Features added vs loyalty encouraged: the real power of technology in channel incentives.

Beyond bells and whistles, the real value and power of technology is to help build stronger relationships and longer-lasting loyalty.

When organisations talk about innovation in channel incentives, the conversation is usually around technology, and in its most visible forms: things like dashboards, leaderboards, gamification elements, real-time reporting. These features are often taken as proof that a program is modern and cutting edge.

But they are the superficial signs of innovation – not the real game-changer. The most important innovation in channel incentives over the last decade has been something less obvious, but far more powerful: the loyalty that technology can nurture.

Why channel incentives exist.

Channel incentives are often seen through a limited and short-term lens, designed, for example, to increase sales. That is the basic principle of an incentive: do (more of) this, get (more of) that. Sell more, get rewarded more. But there is an inherent flaw in this approach: competitor brands can simply outbid you with better incentives.

The real potential of incentives is something much more valuable and durable: to build loyalty.

Channel partners usually sell many brands, all of which are competing for your partners’ attention and affection. Real channel loyalty is your partners wanting and choosing to promote your brand above all others – even when those others offer more attractive incentives.

If money alone created loyalty, the richest brands would always win. But they don’t, because channel behaviour is more complex. Research has shown that economic incentives alone do not create lasting loyalty.

Loyalty is earned, not bought.  

If it’s not just incentives, where does loyalty come from?

It’s a combination of things. Incentives are one of them. How quickly those incentives are fulfilled is another. So is the quality of your products. The way you communicate. The support you provide. How valued you make your partners feel.

Ultimately, it’s not a transaction, it’s a relationship. And any relationship is built on a whole lot of different things that people do, continually, over time. If marriage is a commitment to love and to cherish, perhaps channel partnerships should be a commitment to woo and to wow.

In that context, channel loyalty programs shouldn’t stem from thinking that is mechanical; the starting point should be experiential. A loyalty-first perspective doesn’t ask what the features are and how they work. It asks: how do we give our partners an experience that will make them genuinely want to work with us over everyone else?

From this perspective, technology is not a master, but a servant – albeit a very capable one – that supports a higher cause.

Technology in service of loyalty. 

The real benefit of technology is that it helps us do important things better. Features aren’t used for their own sake, but because they improve our partners’ experience and help build loyalty.

Some tangible examples of how it does that:

Speed

Typically, partners or sales people might make sales every day, but only get feedback at the end of the month. By then they’ve forgotten about most of the sales. The reward is still great, obviously, it’s just disconnected. And the sense of motivation spikes only briefly, on that one day that they’re rewarded.

Behavioural psychology, including famous work by B. F. Skinner, has shown that the shorter the gap between action and reinforcement, the stronger the behavioural response. Immediate recognition increases repeat behaviour more effectively than delayed rewards.

Technology accelerates the reward. A sales person might, for example, receive rewards daily, rather than monthly. In an even better scenario, the reward might be immediate: a sale is made, and as the customer is leaving the store, the sales person is notified that they’ve received a reward. The reward is linked to a specific sale and, most powerfully, the sales person is motivated continuously.

Communication

Technology enables communication to be hyper-personalised. In the above example, it may be the third sale of the day, and a message may acknowledge that. It could go even further, for example: Good job, Mo. If you can make five sales today, you’ll get an extra 20% bonus. Or, Mo, you’re two sales away from your daily record.

The communication isn’t just fast, it’s tailored to an audience of one. It powerfully uses the principle of recognition. And it’s motivating.

Technology can also be employed to communicate product information. If a model has got an upgrade, a platform or app can convey information about those upgrades engagingly, and immediately, and sustain it consistently – rather than waiting for store visits from representatives.

None of this is about more communication; it’s about better communication.

Support and admin

A sales person trying to find out about their points, or redeeming those points, might call a contact centre. But it doesn’t matter how good and friendly the agent is – if it takes five minutes for the call to be answered, that’s a poor experience.

These days, AI can answer calls and answer quite a lot of questions or requests very efficiently and competently.

Launching a program and onboarding participants has also changed. Big launch events are on the wane because so much information can be distributed digitally (e.g. information packs) and so much of the work can be automated (e.g. sign-up). But in the dash toward technology, these things can feel cold and mechanical, devoid of energy and excitement. That’s not technology’s fault. It’s the way tech is employed.

By contrast, technology could be used to add energy and amplify excitement – for example, extending the engagement that a launch event might generate, rather than trying to replace it.

Innovate functionally to elevate emotionally

In all of these examples, the important innovation isn’t the technology itself; it’s the way tech is used to give partners a better experience in multiple different ways, and in such a way as to engender their loyalty and love.

A loyalty-centred approach doesn’t start with technology-centred questions. Rather, it asks: What do our partners need in order to succeed? What kind of experience do they want? What behaviours will grow the business, and how can we support those behaviours?

Ultimately, the most innovative programs aren’t necessarily the most flashy or feature-full. They’re the ones that partners describe more simply, and emotionally: This brand is great to work with. This brand makes things easy. This brand recognises me. This brand motivates me.

That’s not innovation that can be demonstrated in a features list. It’s innovation that shows up in behaviour. In channel partner relationships, that’s the kind that counts.

Are you channelling the real potential of channel incentives?
If you’re wondering how to better harness and direct technology in your channel incentive program, we’d love to chat. Email gordonw@awards.co.za