Tune into channel loyalty

27 December 2011

For companies that have more of a consumer focus, customer loyalty is an obvious objective. But using business-to-business (B2B) channels to build brand loyalty and awareness is often either neglected or completely forgotten. Here we look at the key challenges facing brands with B2B sales channels and the brands which have successfully used B2B channel loyalty programmes to drive business growth around the world.

Where are B2B loyalty programmes most commonly found?

B2B channel programmes are often found in the technology and office supply sectors. For example, Indian IT vendor Nortel realised its channel partners were in direct control of end-user relationships, so it set up the Nortel Overdrive channel programme to make sure the channel remained consistently motivated and empowered with the right tools, skills and training. It provided several points of payback, including increased sales, channel employee education, channel employee training, increased frequency of contact with channel partners, and rewarding channel partners for desirable behaviours. As a result Nortel has increased new registrations, regional sales penetration and an improvement in customer satisfaction.  

Other leading technology firms such as HP, Samsung, and LG have also used B2B reward programmes to great effect. But while technology firms can generally reach only their channel partners (rather than end users), some sectors - such as office supplies - offer the ability to build relationships with both channel partners and the end-user businesses. For example, office supply chains Staples, OfficeMax and Viking Direct have all used rewards to build direct relationships with end users, whether through simple mail-in rebates or externally managed B2B loyalty schemes.

What other sectors could benefit from B2B loyalty?

Many other sectors can benefit from B2B loyalty, including retail, travel and leisure, beverages, courier services, and real estate, to name just a few. Some B2B programmes already exist in these markets, such as InterContinental Hotel Group's (IHG) BusinessClub  (hotels), Big Train (beverages), SuperClubs (travel), DHL Altitude (courier), and Re/Max (real estate).  

IHG's Business Club programme, for example, aim was to drive increased bookings, revenue and improved share of business travel from small to medium-sized corporations, whilst continuing to support the needs of local markets. Through their centralised B2B reward and recognition programme, IHG was able to gain greater commercial insight over their performance in the SME corporate travel sector. A single solution across multiple territories delivered brand and proposition continuity for IHG, whilst benefitting members by allowing them to book and redeem on properties outside their 'home' country.

BusinessClub is now available in 6 languages and has been rolled out to 23 countries across EMEA, whilst revenue attributed to bookers has continued to grow year-on-year since launch.

How does the B2B model differ from sector to sector?

There are different types of channel relationship, with examples including:

  • The Channel Programme: a classic vendor/distributor/reseller programme (typically seen in technology firms);
  • The Sales Incentive Programme: generally run by a vendor for its own salespeople, or for retail outlet salespeople;
  • The Corporate Programme: typically aimed at business people with purchase decision-making power, where those people choose between multiple suppliers (competitors)

Regardless of the structure, the objective is always the same: to incentivise the channel, and to focus on value creation and data collection. Targeting something that is measurable - apart from pure sales - is a vital way of monitoring success as well as being able to adapt to changes in the marketplace. For example, you could try measuring merchandising effectiveness or even training compliance, or demo performance, among others.

Rewarding channel relationships

B2B loyalty seems to be a great idea: encouraging businesses to not only keep doing business with you, but also increase brand awareness and market share. But there are some areas that need consideration:

Who should be rewarded: the business owner, management, employees, the business itself, or all? The most critical best practice is to inform all levels in the channel partner organisations of the requirements and rewards, and to ensure openness about who will be receiving rewards, and for what actions or decisions.

Is it ethical to reward a client's employees to make decisions based on personal gain? And apart from matters of ethics, there are often legal and HR implications (e.g. the Bribery Act, and the idea of employees taking 'kick-backs' to favour one supplier regardless of the soundness of that decision)

To address this, a recent survey was commissioned by ICLP in association with CRN and UBM Channel Research of over 200 channel partners. Just some of the insights included:

  • Shift from corporate to personal rewards: nearly 50% of all respondents wanted a focus on more personal rewards. Manufacturers and vendors could gain greater buy-in and a change of behaviour by reconsidering the types of rewards they offer. There was also a desire for more flights, hotels and dining which reflects the current state of economic climate.
  • Distributor influence: 52% of channel partners are likely to be influenced by their distributors' recommendations for manufacturer and product choice.
  • Benefits received against those valued: channel partners valued the benefits that were offered the least. There was a particular emphasis on pre/post-sales support and education/enablement.

The key considerations in identifying how a B2B loyalty programme will benefit the brand

Identifying where - or even if - a B2B loyalty initiative will benefit the brand most can be complex: you need to examine the entire supply chain to find out where rewards will add the most value. These will be the points where choices are made that affect sales outcomes and recommendations. The retail supply chain is perhaps the most complex, and knowing where to focus the rewards is difficult, although FMCG also has challenges, as it is difficult to influence large numbers of independent retailers.  

There are also several other challenges when implementing B2B loyalty, such as:

  • It can be difficult to get real 'buy-in' at all levels throughout the supply chain.
  • The rewards and required actions must be structured not only to influence the right people, but also to drive the most desirable behaviours.
  • The programme's touch-points must be simple, functional and measurable. Offline touch-points are just as important as the online ones, but they can also be more difficult to measure and monitor.

Tuning in to your channel

As has been highlighted, there can be some key benefits to establishing a channel programme - from increased sales penetration, improved channel relationships and more loyalty business customers. Although brands do face challenges setting up a B2B channel relationship programme, those brands that have successfully employed B2B channel loyalty programmes have driven significant business growth - both globally and on a local level.

Building on the success of channel reseller programmes that have long been the mainstay of technology brands, businesses in other sectors should seek to maximise that value that B2B channels can deliver - from retail, travel and consumer goods - all can benefit from enhancing relationships throughout their value chain.

Similar Resources

Check out our other popular resources about channel loyalty below:

1) 7 Things To Learn About Channel Loyalty From One Of The World's Most Valuable Sport's Clubs

2) Partner Loyalty Cube Solution



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