Cast The Right Spell: Building lasting loyalty in your partner relationships

19 April 2017

Once upon a time, channel demand could be as easily forecast as looking into a crystal ball. You had good boxes, boxes needed shifting, and your partners shifted them… (with a little help from a wave of the proverbial incentive wand). Now, being successful in the channel requires much more than a quality product and wave of a magic wand. It requires thought and investment into building relationships. Loyalty has become the protagonist. Engagement is center stage.

Hubble, bubble, toil and trouble!

What the crystal ball did not forecast is the exponential pace of change the channel has experienced. Sophisticated consumers, crowded markets, narrowing margins and diverging channels have hit with tornado force and transported the channel from a simple, predictable place, to something akin to the Land of Oz – a place loaded with conflict, different characters and a multitude of hurdles along the yellow brick road to success.  

Fairy Godmother/Father to the rescue

Out of this frustrating complexity, one old-fashioned virtue has emerged as the cornerstone of rewarding relationships, Loyalty. How you nurture, measure and understand it with each of the unique channel characters, is in itself the key to their success. You are the fairy godmother/father/mentor in your channel story. Are you guiding your partners down the right path? Are your partners doing the right thing (your thing!) when your back is turned without you having to wave your magic incentive wand? Are they as devoted to you as you are to them?

How can you change partner behaviours to improve and strengthen their loyalty?  The first step is identifying and understanding the various behaviours of your partners. 

The rule of three

Three Little Pigs. The Three Bears. Three Brothers. The three fairies in Sleeping Beauty… Fairytales always include the rule of three. Your channel is no different. We believe that there are three levels of channel loyalty: complacency, conditional and connected.

  1. Complacency manifests itself as partners acting opportunistically, indicating no real loyalty. Imagine that they are registered to your programme but you see that they have little or no engagement, suggesting there is no loyalty to you or your brand.  Waving your wand at these partners will not change their behaviour – they need to see the value in you beforehand… for all they know, that wand could be filled with black magic and you could be about to turn their business from a sparkly carriage into a metaphorical pumpkin. Educate them.
  2. Conditional manifests itself as “what’s in it for me?” These partners are influenced by incentives and will not think twice about taking a different path if they can get half a percentage point higher margin with a competitor. Always trading for their magic beans hoping it will turn into a giant money beanstalk rather than seeing the value their cow could bring.  The trick with these partners is to get them to see the long term value in the cow! Enable them.
  3. Connected. A loyal partner. These partners are your advocates, even when you are not there. They are the “good conscience” in your partner program.  Reward them for being loyal advocates.

Spinning straw into gold 

Channel managers are provided with numerous data sets, but they’re rarely consolidated or analysed in ways that reveal valuable insights that result in opportunities to build bespoke loyalty strategies that drive profit and incremental revenue.  Like a magic mirror, data can tell you what you want to hear, not what you need to understand.

Collinson (formally ICLP) has created an innovative, three dimensional bespoke framework - The Partner Loyalty Cube - to reveal hidden insights that help you understand the type of character you are dealing with.   It helps you better understand engagement, performance and value of your partners and allows you to understand:

  • What is the relationship between engagement and performance?
  • Am I recognising and rewarding the right partners?
  • Who are my rising stars?
  • How do my loyal partners align against program tiers?
  • How can I track loyalty and measure it over time?

Individual profiles are built, weightings assigned and a set of specific recommendations are delivered which can be implemented by your partner management team. This is the point at which you can create a relevant loyalty strategy for each partner – you will know which frogs need incentivising with a kiss, which need a pea under their mattress to get them out of bed and which are already maturing into a beautiful swan.

The Partner Loyalty Cube helps you create a loyalty strategy based on two of Collinson’s strongest skill sets, sound analysis and insightful interpretation. It certainly isn’t witchcraft – but the results might be enchanting…

To help you further, Collinson’s latest report has identified six key channel partner personas, and we believe each one requires a different partner management approach based on their level of loyalty.