Channel Champion Blog

by Peter Hornberger

Amazon_imageI love Amazon. I’ve been a long-time Amazon Prime member – from before Prime included movies, music, photos, etc. I paid for Amazon Prime just to get fast two-day shipping.

I used to have a credit card from a major bank that gave me arbitrary points I could redeem for bicycles, toasters, and trips. But what did I wind up buying with those points? Amazon gift cards. Eventually I got smart and cut out the middle man by just getting the Amazon credit card. I put all of my monthly spending on the card and get somewhere around $100 worth of points towards Amazon spending each month. Those points are as good as cash to me – I shop on Amazon so much that I actually include the points in my budget as income.

How does this relate to the channel? Your partners have internet shopping allegiances. Whether it’s Amazon, Etsy, Zappos, Nordstrom, Wayfair, Crate & Barrel, Target, you name it – people tend to shop at the same places over and over.

So when we offer points-based incentives, why do we force partners to shop in a limited catalog of things they may or may not need? Let’s give them what they dream of – the ability to buy what they want, where they want, without having to spend their own money. Who wouldn’t be excited at that proposition?

Lucky for us, rewards technology is quickly changing. It is now possible to let your partners shop on any site and pay with their points. The browser plugin will even auto-fill the payment information so they don’t have to lift a finger outside their normal routine. Forget clunky and outdated reward catalogs; this is the way to make partners happy.

We featured a company, LRG Rewards, in our May newsletter. They are a frontrunner in this new rewards technology. Check out the full interview here.

What I admire about LRG is the way they are challenging an age-old practice. Too often, channel programs get stuck in the past and lose effectiveness. A channel program starts to fail when it becomes an entitlement rather than a reward. We saw this with co-op programs when partners started to expect a 2% or 3% accrual each year. We see it now with volume-based rebates – again, partners expect their quarterly payouts. This does not encourage growth; it does not drive lift.

I challenge vendors to think outside the box when crafting your channel programs. Don’t just rest on common industry practices or the program formulas you have used for the past five years. Offer MDF programs that are truly discretionary – based on a scorecard of five to ten key metrics that go beyond just last year’s sales numbers. Provide value-based rebates and SPIFs that focus on developing pipeline behaviors instead of back-end sales. Reward a behavior and once it is learned, move on to the next behavior. If something in the process starts to slip, find a way to re-teach through rewards.

These are just a couple ideas CCI is exploring with our clients, but there are many more untapped possibilities that vendors can pursue. I left a credit card because of their cumbersome, old-school rewards process. That card is still open and in my wallet, but I don’t pay attention to it – don’t let your partners do the same to you!