The Race for Dealer Loyalty
By By Julia Chang
September 1, 2005
David Weiss is used to awarding unique incentives to successful salespeople. But one reward requested by a salesperson for an office-product reseller takes the cake. When asked what would further motivate this sales star, the rep's answer was simply, a thoroughbred racehorse.
"When you're a high earner in commissions, you have all the stuff that you really need," says Weiss, president of INmarketing Group, Inc., a motivation and customer-loyalty firm based in Mahwah, N. J., that awarded the incentive on behalf of a client, an office-products supplier. "So we ask [these
high earners], 'What would incite you personally to do more work than you did last year?' The answer could be personalized travel, aluminum siding for a house—or it could be a thoroughbred racehorse."
The lengths that Weiss' client went through to reward the rep exemplifies the importance of channel partners in a climate where companies are trying to get a jump on the competition in a turning economy. "Many more organizations are now selling through distribution channels," says Michael Dermer, president and CEO of IncentOne, a provider of incentive and recognition programs based in Carlstadt, N.J. "They've reallocated a lot from direct sales to reseller channels." As a result, he's seen companies spend more dollars on incentive programs that encourage dealers—whose loyalties don't lie with one supplier—to push their specific wares.
But instead of just proffering up a product catalog, companies have to be strategic about how they use incentives, experts say. "Many suppliers have an uncoordinated, unmanaged and unmeasured approach," says Mark Dancer, vice president of Pembroke Consulting, a Philadelphia–based consulting firm for distributors and manufacturers. Instead, companies should "start with a review strategically of what they are trying to accomplish with partners; do a holistic alignment."
Read on to see how companies are using reseller incentive programs to achieve their big-picture results.Branding Through Rewards
In the basic sense, reseller incentives provide a way for suppliers to fight for the mindshare of distributors, much the way distributors fight for the mindshare of consumers. This means suppliers have to take branding to their reseller networks seriously, and many firms are "taking marketing dollars and allocating them toward incentive-driven spending," because they view distributor rewards as a form of marketing, Dermer says.
When the U.S. offices of Silhouette Optical—an eyewear manufacturer whose headquarters are located in Linz, Austria—wanted to boost brand awareness for Titan Minimal Art, its line of lightweight, rimless eyeglasses, it decided to go with a contest that would promote the product and reward loyal consumers and resellers.
"We were trying to position the line as classic and show people it's a line that's going to last," says Genevieve Fay, Silhouette's director of marketing in Green Island, N.Y. "We wanted to show that this is just the beginning of a fabulous collection."
In September 2004, Silhouette launched a contest that called for essays from consumers and optical retailers describing how the eyewear line had positively affected their lives or the lives of their customers. Winning submissions were posted on a Web site created specifically for the incentive program, SilhouetteStories.com.
There were four prize levels, with six retailers and six consumers at each level; each incentive was tied to the Silhouette brand. For instance, the grand-prize trip to Vienna, Austria this summer included a stop at Silhouette's manufacturing plant.
"Austria is a huge draw because we can show our retailers how we make our frames, show them that they are still handcrafted," Fay says. First-place winners will go to Fashion Week this September in New York, where they will take in a Broadway show, tour Manhattan—and catch Silhouette's eyeglasses on the catwalk. Second- and third-prize winners won $1,600 worth of Silhouette eyewear and a spa gift basket, respectively.
Silhouette's national sales force was essential to communicating the program to eye care professionals. Salespeople visited their accounts with point-of-sale materials and encouraged the opticians to participate.
"We did a little bit of trade advertising, but mostly the sales reps came in and did follow-ups," Fay says. She declined to say how much the contest increased sales, but did say that the company was "thrilled with the results"—so much so that the contest will recur, and other Silhouette divisions are looking into a similar incentive. "We are not a company that can afford twelve ads in Vogue [magazine], so we had to be smart with our marketing. [The contest] has been more effective for us."
IncentOne's Dermer says incentives can be a natural fit for strategic marketing. His firm has even used rewards to help clients lure marketing partners. When a particular telecommunications provider wanted to grow sales among new homeowners, Dermer's team came up with a plan to reward local real-estate agents with points for selling telecommunications services to recent customers. "They wanted new ideas for reaching new homeowners," Dermer says. "We took that business objective and [used the incentive] to execute it." For the Long Haul
The business objective of a supplier often mirrors the business objective of its resellers, which, ultimately, should be to grow sales all around. But it's not always about increasing short-term volume; incentives can be used as a tool for promoting behaviors that will benefit business in the long run, too.
Avnet Partner Solutions, a distributor of servers, storage and software for major manufacturers like Hewlett-Packard and IBM, based in Tempe, Ariz., took this tack when it instituted a points-based incentive program, SMART Rewards, for its channel partners last year. Amid anticipation of a tougher market, Avnet decided to reward resellers for taking advantage of educational opportunities instead of for straight sales. "We deal with complex environments. The total marketplace is going to grow more slowly than we've enjoyed in this industry in the past," says Eileen Gibson, Avnet's vice president of marketing. "Customers are making more informed technology purchases, and so [our resellers] have to be well-equipped to address market needs."
Avnet channel partners earn points for business-building activities like attending Web seminars during which industry experts discuss market trends. Or they earn points for achieving certification and training on specific enterprise products. Gibson says a program like this not only promotes sales demand-generation activities, but also rewards partners in an industry with long sales cycles—which can discourage reward programs. "We wanted to keep partners focused on what's important for them," Gibson says. "We distill information coming from the suppliers, and point partners to activities that will result in long-term benefits."
Avnet partner Geoffrey Lilien, CEO of Lilien Systems, a provider of IT infrastructure programs based in Larkspur, Calif., says he has attended Webinars he probably wouldn't have attended otherwise. But mostly, the program "promotes goodwill, which is good marketing [by Avnet]," he says. Lilien, who runs separate sales contests internally, has redeemed points for items such as All-Clad cookware and a remote-control plane. Other partners have redeemed points for travel, jewelry and restaurant certificates—or have even passed along points for internal employee incentives. "We do it at a firm level, so a salesperson doesn't earn points, the company does," Gibson says. "When I was a reseller and managing sales and marketing, I was not a fan of someone else trying to rebate or spiff my reps."
Feedback from resellers has been positive thus far. "They were excited about it, and felt they were getting business value from the investment that they make [with us]," she says. "Our enterprise partners have to spend a lot of money before they can make money. This is a way to make the investments that they make worthwhile."
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