“Channel Loyalty”: Exploring the role of Loyalty Programs in Channel Relationships

Increased reseller power in numerous sectors is forcing suppliers to shift channel promotion budgets to price incentives, which are preferred by partners because of their versatility. Price incentives tend to determine mere compliance, while non-price channel promotions, which act on attitudes, are probably more effective in aligning supplier and reseller goals. This paper aims to draw management and research attention to the fact that “loyalty” promotion, i.e. loyalty schemes and clubs, that have literally flourished in consumer markets, have a great and untapped potential for aligning supplier and distributor objectives and improve channel performance. We believe that our findings could be useful for management decisionmaking in the area of channel promotion investment, design and innovation, especially in times of recession, when more companies resort more frequently to trade promotion and sales force motivation.