July 13, 2018
Rewarding Commitment and Earning Business through Distributors Loyalty Programs
The economic world is populated by a few sky-high companies and millions of small businesses which form a platform for the former’s rise. In fact, as per the report filed by the United States Small Business Administration, small businesses have added little more than eight million jobs in the country, as compared to the four million produced by large businesses. Also, the U.S. Bureau of Labour statistics points to the fact that more than 50 percent of businesses operating at considerable profits had about ten employees, meaning that their distributor's network has been extremely intensified and spread out across the country or globe. While these survey results are a commonplace knowledge to the mass community of distributors, they serve as an enlightening data to the parent companies. Observing this scenario, we, at Xoxoday understand that the backbone of international economies is the small businesses that act as distributors or channel partners and passive advertisers of multi-millionaire business giants.
The success and profits of a giant business are solely dependent on the enthusiasm of its channel partners who make loyal customers at their end. An online customer feedback survey once reported that companies profit from the tendency of existing customers to spend up to 67% more than stimulated new customers to patronize the brand. These results further emphasize the contribution of channel partners towards the growth of a brand. Distributors consistently attempt to form new customers while serving the existing ones. Yet, even though their sales are conducted for retrieving their business profits, the network and customer base of distributors also ensure that the demands of a company’s goods never run out of the market.
Owing to the innovations in technology and distribution of business resources across the world, companies and their distributors have been able to cater to a diverse audience. Yet, such a huge customer base has also led to a number of problems, which include maintaining customer loyalty. Since giant business tycoons cannot be expected to run around busy streets and make thousands or millions of time-consuming personal sales calls, the responsibility of distributors in uplifting a brand becomes double-fold. The numerous distributors assume the role of a local salesman for the company (which may be housed in another country), thereby collecting revenue for its proliferation. So, it won’t be preposterous on our part to state that the distributor’s loyalty is an essential asset to businesses.
So, like our customer incentives, distributors loyalty programmes by Xoxoday are equally significant support systems for businesses. By providing trusted channel partners, a share of one’s profit on the swooping sales – be it in the form of rewards points, vouchers, free trips, relaxation on product prices etc. as per our program mechanisms – giant businesses can foster a spirit of responsibility in their distributors about the company’s future sales. In addition, as our programme hands out a share of profits, it also strengthens the commitment of the distribution partners. By voluntarily accepting the rewards for their sales and aiming at earning more rewards set out by the company, channel partners garner more trade profits for their parent company. In a world full of innovations and an entailing competition, hosting loyalty programs for one’s distributors can prove to be very helpful to companies – be it big or small. So, here are a few of the many distributors loyalty programme ideas executed by Xoxoday, which are sure to help companies in strengthening the dedication of its channel partners:
- Classic Yet Effective: Reward Point System
Converting distributor’s spent amount into reward points as per a set conversion algorithm is the most common loyalty program methodology used by our client companies to promote the purchase of their goods. As per the frequency of purchase, distributors can be availed for discounts, freebies, prime treatment, etc. Higher the limit of reward prize, more are the chances of distributors to keep hiking sales in order to receive their desired prize. But this scheme is not as easy as it sounds from the end of the distributors. For the companies, setting a reward point system means formulating a conversion rate which does not put off distributors. Adhering to this rule, Sephora’s Beauty Insider and VIB Programs set an algorithm where every dollar spent was converted to one point and rewards were handed out in the form of the company’s own products. The system was successful for Sephora for it was applicable on goods frequently purchased by customers.
- Advanced Reward System: Two Tier Loyalty System
This system is quite alike the reward point scheme; however, it does not adhere to the order of “purchase for points to get rewards”. Instead, in Xoxoday’s two-tier system, the initial loyalty of buyers is awarded by a small token. Later, on every purchase, existing customers are encouraged to move up the loyalty ladder, in order to increase their amount of rewards. Such a mechanism inverts the commonly used point mechanisms and attracts the interests of distributors more fastidiously. Furthermore, it also increases the loyalty of channel partners by reducing the gap between the time of purchase and collection of reward. Since it is economically profitable for common businesses like cosmetic products, clothing brands, etc. to hand out rewards at every purchase, the two-tier system becomes particularly useful to higher priced enterprises like airlines, hospitality or insurance companies. Probably the best example of a successfully established two-tier systems is the Virgin Atlantic Flying Club, where the three types of inducted members – Red, Silver, and Gold – enjoy rewards like flight, airport parking, hotels or rental car discounts, convenient check-in, priority standby seating, and access to exclusive clubhouses where customers can lay back for a massage before a tiresome journey.
- Direct Costs for Benefits: Charging to Sanction VIP Passes
A common issue faced by companies is the discouragement of distributors from purchasing high priced goods because of the “sticker shock” after the addition of tax in the billed amount and overhead shipping charges. As per a study conducted for about 500 international brands, cart abandonment rates were found to be 75.6% across retail, travel and fashion goods owing to the additional costs. So, to tackle this issue and prevent a market crash for luxury items, we suggest companies to initiate the VIP loyalty program. Under this scheme, customers or distributors are requested to submit a fee upfront during their first purchase. On the successful deposition of the fee, the payees are entitled to certain benefits like relaxed shipping prices, the guarantee of safe delivery, etc. The Amazon Prime program is an example of the VIP loyalty scheme, where customers are given a plethora of offers in exchange of a monthly fee. While it does not harm to the company as it increases the Prime membership benefits, it takes to benefit from the program by increasing the membership costs successively.
- Taking Hand in Hand: Company Partnerships for Unique Offers
Sometimes, it is not enough to offer discounts or additional services from one’s own company to maintain distributors loyalty. With increasing business competition, one needs to develop dynamic ideas that cater to both the company’s and distributors’ interests. This is why our inclusive offer scheme is such a trendy distributors loyalty programme today. Many companies have increased their outreach by using the channel partners of other companies to promote one’s products under a limited partnership programme. Availing benefits or rewards that are meaningful to distributors (as customers and potential businesses) helps to strengthen the bond between the company and its channels. The Plenti Program of American Express is the best example of how company partnerships can generate broader customer base during an alliance.
- Different Face of Encouragement: Gaming Jackpots
In the digital age, the process of reaching out to end users and every channel partner leading up to them can be realistically executed in half the time and double the ease. A simple tool to make it possible is gaming contests or sweepstakes. A more interactive and attractive form of surveys, games designed by our team can be designed to hand out gifts or loyalty rewards as well as receive feedback from distributors. The only challenge of using this programming methodology is satisfying the legal limitations regulating online public contests. However, if executed successfully, this methodology can appeal to a wider audience besides one’s channel partners. An interesting ideal for companies playing with the idea of developing a gaming app is the Swarm Perks, check-in app.
- Soothing Cautious Nerves: Spending on and Earning from Distributors
With the high number of loyalty programs operating at the same time (which are more often than not concentrated on raising company benefits), it is obvious for businesses to find extreme difficulty in finding commitment and dedication from its distributors. This is why, our client companies are taking up a new means of earning distributors loyalty, i.e., by generously spending on them before demanding lifelong commitments. Under this drastic scheme, businesses walk the way of showing distributors their value to the company by handing out an irresistible loyalty program. The REI Co-Op’s Membership program catches the fun spirit of its customers or distributors and offers lifetime membership at a flat fee of 20 US Dollars. From there on, the customers earn up to 10 percent cash back on their purchase with REI Co-Op and make the most out of adventure classes, discounted wilderness trips, etc., while the company gains their voluntary and enthusiastic loyalty towards its business.
- Breaking the Mould: Gaining Loyalty Without a Program
The ultimate goal of every loyalty program is boosting sales and ensuring market reputation. However, that can be earned by dropping a loyalty program as well. That’s right! In a market where every business is executing a loyalty program for its distributors, only those businesses which are out of the crowd and based on unprecedented ideas can function as a loyalty-inducing strategy in itself. For instance, the ardent following of the Apple Co. products is not a crowd pulled by the company’s special rewards or discounts to loyal distributors. Rather, it is a huge fan-base prompted by “enchanted” customers. Apple specializes in offering one-of-a-kind services that cannot be challenged by any other competitor. This, in turn, spreads its reputation across individuals by word of mouth and ever increases its demand in the technology market. As a result, Apple does not need to issue loyalty programs for gaining its distributors’ loyalty, for they are “voluntarily” connected to it for a “lifetime”.
Issuing a loyalty programme for distributors is a time and capital consuming task. This is why businesses must carefully choose the best program methodology that suits its distributors’ mentality, brand image, and profit target. In addition, it is equally important to select the best group of working partners, like communications, program administrators, rewards, and customer service, so as to ensure that the program is executed flawlessly. Loyalty program partners can be a business’ route making the most out of its scheme since their ideas about maximizing memberships return policies on rewards and short-time promotional plans can compliment one’s strategy. Besides, one should also focus on the customer service resources of its program partners because one’s own brand may suffer a tarnished reputation if the partner’s response to inquiring customers is too indifferent.
Xoxoday’s loyalty program for distributors can be moulded to fulfill the interests of a business’ customers as well if only the right medium of advertising is chosen. By satisfying its valuable distributors, a business makes way for generating its reputation amongst customers through the word of mouth of its distributors. In such a form of passive advertising, businesses or brands have much less to lose and invest, though the rate of profits can only be expected to skyrocket. This is how our distributor loyalty programs also serve as a means to find the correct tool for business growth for small companies. Pulling distributors and their associated network of customers towards one’s own business allows small companies to generate numerous threads of satisfied customers. As these threads spread the brand’s information through offline or online media, the company remains to make more loyal customers. Thus, be it for appreciating distributors or using their means to promote one’s business, Xoxoday’s loyalty program for distributors is an all in all profitable package for companies.
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Xoxoday is a SaaS commerce company with products for employee and channel management.