Nov. 22, 2017  I  Gage team

If you are managing a loyalty program, chances are you are probably doing many of these right now with varying degrees of success. And this is by no means an exhaustive list. However, when you think of your loyalty promotion needs, think of the context of how these techniques can be used in conjunction or integrated together. By implementing a loyalty reward platform, you can even mix and match to further optimize future campaigns.


1) The traditional formula

In the consumer world, this is akin to frequent flyers miles or American Express incentive programs. With this formula, activity is given a value and appropriate value units are awarded, such as points or dollar rebates. The positives are that it is easy to understand, positive recurring behavior is reinforced, and you may have anywhere from 10 percent to 30 percent breakage depending on the type of campaign and incentives offered. The negatives are that you generally must have a large incentive to make an impact and, if your budgets are not large, limited awards will not drive large participation. The biggest downside is that your value units will accrue and management and ongoing value unit liability will need be accounted on a regular basis.

According to Google, these are intent-rich moments when decisions are made and preferences are shaped.

2) Entries for points

Rather than using points as a currency to purchase or redeem items in a catalog, you can use them for entries for a chance to win bigger merchandise items. The more points earned and used, the better the odds to win a prize. Again, the positives are that you get a better control of the reward budget and the potential to make a big impact for your channel with a large promotional offer. The downside is that there’s no guarantee participants will receive items and may not result in an effective way to drive the behavior or motivation you want. There are also more legal requirements to ensure compliance if you are looking to run these types of promotions internationally. To be most effective, the Entries for Points method should be done in shorter timeframes, from a couple of days to a few weeks.

3) Time-sensitive prize pool

If you are looking to drive your channel to engage with you consistently over longer periods of time, consider implementing this technique, which is often referred to as a Monte Carlo incentive. It is best used if you are looking to drive channel buying earlier in the time period as opposed to waiting to the end of the quarter. The point pool is funded usually with a set budget at the beginning of a period. Channel partners accrue the points as soon as the products are purchased but point pools are limited. Again, this encourages increased purchases early in the time period. The downside to this approach is that significant analysis is required to structure this type of promotion correctly.

4) Stack rank prize pool

When you have a situation with dealers or resellers where you really want to drive competition, consider this approach. Members compete against each other for their share of the prize pool of points each month. Because the platforms have real (or near real) time data, you can post leaderboard ranks on the web or through e-mail updates. This highlights the top performers and encourages competition.     

At the end of the period, the prize point pools are then divided by the members who made the leaderboard. This is less effective for a broad channel play and favors bigger channel partners.     

NOTE: Incentives could be further segmented to the teams or individuals within the participating channel partners.

5) Threshold incentive

Consider this approach when you want to have a minimum level achieved before incentives can activate. The consumer equivalent of this would be a frequent flyer program where you must achieve a certain point threshold before you can redeem for the incentive. There is considerable research required in this approach as well as you would need to set thresholds based on historical data. There may not be as much impact on breadth programs, but organizations can tier the awards and add accelerators to match the desired behavior they want to reinforce.

6) Threshold with second-chance sweepstakes

Like the straight threshold goal previously mentioned, partners that don’t reach the threshold could use the remaining points for an entry into a sweepstakes. This has the benefit of giving every participant an 11 opportunity to earn an incentive. Like the Traditional Formula, there is a point liability management that needs to be considered for most of these incentives. It is highly recommended that these programs be tiered based on the size and type of partner.

7) Botswana bingo

This is a very simple technique where channel partners earn points for activities, such as taking a training course or meeting sales goals, and have a set and predefined prize catalog. As each set time period goes by, the point price drops until the item is redeemed and no longer in the catalog. The upside to this type of approach is that you can have numerous promotion capabilities to make a big impact. The key is also to drive critical mass and awareness. 

8) Auction engine module

One of the most effective and popular ways to mitigate your point liability with an incentive program is to integrate an Auction Engine Module. As with all of these incentives, value units are earned through activities that are measurable. Points are then used as currency to big on unique items. The more unique the item, the better the engagement. For example, if your distributors are selling music equipment, a signed instrument by a famous musician could fetch considerable amount of engagement. In this approach, the value units expire at the end of each time period and your point liability is mitigated. The downside to this approach is that high point earners can dominate the auctions and, therefore, it is recommended that a tiered approach be taken.

9) Nab it 

To foster a constant awareness of your channel incentive program, consider a Nab It incentive. This is an intermittent reward that has been popularized by leading retail sites. You are presented an incentive item, such as a trip, for an extremely discounted point price. The catch is that there may be only a handful of these incentives available and you are not sure when they will appear. If you have a global channel, you will want to accommodate different time zones so as not to favor one time zone over another.