flyers, postcards, texts, or calls. The more successful your program communication is, the more information you can gather about your program’s participants and their needs.
Static reward programs stay where they are—they don’t inspire distributors to make different choices and they don’t increase your sales. With custom reports and efficient communication tools; however, you can sharpen your focus and concentrate on what will make your particular program thrive.
4. Not keeping track of your most profitable participants
Not all distributors are equally lucrative B2B partners, unfortunately. Some may have a healthier budget to spend on your products and some may simply be greater evangelists for your brand. Sometimes, the distributor who buys more in quantity isn’t necessarily the most profitable relationship. You should keep an eye on your distributors’ efforts to make sure your most profitable partners are the ones hearing the loudest “Thank you.”
The Loyaltyworks Performance Tracking module allows you to run promotions among your distributors and keep track of who is turning more profit. Distributor A may be a leader in selling small furnace parts, but Distributor B may be better at closing HVAC systems. You can control all parameters of the Performance Tracking promotions. If you want to conduct a show-down between distributors in a particular region, or boost sales of one particular product, you can do both. Combining these results with in-depth reporting, you’ll always know who your most loyal and profitable distributors are.
Remember that, while you should keep track of your profitable partners, it’s important not to forget those with small budgets who still effectively promote your brand.
HVAC distributor loyalty can be difficult to achieve. You can ease some of the relationship strains by staying aware of your organization’s particular needs, then instituting a distributor loyalty program that reflects those needs in its goals. When you can offer appealing, non-cash incentives to distributors, they also benefit from your reward program and you can cultivate long-lasting, mutually advantageous partnerships. A reward program like Loyaltyworks helps you focus on the specific needs of a channel sales set-up with a combination of advanced reporting, program tracking, and enticing rewards.
- Drèze, Xavier, Nunes, Joseph C. (2006). Your loyalty program is betraying you. Harvard Business Review. https://hbr.org/2006/04/your-loyalty-program-is-betraying-you
- Frost & Sullivan. N.d. “Distribution Channel Optimization: Accelerating Growth through Unbiased and Ongoing Partner Evaluation, Selection, and Management.” Retrieved from www.frost.com/prod/servlet/cpo/189738462