Some say performance, others say money but it may be systems and processes that carry the day
Loyalty is challenging no matter the circumstances. And in the highly competitive IT channel, where manufacturers work directly with solution providers and distributors, and in turn, distributors support two-tier resellers, loyalty can be a riddle of sorts, influenced by a host of moving parts.
Is channel partner loyalty made only of performance, of money, of history, of convenience, of relationships? Or, at the end of the day, is it made of hard facts - data-driven systems and processes that work to the benefit of all concerned?
Fortunately, there are some constants that frame long-term vendor/distributor/channel partner associations, some practical, some functional and some, well, traditional.
For starters, selling more solutions and services to a dedicated group of partners makes good business sense for distributors. That's why most have their own partner loyalty programs and communities.
Secondly, distributors paying attention to partners not only with training and support, but also with incentive funds can win and sustain loyalty. Indeed, the more a distributor knows about its partners, the better the relationship and the more room it offers for growth.
And let's remember that partners are enthused by boosts to gross margin, whether they take the form of additional discounts, incentives, MDF or other formats. Ultimately, maintaining loyalty is far more beneficial both for distributors and channel partners than ignoring or brushing it aside.
In that regard, there's no denying that dollars and cents - in this case, incentive rewards and MDF targeted for channel partners either directly or indirectly - are overriding factors in building mutually loyal relationships.
How best to oversee management and administration of those available dollars is the question.
"Manufacturers often say that they have difficulty distributing MDF and are left with money not spent still on the books," says Mark Essayian, president of KME Systems, a Lake Forest, CA-based voice and data specialist.
"If you combine that with many partners that don't know how much MDF they should be receiving [from distributors], a third-party can definitely help."
Third-party trackers can be particularly useful for smaller, two-tier partners that may not receive as much attention from manufacturers and want to engage more with their distributors, says Essayian.
"How many hundreds of smaller partners are buying through authorized channels but don't have a place to go to be certain that MDF is getting spread around fairly?" he asks.
And while many manufacturers are hesitant to use a third party to calculate MDF, many want a measure of certainty that their money is being used productively, the exec notes.
"That's where distributors can come into play with MDF to build partner loyalty," he explains.
Channel partners typically examine the entire spectrum of a distribution relationship, including product choices, support, training and also financial incentives. Actually, let's be a little more specific on that last point - accurate and fair financial incentives.
That's not to ascribe any malevolence anywhere, but it is to suggest that equitable allocation of incentives from vendors to distributors to partners can, and does, get hamstrung by the volume of sales data to catalog, sift and categorize.
At the distributor level, potential missteps perhaps could be avoided through a third-party's application of data analytics to automate the entire incentive funding process.
While there is a number of automated incentive trackers available that monitor channel POS data in a consistent format - putting to bed older, less nimble productivity apps, such as spreadsheets and flat files - triangulating distributors, manufacturers and partners around incentive funds isn't quite so prevalent.
"For us, adding a layer [of administration] wouldn't work, but for smaller resellers buying from distributors it could provide a huge opportunity," says Jake