Why Do Channel Partners Keep Switching Suppliers?
In industries like HVAC and construction, price often drives buying decisions, especially when the economy is unpredictable. That makes it tough to win distributor and contractor preference, and even tougher to keep.
If you manage a channel partner program in one of these markets, you likely know the reality. You want to shine as the preferred vendor, yet partners continue to shop for better deals and switch suppliers based on the best price (for now). It’s frustrating when you’ve invested in these relationships only to see partners jump ship for a slightly better deal.
But it isn’t just a pricing problem. It’s a loyalty problem.
Here’s some good news though. A small shift in your strategy could help partners stay loyal, even when tempting offerings come along made by your competitors. That’s the power of evolving from a transactional program design to a more sustainable loyalty framework.
How Do You Build Loyalty When Partners Care About Price?
Before we get into the strengths of a loyalty framework, we need to understand how transactional incentives differ and why they aren’t an effective long-term strategy.
What’s The Difference Between Transactional and Loyalty-Based Programs?
While 91% of channel sellers say incentives significantly influence motivation, it takes more value to make it sticky. Without a long-term focus, there’s no repetition and no cycle to create or reinforce. It’s a one-time reward for a one-time result and then partners are back to shopping for the best price.
This is where transactional and loyalty-based programs take different approaches:
Transactional programs are built to drive and reward sales alone. Loyalty-based programs consider the broader scope of behaviors (sales and otherwise) that signal engagement and add to the emotional connection.
Transactional Programs
Built to drive and reward short-term sales and immediate behaviors
- Reward the last sale/highest volume
- Engage partners mostly through cash-dependent tactics: rebates, promotions and MDFs
- Are designed to drive immediate behaviors right away
- Success is defined and measured based on quarterly sales volume and annual revenue
- Reinforce a supplier-distributor or supplier-contractor relationship
Loyalty-Based Programs
Built to drive and reward sales AND create a meaningful emotional connection
- Reward consistent performance and longevity
- Engage AND enable partners with meaningful recognition, growth opportunities and personal motivators
- Are designed to shape behavior and preference over time
- Success is based on ongoing performance and engagement beyond transactions
- Reinforce a strategic partnership
In price-driven markets like HVAC and construction, it’s easy to fall into a transactional rut. Engagement is short-lived, based solely on seasonal buying patterns or quarterly projects. Partners treat the business relationship like a transaction because those are the behaviors the program rewards.
The Competitive Contrast
Loyalty designs celebrate consistency beyond just sales and add value beyond basic incentives. The program experiences and emotional connections stick, and that’s hard for other programs to recreate.
Growing out of a transactional approach means you don’t have to rely on promotional communications or last-minute discounts to engage partners, meet quotas or hit targets.
Instead, a loyalty-first approach gives you a real edge. While the competition burns resources to spark engagement today, you’re already shaping partner preferences tomorrow and beyond.
What Strategic Levers Boost Loyalty with HVAC and Construction Partners?
Smart program designs nurture connections, not just cash flow. By applying these proven loyalty strategies, you can maximize both.
- Points Systems
- Tiering Structures
- Recognition Programs
- Exclusive Perks
How Do Points Systems Drive Engagement Beyond Cash?
The beauty of going beyond basic rewards, MDF and monetary incentives is that it can help you hit two goals in one: Driving immediate behaviors and reinforcing loyal partner relationships.
That’s why point-based programs are a powerful program differentiator. Partners get to decide how to make participation most rewarding. It becomes personalized, meaningful and a lot more motivating to chase an outcome they’ve chosen.
Beyond cash-based options, partners can choose to redeem points for:
- Experiences, like concert or airline tickets, excursion passes and more
- Tangible goods, like luxury merchandise, clothing or trending tech products
- Access-based value, like exclusive leadership training and product demos
- Symbolic rewards, like special certificates, awards and recognition opportunities
- Creative cash options, like pre-paid cards or gift cards to local restaurants
The Payoff of Choice
The systems work well because each point your partners earn represents effort, time and outcomes they’ve contributed, and they need to justify that their investments in the program are paying off.
Points are a visible affirmation of value.
Outside of sales volume, you can reward other incremental behaviors that paint a bigger, more complete picture of program success, including:
- Completing enrollment and onboarding
- Reaching pre-set performance milestones
- Using learning modules to up their skills or know-how
- Participating in surveys and providing feedback
- Improving customer satisfaction scores
- Engagement with your program communications
How Do Tiering Structures Motivate Consistent Performance?
Like point-based programs, tier structures give partners something to work toward; they create a visual progression through the program. The more your distributors and contractors advance, the more value they unlock at each level, and the more connected they feel to the brand.
Rather than overwhelming partners with praise for a one-time win, use tiers to reinforce the value of consistent and active engagement. From completing training to make a referral, you can show them that every action rolls into something greater.
The Internal Drive
Tiers are effective for activating your partner’s intrinsic motivations, or their internal drive to reach a goal.
Connecting these deep motivations to broader program objectives creates a win-win scenario: steady performance that feeds bottom-line growth for you and stronger feelings of accomplishment that draw them deeper into your program.
As distributors and contractors reach new tier levels, their opportunities to drive success and strong returns expand. Every step up boosts their confidence that they’re investing their time, effort and money into a program that reflects their efforts and makes dedication truly worth it.
Why does Recognition Matter in Trade Industries?
Tier structures are powerful for motivating consistent performance, but when you want to strengthen the value of your connection with your partners, recognition works. Distributors and contractors respond to it. They care about elevating their professional skillsets and achievements.
From highlighting partnership milestones to incredible performance, this is your chance to make every valuable effort feel seen. And not just by you, but by other professionals they respect in their field.
There are plenty of meaningful opportunities to acknowledge broader successes, not just sales behaviors. Consider finding creative ways to promote their achievements as they promote your business:
- Deliver anniversary or milestone perks like a team lunch, group experience or loyalty certificate
- Layer “Partner Shoutouts” into your communications to highlight exceptional work
- Roll out a “Champion’s Club” for your top-performers
- Offer digital badges to provide a visual reminder of success
- Nominate exceptional partners for industry awards
- Send performance certificates for training completion, advocacy or referrals
- Create a peer community to elevate each other’s work
The Visibility Effect
Ongoing recognition shows partners you value them beyond the sales they drive. Seeing and elevating their broader contributions triggers a meaningful shift in your partnership.
You go from just another supplier to their most coveted strategic partner.
What Kind of Exclusive Perks Actually Drive Interest?
92% of channel partners say participating in programs positively contributes to their business success. You don’t have to sell your partners on participation, they see it as an opportunity. Instead, show them that participation in your program is their best opportunity for growth, and you can do that with exclusive perks.
Offering special access, experiences and opportunities is how you bring partners deeper into your program. These exclusive benefits don’t fit into a transactional framework, but that’s because they’re more relational than a cyclical rebate or cash payout.
Use special benefits that enable partners to grow their business alongside yours:
- First-look access to test or learn about new seasonal products or developments
- Exclusive skill or role-based training opportunities and workshops
- Invite-only networking events or tradeshows
Giving partners exclusive perks and behind-the-scenes access doesn’t just drive surface-level engagement like other limited rewards, eligibility is a reason to stay active, and partners will strive to keep or unlock new limited benefits.
The Exclusivity Factor
Exclusive access and perks turn simple engagement opportunities that would otherwise be blips in channel partners’ day-to-day into lasting value propositions for your program. For your partners, a secret advantage. For your business, a competitive edge.
Beyond Price: How Do You Build Emotional Depth with Distributors and Contractors?
- Distributors and contractors are busy. They want cost-effective solutions, but even great pricing won’t win them over if the program feels confusing or frustrating. When things are simple, they stay engaged.
According to a Maritz Partner Insights Study:
- 35% of partners said ease of participation was a significant factor in “the best” programs.
- “Very simple sales goals” define their ideal experiences.
- 31% of partners have disengaged from programs due to confusing rules.
Ease matters. For time-strapped tradespeople, the only actionable opportunities are straightforward ones. They need maximum clarity and minimal friction to put any energy toward your program:
- Transparency and fairness: Clear rules for earning rewards, consistent application of the rules and achievable goals that are aligned with their roles and priorities
- Effective and timely communications: Actionable and specific brand updates, progress reminders and information about reward fulfillment, new product launches, early access to demos, training and other relevant news.
- Streamlined user experiences: Effortless portal navigation, easy access to training and program resources, simplified claim submission, available progress tracking and otherwise positive platform experiences.
The Simplicity Advantage
From navigating your platform or submitting claims to viewing sales or following earning rules your program needs to be the path of least resistance. That’s how you cut above competitive pricing and what it takes for partners to get and stay engaged long-term.
How Does Professional Recognition Fuel Performance?
Distributors and contractors take great pride in their skills and professional expertise. That’s why it’s so meaningful when you extend opportunities to boost their qualifications, reputation or know-how. It fuels them and their business’s opportunities.
The Spotlight Effect
Recognizing partners for achievements and unfurling professional development opportunities elevates your entire partnership. You make your program a source of growth and show partners your success is their success too.
Think about recognizing partners in ways that feel personal and memorable, like exclusive event invites, public shout-outs or even a customized certificate that celebrates their impact.
How Does Purpose Play into Channel Loyalty?
HVAC and construction pros don’t just build businesses, they build communities. From powering homes efficiently to building them with public confidence, they care about connecting their personal achievements to these greater purposes.
The Meaningful Motivator
If your program is the one to elevate what really matters to them as professionals, you make stronger connections. You also set your program apart from the competition’s stiff and transactional one that stunt shared growth opportunities.
Going hand in hand with recognition, you can give partners public shoutouts for their impact, from promoting their industry leadership to celebrating their own business’s milestone achievements.
Ready to Go Beyond Price-Competition?
Price-driven switching is a sign of deeper loyalty gaps, not just market competition. As you work to engage your HVAC and construction partners, make sure they feel valued beyond the deals they close.
By tapping into the right strategic and emotional levers, you give partners fewer reasons to switch and more reasons to stay and grow with you.
