Maybe at your organization, the terms have been interchangeable: Incentive programs are loyalty programs and loyalty programs are incentive programs. But what if there’s more to them than that?
Sure, both add head-turning value for channel partners, and both can offer revenue-booming results for your business when built to their fullest potential, but how are incentive and loyalty programs different? Where do they overlap? Most importantly, how can you use the right program type to advance your team’s unique business goals?
Comparing Incentives and Loyalty Programs
In the simplest terms, channel incentive programs aim to influence a set of partner behaviors to drive an immediate result. In contrast, loyalty programs look to form deeper, long-term relationships and generate repeatable results over time.
Here’s another important distinction: Most loyalty programs will use incentives, but not every incentive program will build loyalty. This is where your business has an opportunity to be an exception and harness the best of both worlds – but more on that later.
First, let’s go deeper to define each program type, ideal use cases, their roles in elevating your brand, and how the two can work together, or apart, to maximize results for your teams.
Immediate Impacts: The Action-Sparking Potential of Incentive Programs
Typically, incentive programs are focused on the immediate. The idea is to engage partners with reward opportunities to encourage sales or other transactional behaviors. When the cheese is proportionate to the chase – or when gaining the reward is worth the effort or action – partners are motivated to follow through.
Traditional incentive strategies will call on rewards like cash, discounts, or rebates to prompt action. Short-term rewards can spark short-term engagement – but that’s where it ends until the next nudge. More advanced programs will go beyond generic rewards and limited rule structures to stretch partners’ interests beyond the current moment. The idea is repeatability and encouraging active participation through continuous and compelling earning opportunities.
Think of it this way: Divvying out cash rewards for making a sale is giving your partners the fish. It’s immediate gratification for you and them, but the satisfaction is also short-lived. Other programs will be competing for their focus tomorrow and offer another fish in exchange for their efforts – but what if your program could give them the fish and the net?
Partners will recognize programs that offer great rewards, but they’ll remember those that support their success beyond the immediate ask. When partners can earn while building their business alongside yours, engagement isn’t hinged on a “request, reward, repeat” cycle. For them, participation becomes an opportunity to be empowered to sell more, gain more, and advance their own careers.
Long-term value will always outperform the short-term, “do this, get that” nature of basic incentive programs. To stand out, you’ll need to go beyond “been-done” designs that reward partners solely based on transactional behaviors. The best-performing incentive programs can make partners’ excitement last longer than reward redemption because there’s another element at work: loyalty.
The Long Game: Lasting Advantages of a Loyalty Program
Loyalty programs may use a range of compelling incentives, but the aim isn’t a one-time transaction. The focus is long-term behavior change, consistent engagement, preference for your brand and, of course, business growth.
When longevity is the goal, broader rule structures and diverse reward types are useful for celebrating and reinforcing business-building efforts that aren’t linked solely to revenue. That’s not to say racking up sales and earning a trip to the Bahamas would hurt participation or commitment-building efforts by any means…
Instead, while incentives play a role within loyalty programs, they’re built into a more complex strategy to engage, enable, and empower partners.
With a larger focus on enhancing the overall program experience, loyalty strategies often involve supplying high-quality seller resources, simplified tech, access to quick support, actionable communications, and other elements that drive mutual value and shared growth.
Measurable Results, Meaningful Partnerships: How to Harness the Best of Both
The strategies behind loyalty and incentive programs might differ, but the two worlds should coexist. No matter what kind of program you run, prioritizing loyalty adds value that keeps you relevant. While competitors are working overtime to gain partners’ engagement, you’ll already have it because you’ve won their preference too.
For incentive programs, incorporating a loyalty strategy can be as simple as creating more flexible rule structures to reward positive behaviors, transactional and otherwise. For instance, partners can receive rewards for making referrals, stocking up on new products, or purchasing marketing displays.
The next step is to really make your program stand out with reward types that go beyond the basics. Any program can offer cash or rebates, but these types of rewards will look pretty much the same no matter who they’re coming from – and you want to be memorable.
Think about expanding the scope of your incentive offerings to include:
- Points catalogs that give partners a variety of high-interest reward options, from camping equipment to merch from their favorite brands.
- Continued learning and soft-skill training will grow professional knowledge, confidence and experience and create future leadership opportunities.
- Recognition and status advancement to elevate partners in their careers as they build their businesses – while also unlocking tiers or more lucrative earning structures.
- Trips and events that help your partnerships go the distance – literally – with unforgettable experiences that wouldn’t be possible working with any other brand.
If you need a reframe, consider which would be more meaningful to you: Spending a pre-loaded cash gift card at the grocery store or redeeming sales points for a new barbeque grill.
It’s the grill, right? Every time a partner fires it up – whether they’re hosting a neighborhood get-together or making dinner for the family – they’ll remember which company made that experience possible.
Freeing up your rewards and rule structures can mean you’re the brand that partners associate with lasting satisfaction. Whether you’re running an incentive program or a loyalty program, value and repeatability is what keeps partners coming back.
How can I make sure I’m building the right kind of program?
Your brand has unique goals, which means the kind of program you need, and your starting point will ultimately depend on a host of factors – from your industry to the maturity and stability of your sales program to current partner engagement and more.
Whether you’re starting from ground zero, have an established program, or are wondering what the best choice for your team is, it’s helpful to work with trusted experts who can guide you to the right program solutions for your business model.
Layering a loyalty framework into your strategy is easier in collaboration with dedicated specialists like Maritz who have the experience and know-how to support a seamless process. This gives you direct access to experts who will:
- Get to know your goals and create a one-of-a-kind growth roadmap to guide your teams.
- Bring clarity to your program data with detailed analytics to strategize your next steps.
- Create financial feasibility models to create the ideal program for your goals and budget.
- Segment your partner types to design personalized and compelling incentive rules.
- Upgrade your program with more diverse rewards and flexible earning structures.
- Develop accessible resources, support, and ongoing partner enablement opportunities.
- Simplify your day-to-day channel program management and technology experiences.
Whoever you turn to for insight, it’s a good sign if the direction you receive comes from experts who take every opportunity to strengthen loyalty. Your partnerships are the lifeblood of your channel program, and mutual value should always be a leading focus – especially if you want to earn theirs.
Let’s Grow. We get excited about Channel Engagement Solutions that get results, and we want to bring out the best in your partners and your business. Ask us how you can evolve the program you have into the program you and your partners want, starting today.