Points, Tiers, or Cashback: Which is the Best Loyalty Program for Businesses?

Businesses that rely on robust distribution networks like manufacturing, construction, consumer electronics, FMCG, healthcare, automotive and technology often look for effective ways to incentivising their channel partners, influencers and advocates.

In such instances, choosing the best loyalty program becomes a need of the hour. However, with so many variations to the loyalty incentives, choosing one can be a challenge. Should you go for points, tiers or cashback, which out of them would benefit the channel partners and influencers.

If your business is stuck in a similar predicament, this 1Channel guide will take you through all the different variants and help you choose the best option for your business.

A Brief Rundown of Points, Tiers, and Cashback in Loyalty Programs

Unlike the end customer loyalty programs, channel partner loyalty programs focus on the needs of the individual channel partners and influencers in the distribution networks.

Not just for appreciating the hard work that they are putting in, loyalty programs also boost productivity and drive sales. In short, when the individual driving factors in a business chain feel appreciated, the business grows and thrives.

Here’s a breakdown of the different types of loyalty programs:%

Points-Based Programs: As the name suggests, this allows the channel partners and influencers to accumulate points through the successful sales and the milestones they reach. This can happen when they hit purchase volumes, hit sales targets, promote the brand, etc.

Tiered Programs: In most cases, distribution networks are multi-tiered including distributors, retailers, last mile advocates, etc. Tiered programs cater to each level and breaks down the loyalty bonuses based on the sales performance in each tier.

Cashback Programs: This is potentially one of the most popular loyalty programs among the channel partners and influencers. In this, the users receive a percentage of a successful sales they make. Think of it as a commission upon making a sale.

4 Reasons to Choose Points-Based Loyalty Programs

Each of the best loyalty programs come with their share of pros and cons. Not just that, which kind of loyalty program will work the best for you also depends on the business you have and the kind of examples you want to set for the people involved.

Following are a few advantages:

1. Every business has specific budget and objectives when it comes to rewarding their channel partners and influencers. With points-based programs, there’s room for adjustment to match the rates based on the business’ budget and create an inclusive ecosystem.
2. With points, businesses can reward their channel partners beyond the scope of sales. You can reward them for completing certain milestones, bringing in more sales partners or improving the customer satisfaction scores too.
3. Points-based programs also foster long-term commitment and engagement. It allows the sales people to work towards achieving a certain milestone with their accumulated points to get their desired reward.
4. Access to points-based programs also provide real-time data regarding the partner’s sales and their behaviour and track the high-performing individuals in the team.

4 Reasons to Choose Tiered-Based Loyalty Programs

Tiered loyalty programs are the best loyalty program if you want to start from scratch and provide a fair chance to every individual in the distribution network. Instead of hierarchy, tiered programs enable everyone to start from the base and then work their way up the reward ladder.

Following are a few advantages:

1. The biggest benefit of tiered loyalty programs is that they foster a sense of progression. Since everyone starts with a blank slate, everyone in the network has a fair chance to grow their position with their performance. This motivation keeps them working towards higher levels to get better rewards, propelling the business’ growth simultaneously.
2. When you have the loyalty program based on performance solely, it differentiates the high-performing partners from the low-performing ones. This allows businesses to include additional incentives to the users that are bringing in more sales and revenue for the business.
3. For companies with a diverse partner network, a tiered program involves varying levels of engagement, making things easier for manage.
4. Since participants have clear levels and benefits to achieve, tiered programs are easy to understand, making them effective for large and complex partner networks.

4 Reasons to Choose Cashback Loyalty Programs

Cashback loyalty programs are probably the best B2B rewards program. This involves monetary reward for the sales representatives on every successful sale they make. For example, if they sold a $100 product, they might receive $10 cashback, which is their reward for the successful sale.

Following are a few advantages:

1. With cashback rewards, there’s an immediate reward appeal. You don’t have to collect points or wait to reach a milestone to receive the reward. Instead, you make a sale, you get rewards – As simple as that. This is this a popular choice among channel partners and influencers that prefer tangible financial benefits over non-cash alternatives.
2. Cashback rewards are one of the best b2b loyalty programs because it is easy to understand and communicate. There are no additional conditions besides making a sale.
3. When companies link cashbacks directly with the purchase, sales representatives are motivated to put better efforts to drive growth that increases the sales significantly.
4. Financial rewards create a strong incentive for loyalty among partners and retailers, particularly in industries with narrow profit margins.

Which is the Best Loyalty Program for Your Business?

With so many B2B loyalty schemes floating around in the market, finalising one for your business becomes a headache. This is where you need to step aside, research and find what’s best for your business and distribution network.

Following are a few tips to choose the best loyalty program for your business:

1. The first step is analysing the behaviour of the channel partner and their preferences too. Do they prefer financial rewards as opposed to points? If yes, you have to implement cashback programs. Thorough research and feedback from each user are thus necessary.
2. Another factor to consider is engagement frequency. If your channel partners engage with the brand frequently, points-based system might work but for the distribution networks needing immediate rewards, cashback is the way to go.
3. If you want to foster long-term partnership with the channel partners and influencers, points and tiered loyalty programs are effective. If that doesn’t matter and you don’t might short-term associations, cashbacks work fine too.
4. In industries with short sales cycles, cashback can boost quick wins, while points and tiers can help in longer cycles by building up sustained loyalty.

Irrespective of the kind of loyalty program you choose, the key is to invest in the best B2B loyalty platform like 1Channel to track engagement, adjust incentives, and deliver personalised experiences.

Drive Channel Loyalty with 1Channel’s Loyalty Management Software

The best loyalty program for your channel partners, retailers, and advocates involves a lot of factors to look into and consider. You want to ensure that the rewards you are implementing isn’t only convenient for you but also favourable for the channel partners and influencers that are responsible for driving your business’ growth.

With a tailored loyalty management platform like 1Channel, you can streamline the implementation of the loyalty programs and monitor the performance and the data that comes with each successful sale made within the distribution network.

Ready to make that switch? Book your free demo today!