For many businesses, it’s a natural response to pull back on spending in the face of an adverse economic climate. Right now, we’re living through a challenging economy with tariffs and foreign country relationships in flux daily. While cutting back on spending within your sales and marketing budgets might feel like the right thing to do, there are concrete reasons why now is not the time. Instead, it’s critical to show your B2B customers just how much you value them; and our team at Motivation Excellence has the data to back that up. Below are four reasons why we suggest implementing a channel partner incentive or B2B loyalty program in today’s economic environment.
1. Economic Downturns Are One of the Best Times to Capture Market Share
When business slows down, decision makers have to decide if they want to:
- Cut back on spending enough to still turn a profit
- Stop investing and spending, hunkering down in a “wait it out” mindset
- Go on the offense and try to grow through the turbulence
Years of experience have taught Brian McHugh, VP, Client Solutions at Motivation Excellence, that businesses that come out ahead more often choose the last option.
“There are multiple studies spanning decades that show firms maintaining or increasing marketing spend during recessions recover faster and even outperform competitors,” says McHugh.
“There’s a popular industry adage that says, ‘When times are good, you should advertise. When times are bad, you must advertise,’” he adds.
McHugh advises that incentives are more powerful than “just marketing” because they factor in sales growth and growing market share.
Implementing a B2B loyalty or channel partner incentive program now, when competitors are pulling back, is a great way to:
- capture market share
- strengthen relationships
- build momentum for the eventual upturn
“When the economy rebounds, the customers you took care of in the lean times will take care of you because you’ve demonstrated commitment, which creates trust and leads to loyalty,” McHugh imparts.
A longtime electrical supply client at Motivation Excellence experienced this firsthand with an incentive program that spanned more than two decades and saw growth in up, flat, and down markets during that time.
Their ROI was more than 200%. They saw an increase in market share and built a loyal customer base. Working with vendor partners helped elevate the budget and the opportunities for their customers. For the full story on this client and their results, check out the case study on our website.
2. Investing in Relationships Protects Your Current Customer Base
Here’s a simple truth: it’s easier to retain and grow existing accounts than to win them back after they’ve moved on. One of our building supply clients calls this “relationship equity.” We’ve worked with this company for more than a decade on a loyalty-driving incentive program that culminates in an exclusive, all-expenses-paid, four-day event that includes world-class entertainment, access to preferred vendors showcasing the latest innovations, training and networking sessions, and small group activities.
“When the economy tightens and customers become more price-sensitive, programs like ours become even more valuable. It allows us to invest in loyalty without relying on price cuts. This premium, relationship-based benefit reinforces long-term value – and that resonates in any economic climate,” reports Natalie, a marketing manager at the above referenced building supply client.
Natalie says even when economic or global issues may alter business strategy, the focus of their loyalty program remains the same.
“It’s about delivering value beyond the business transaction. Especially in uncertain times, experiences like this offer a powerful way to reinforce connection, stability, and appreciation for our customers.
“It’s not just about points or perks; it’s about creating an emotional connection and a sense of belonging. In a growing industry, where customers can feel like just another number, this program reminds them that they’re seen, valued, and essential to our success,” Natalie extols.
Their sales growth has averaged 230% over the tenure of the program, which is still operating today. To see more about this company’s success with their loyalty event check out the case study on our website.
Increases in Sales Growth
214% = Median growth
230% = Average growth
263% = Top 25 average growth
3. They Can Pay for Themselves
If you’re still not sure you can afford to start a channel partner incentive or loyalty program, this should get your attention. The incremental gross profit generated from customers’ increased purchases pays for the cost of the program and contributes to overall bottom-line margins. Read that again.
How does this work? Our team does a deep dive into your:
- Goals
- Challenges
- Company & industry data
- Target audience
- Reward preferences
Your company wants to motivate behavior change within your channel—most likely to increase sales and loyalty. You might be one of several companies in your market vying for the same channel customers. We look at industry trends. We look at your product margins and individual customer sales data if available. We consider what type of rewards you want to offer; for instance, a group travel experience or reward points your participants can use for almost anything. (There are so many ways to reward people, truly.)
Once we have all the pieces, we can come back with recommendations and models that outline how much you need to increase your sales to pay for the program. This leads us to creating goals for your customers. The key here is the goals must be attainable, but not without extra effort, which is why the motivation (or type of reward offered) is so important.
Our electrical supply client mentioned previously employed an evergreen rule structure* that drove incremental sales growth year over year. They offered a tiered reward structure with the top performers earning a group travel experience with company executives and preferred vendor partners.
Once earned, the motivation to continue landing in a top spot added to the momentum. In addition, accelerated reward opportunities kept participants engaged and committed to meeting and beating program goals.
*With the evergreen program structure, participants created a sustained growth pattern year after year.
4. Incentive Programs Are Differentiators
Sought-after channel customers often want, or even need, a reason to buy from you, rather than one of your competitors. They might ask, what’s in it for me and my company to stay with you or jump to you?
Offering an opportunity to earn rewards like travel, merchandise or special event tickets can be a persuasive approach, especially because it feels “free” to them. It’s a business relationship with a personal gain. It becomes a part of your company’s overall value proposition with your customer.
“Industries with competitive distribution, like ours, give customers more options, and that’s exactly why loyalty can’t be taken for granted. We have to continually earn it. Our loyalty event helps us do that in a meaningful way while setting us apart from the competition,” continues Natalie.
“None of our competitors offer loyalty events at this level,” she says. “The event has become a cornerstone of our company culture. Customers talk about it all year long. It’s a celebration, yes, but it’s also a statement of how deeply we value our partnerships with our customers.”
Rewards alone can take you a long way with your channel partners, but there are additional benefits that really enhance a trusted relationship. Best practice discussions and product trainings are two additional ways to demonstrate your commitment to the success of your customers’ businesses. When you both grow your businesses together, the relationship is bound to grow too.
“With our programs, we want to drive buying behavior changes within a channel which then leads to lasting, mutually beneficial relationships. Once there’s an emotional connection, loyalty to your brand follows. Our loyalty and incentive programs foster a bond that will see positive returns well into the future,” says McHugh.
Channel partner incentives and loyalty programs are proven to effectively generate a boost in sales, as well as strengthen relationships within your distribution channel. You now know why they’re important and how they can help a business even in questionable economic conditions.
Let’s connect to discuss your unique situation. Our team is full of experts in this nuanced industry. We start from scratch with each client to drive the results you want to see.
