8 Most Common Reasons for Failure of Channel Loyalty Programs

Winning your channel sales partners’ loyalty can be the key to your B2B business’s success. For that, you will have to invest in a sophisticated loyalty program software as well as introduce attractive and engaging B2B loyalty programs.

But will that guarantee the success of your channel partner loyalty programs? Unfortunately, the answer is no. Even after launching a strong and fool-proof loyalty program, there is a chance, no matter how small, that it won’t work.

Some factors can work against the success of your channel loyalty program and let it down. This blog post discusses the seven most common factors that cause loyalty programs to fail. Read on to know what those are.

Not understanding channel partners and not taking their perspectives into account

The most dangerous mistake that a B2B company can make is to take their channel partners for granted, not understand them, and ignore their perspective. Not every channel partner is equal. That’s why it’s crucial to know all the key things about all your channel partners.

Understand what your channel partners value in a partnership. How do they perceive your brand and how important it is to them? How many brands do they deal with and are they dealing with any of your competitors? Would they prefer to promote your brand before others?

When it comes to forging a strong relationship, transactional and cash rewards aren’t just sufficient. A study found that 77 percent of channel loyalty programs, which only use transactional rewards, fail within the first two years of launch.

Lack of clear and measurable goals

After taking care of the qualitative aspect, it’s time to pay attention to the quantitative aspects of the channel loyalty program. Make sure that the goals are extremely clear and measured. Determine the growth in market share, sales, and revenue you want to see after launching the program.

Also, find out if your focus is more on the acquisition or retention of channel partners? At present, retaining the existing partners is much more feasible than acquiring new ones. But a recent survey revealed that 82 percent of B2B marketers focus on acquisitions compared to just 48 percent who focus on retention. Make sure you have the answer to the question before starting with the program.

Apart from setting your own goals, ascertain and understand your channel partners’ goals. This will ensure that both your and your channel partners’ goals are aligned. Communicate the goals to your sales and marketing team. After setting the objectives, select the best way to achieve them.

Lack of commitment

A channel loyalty program is a long-haul game. The results will take time, effort, resources, and dedication. But it will be completely worth the wait, patience, and investment. Make sure you have the patience and perseverance to remain committed to it for as long as it may take. An unwavering commitment is a must for a channel loyalty program.

At a time when 40 percent to 50 percent of B2B brands have the same vendors for at least five years, reveals a B2B International survey, be prepared for a long-term commitment and refrain from immediate gratification.

Make sure you have an absolute buy-in from key stakeholders as well as assign a dedicated program manager to supervise the loyalty program’s momentum and report the progress and developments to the senior management.

No personalization

When a B2B company deals with a wide range of channel sales partners such as dealers, sub-dealers, distributors, wholesalers, stockists, etc, it’s crucial to personalize the incentives and rewards for each segment.

But as per a recent study, only 29% of B2B clients consider themselves fully engaged with their vendors. It takes away the opportunity from them to understand what kinds of rewards their channel partners would appreciate and customize accordingly.

Make sure that you understand your trade associates and be clear about what behaviors you intend to encourage and reward accordingly. Don’t solely rely on transactional and monetary rewards. A study revealed that businesses that use non-transactional and recognition rewards for their channel loyalty programs register an average revenue growth of 10 percent per year in contrast with 3 percent for the organizations that use transactional and cash rewards. Apart from that, consider the language barrier and other geo-cultural aspects while communicating with them.

Inadequate or improper resources

If the resources fall short or are not up to the mark, then it will cause the loyalty program to fail miserably. Resources can range from anything and everything from reliable and sophisticated channel loyalty program software to actual rewards and incentives.

The first step to making sure that the resources are adequate and suitable is to set a reasonable budget for the program. After that invest in a high-quality loyalty program software. Make sure the incentives and rewards are attractive, relevant, and riveting.

Over-complicated program structure

Another major reason for the failure of a loyalty program is its over-complicated program structure. Complex structures disengage partners and prevent them from being a part of the journey.

To make the program structure simple, make sure the terms and conditions are easy to understand. Make the sign-up simple and hassle-free. Ensure the incentives and rewards are achievable after putting in a reasonable amount of effort. Avoid making any big changes if not necessary and make sure the changes are well-thought-out and well-communicated to the partners.

Inability to leverage key data

Data are extremely important for loyalty programs but some B2B companies make the mistake of not leveraging enough data. For instance, a well-known study found that only a handful of B2B companies use the right metrics to track their loyalty programs and omnichannel experiences.

If you want your channel loyalty program to succeed, then track all key data and leverage them to enhance engagement and results. Keep sophisticated analytical tools in place to monitor the overall progress of loyalty programs. Check redemption rates and review channel loyalty metrics and other parameters to make sure that the program is well-oiled.

Putting the programs on autopilot mode

Some B2B businesses tend to put their channel loyalty programs on autopilot mode after launching them. They treat it as something as if it can run on its own without the intervention of anyone. This brings the programs down.

To make your program work, promote it throughout the year and not just during and some days after the launch. The key is to assign responsibility to some key team members to track and promote the program.

Summing up,

For a B2B business, a strong and successful loyalty program is extremely crucial for engaged and motivated channel sales partners. But even after creating a well-planned loyalty program and investing heavily in it, some programs are destined to fail. Are you worried that your channel partner loyalty program won’t work? Don’t worry.

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