The Expanding Technology Behind Channel Sales
If you’re a shopaholic, you’re probably a Nordy Club(1) member or hold a REDcard(2) from Target. If you can’t live without pumpkin spice lattes, you’re likely enrolled in the Starbucks Rewards program.(3) Many business-to-consumer (“B2C”) companies utilize marketing, loyalty, and rewards programs to engage consumers and drive brand recognition and customer retention. These programs were early adopters of technology and software aimed at delivering effectiveness, efficiency, and measurability to rewards and marketing spend. However, business-to-business-to-consumer (“B2B2C”) companies and channel marketers have been slower to adopt similar technology, until now. B2B2C companies and channel marketers are beginning rapid adoption of technology and software to drive these types of measurable and repeatable results in their businesses.
Consider an HVAC equipment manufacturer: the manufacturer may choose to sell its products directly to consumers via a sales and installation team, partner with HVAC installation companies and outsource distribution, or use a combination of direct and indirect sales channels. On one hand, selling through a direct channel provides full control of the sales process. On the other hand, channel sales provides low sales, marketing, and distribution costs, and allows for expansion and scaling opportunities. Perhaps the biggest drawback to channel sales, however, is the lack of control over managing the sales process. Depending on the sales model, the manufacturer may have limited visibility into and influence upon the sales process. With 75% of world trade flowing indirectly, how do channel sales companies effectively incentivize and engage partners to achieve strategic sales initiatives?(4)
Channel loyalty technology and software provide a powerful answer to this challenge. Leading channel loyalty technology providers are enjoying rapid growth as they develop innovative solutions that help incentivize and reward partners in indirect sales channels. Traditional channel loyalty and rewards programs rely on commission opportunities as the sole force for driving strategic sales initiatives. New technology and software innovations like omni channel marketing, gamification, artificial intelligence (“AI”) and machine learning, and specialized partner relationship management (“PRM”) software are reshaping the loyalty landscape to provide personalized and experiential rewards programs for partners.
The average partner program contains over 90 distinct components.(5) Specialized PRM software helps string together partner planning, onboarding, enablement, incentives, marketing, and management. Channel, marketing, and sales professionals are realizing the importance of a strategic partnership with PRM software providers as it helps professionals influence the partner journey and manage a larger, more heterogenous portfolio of channel types. Further, channel loyalty technology providers are building omni channel marketing solutions and using AI and machine learning to help large businesses manage complex channel incentive programs in real time.
Some channel loyalty technology providers are using mergers and acquisitions (“M&A”) to broaden and expand service offerings to customers. For example, Zift Solutions secured a position in the PRM market in July 2017 after merging with Relayware, a PRM software provider.(6) The combination of Zift’s existing Channel-as-a-Service platform and Relayware’s PRM platform established an Enterprise Channel Management technology solution to expand functionality and return on investment (“ROI”) for customers. Another example is 360Insights’ recent acquisitions of Ohana Companies(7) in August 2019 and Marketing Technology Concepts(8) in January 2019. These acquisitions provide 360Insights with brand loyalty solutions and sales incentive management software to continue progressing toward an all-in-one solution. MHT Partners expects continued M&A activity in the channel incentive and rewards space as many players compete to become a dominant provider in the fragmented market.
MHT, a leading technology investment bank, will continue to follow channel loyalty trends as industry consolidation remains an increasingly beneficial option for companies looking to maintain high growth and expand into new services and geographies. To learn more about MHT, please contact Mike McGill (firstname.lastname@example.org).
Impartner (PRM provider)_ acquired Amplifinity (develops and delivers referral programs)
Allbound receiving multiple rounds of venture capital funding (PRM software)