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Reward catalog points: untapped potential for channel incentives
Reward catalog points are a type of virtual currency that can be exchanged for merchandise, trips, gift cards, and such. This program model was picked up by tech companies from the B2C Customer Loyalty space, where points were awarded to individuals. In the B2B space, these individuals are the partner companies’ employees (most frequently, partner companies’ salespeople). The more a partner salesperson sold, the more points he/she accrues.
On the surface, the reward expense formula seems simple: when a channel partner redeems 1000 points, they get $1000 of perceived value. So every point allocated as an incentive reward costs you $1, right? Not so fast …
1. Build a margin into your rewards catalog
As noted, channel partners assume a certain dollar value for every point that they earn (1 point = $1). But that dollar worth of reward merchandise doesn’t have to cost you a dollar. You can work out volume deals with merchandise suppliers to your benefit.
For example, let’s say you purchase laptops or tablets as catalog rewards. You can negotiate to purchase them at a volume discount and make them available at the list price to your channel partners. So when your channel partners redeem 1000 points for a laptop, you pay only $750 to get them $1000 of value. That represents a 25 point margin for you.
2. They get the same value, you save money.
Best practice: Don’t overpopulate your rewards catalog. Overpopulating your catalog dilutes your negotiation value with your merchandise suppliers. Stick to fewer products and you can drive bigger discounts.
Note that large companies with a large number of channel partners have a better chance of driving better bargains at volume deals. These are, say, $100m companies with 3000+ channel partners on their roll. But what’s a smaller/midsize company to do?
3. Liaise with other tech companies to create a coalition
Say you are a $50m security tech company, with 500 channel partners. These channel partners not only sell your security technology but also sell hardware servers, virtual infrastructure solutions, and cloud services.
You can go to these companies and propose to share reward catalogs — and expense (and volume discount benefit!). Channel partners can earn and pool points earned from you, and the hardware, virtualization, and cloud services companies. You’ve formed a coalition of tech companies that will act as an even stronger attractant for your collective channel partners.
Best practice: Choose reward coalition partners that have complementary technologies.
Fielo understands that this might be a new way of engaging your channel partners. While much is quite well documented and exemplified per the B2C space, for the B2B space, you will probably need to develop these ideas and their execution plans off somebody who’s been enabling them for quite some time.
Why don’t we chat up? And while we are at it, maybe if you are interested – we can talk about coupling company-level rebates with individual-level points too.