Jim Sullivan (marketing consultant) suggested on Channel Marketer Report, that a well-executed strategy can greatly enhance the effectiveness of your channel incentive programs.
Indeed, the success of a rewards program can be achieved by considering how to create and leverage an effective strategy as well as get to know each channel partner.
To assess and shape your company’s strategy adequately, Michael Porter, a professor at the Harvard Business School, developed a framework of so-called forces that enable a deeper understanding of the macro environment and how it influences the microenvironment.
The forces include the following:
Applying Porter’s concept to your own operations will enable you to understand your position and how to influence it within the big picture. Moreover, being clear on your strategy can aid in the strengthening of brand loyalty overall.
To be able to structure a high-value strategy, building good relationships with channel partners is important and helpful. Making the most of this bond will naturally tie in with your strategy, but it requires consideration of certain factors.
Before commencing a relationship and determining what activities should be undertaken, you need to have a specific vision as to what you can offer your partners. Management consultancy agency SME Strategy emphasises that asking what your long-term vision is will help you achieve it much faster than going in without a specific goal.
Once you know what the end-game is, gaining as much information on your channel partners’ businesses as possible will allow you to have a better understanding of how they determine success. Here, Porter’s framework starts to come in, as you can assess the relative competitive environment of your channel partners and analyse the level of commitment needed to enter the market as a new player.
At this point, analysing the relative power of suppliers and buyers in relation to your channel partner will give you, yet again, a deeper understanding of the specific industry drivers, thus allowing you to tailor your program to their exact needs. The Loyalty Guide (TLG) suggests identifying who has the power to dictate price and product supply at what point in the supply chain.
According to both Mr Sullivan and TLG, once there’s an understanding of how success is defined for both you and your channel partners, establishing a comprehensive action plan together is key. Go as in-depth as possible, asking questions of who is in charge of what, when and where, as well as setting priorities of what can add value to the venture.
Regarding the flow of inventory planning and control, collaboratively setting expectations as to the turnover rate and communication channels can further help reach desired targets more effectively.
Executing a great strategy is as important as creating it.
Things to look at
When creating a successful incentive program, you should always have the end-to-end supply chain in mind. To do well, Sullivan suggests to do the following: