How Do Channel Reward Programs Work?

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It is important for any company to have its business goals in mind at the business initiation. However, when it comes to reaching these goals by some means or others, wholesalers and manufacturers often find it difficult to utilise their channels completely. There is an incentive program called channel reward program, with the help of which these distributors can make the most of their channels, such as the vendors, contractors, and resellers.

Obviously, the end goal is to make the most profit margins that are initiated by increasing units sold, and this is done by helping the lower channels in ways that promote the big brand at the end of the day. These channel partners are provided with such incentives as channel royalty, providing product differentiation, and more to motivate and inspire them in order to reach the bigger goal.

Why are Channel Reward Programs Important?

Most of the major purchases that consumers make are generally through some of these channels that have been mentioned previously. Distributors do not generally make these sales directly because they sure do have bigger goals in mind. What they do is simply make these channels make their products more lucrative so that they sell more. More than 3/4th of all products sold by big manufacturers actually happen with these channels’ help even when they are not aware of this.

This is basically what is known as indirect sales, yet they have a direct effect on the profit made by the big companies. The movement of a product generally happens from the big manufacturer, which is sold to a primary distributor. The distributor then sells the product to the contractor by recommending this product over the other meeting in the market. When such things happen generally is because of channel reward programs that are in operation. When you invest properly in such channel reward programs, there is a stronger possibility for you to make future gains.

Types of Channel Reward Programs and How it Works

The concept of channel reward programs is not new and has been utilised for years by major manufacturers. As it has been rampantly used as a very successful marketing strategy, there are a number of varieties of channel reward programs that have been developed throughout the years. The variety of channel reward programs and their workings are provided below:

  • Incentives that are Activity Based: In this strategy, the channels are provided with more authority over the workings of the company that goes beyond the basics of marketing and sales. This can be done by providing the channel partners with rewards in case of promoting brand loyalty as well as extending contracts and relationships to interested parties. The channel partners can be used in order to help your business while making them feel useful and part of your endeavour.
  • Referral Incentives: This is a form of incentive that is generally used by major distributors and manufacturers in order to build their connection with other interested parties. In the system, the various channels are provided with incentives so that they can bring in more opportunities as well as customers into your list of clientele. You basically provide an incentive to your distributors and sellers who can bring in potential clients identifying their worth by starting their buying patterns. This sort of an incentive can be given out to the channel partner via a point-based system or with other orthodox methods using gift cards and debit cards.
  • Channel Sales Performance Index Funding Formula:This is an extremely fruitful business model where everyone is provided with a certain benefit depending on the percentage of the sale. These representatives basically have a short term goal in mind, and they are made to make promotions for something very targeted to your business. The most basic form of rewards that are provided to these salespersons is in the form of debit cards.
  • Channel Sales Incentives: By far, this is one of the most traditional methods of channel rewards. The channel representatives are awarded some reward depending on the volume of the sales and the amount of profit they make for your company. This is a great way for producers and manufacturers to make all over profit. Channel rewards are provided to those who make the most profit with the help of reloadable debit cards, some kind of promotions, or even gift cards.
  • Channel Marketing Incentives: This is a form of system where the channel or the channel partners are used in order to make huge promotions for your company. This kind of promotion helps reach the clients at all levels of your business, and we’ll help you gather a number of potential customers. This is a great form of marketing where customer rewards are used in versatile ways in order to perk their interest in your brand. In this way, the channel partners can provide strategic marketing for your brand, which is extremely beneficial.
  • Channel Loyalty Incentives: Itis very important for you to find channel partners loyal and extremely competent in the market scales. Once you identify these channel partners, you must be very attentive to them as you simply cannot afford to lose these participants. Although it may not be directly visible, these channels make up for a lump sum amount of your gains that have to be rewarded thoroughly. This is where you must provide them with channel loyalty incentives, which will drive time to work for your brand.


Channel reward programs are one of the best ways to make the most of the various channel partners that you get acquainted with through your business endeavours. If you can make good use of these partners, you will be able to secure great profitability for your business. These are truly some undeniable tools that can help you and your company comes a long way together in the most loyal clients.

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