If you are in the tire business, whether in manufacturing or distribution, there is a good chance that you've spent some time hanging around car dealerships. A car dealership is a wonderful place to watch how sales incentives can change the course of a purchase. Consumers come to the dealership with a need for a car, but often what they are actually shopping aroundfor is either the right salesperson or the right payment to help them fulfill that need.
For the right salesperson, the way to do a great job of selling is to pay close attention to what the customer says and does, then sort out which vehicle is going to truly best suit the customer's needs.
So it goes too with channel marketing incentives – technology has given us the power and scale to provide programs customized right down to the dealer level. As a channel marketer, you now have the ability to show your partners that you care about them by taking the time to create programs that are harmonious with how they operate and tailor your incentives offerings to their particular needs. This helps in building engagement between your brand and your partners.
Consumer rebate programs have become a great levelling tool, helping tire brands protect their retailers in all sorts of different marketplaces by offering the customer a cash incentive for choosing the brand's product at retail. Just as not every brand and not every customer are the same however, a single rebate or spiff program is not going to be equally effective for driving sales at all retailers in all marketplaces.
Here are three factors to keep in mind when customizing your programs for maximum effect:
What Is the Price Sensitivity of the Category?
The world is changing; there is no sense fighting that. A major factor affecting manufacturers and retailers alike is inexpensive offshore goods changing the competitive landscape in so many marketplaces. Couple this with the proliferation of mega-retailers such as Wal-Mart and Costco and you have some seriously powerful forces helping to dictate the price of products in a given category. In fact, in recent times even brands that have historically been considered premium or super-premium have started offering special makeup units (SMUs) for mega-retailers in order to access the sales volume associated with selling to these companies. Despite the fact that you may be offering a product that is incredibly featured up for the price bracket it is in, this tactic can cause consumer confusion at point of sale where the brand equity of the previously super-premium brand may factor more heavily into their decision.
Many marketplaces are tiered when it comes to pricing and companies have become used to making sure they have a solid offering for each price tier, but even then you may sometimes need to compete on price to achieve your objectives at retail. A rebate is most useful to your retailers when it helps them compete on price without having to compromise their own margin.
What Is the Social Graph of Each Marketplace?
By now, you have probably invested loads of resources into figuring out who the end consumer is for your product. Considering buyer personas is a potent way to refine your offering and a bit of searching around the Internet can usually provide you some high level data describing the makeup of your partners' marketplaces. Since you're taking the time to create a custom program for your partners, why not bump data on your buyer personas against broad census statistics defining the people who are most likely to be engaging with you rebate program? The less variance from your ideal buyer, the less friction your retailers are likely to have when it's time to make the sale. Conversely, the greater the variance between the demographic data and your ideal buyer, the more you can tinker with your program to make it appealing to the folks and bridge that gap. Then test, measure and repeat.
How Are the Salespeople Being Compensated?
If you are marketing to your channels and you don't have any idea what sort of comp plan their salespeople are on, it makes it tougher to build effective incentives. Knowing how the front line sales reps are being compensated is important in how it guides effective rebate campaign design. My company has had the good fortune to interview many retail sales associates throughout North America and the UK, specifically discussing the areas of sales incentives and compensation. From anecdotal data based on the hundreds of calls we answer each day at 360, we know that some people are counting on sales spiffs to make up around 60-70% of their income. In the course of further interviews in my own travels, I have encountered people who make everything from no spiffs whatsoever to those who say spiffs make up a whopping 90% of their income. To understand how the front line sellers are being compensated is to understand what will best incent them to action.
In cases where the salespeople do not have access to manufacturer spiffs, they are going to view a rebate program most favourably as a tool for getting a deal done. Likewise, if they receive no spiffs but are paid commission, they are going to love your rebate program even more as it helps them protect the stores' margin, which statistically they are accessing around 25% of for their commissions.
The opposite is true in a situation where sales associates earn and even expect spiffs; a consumer rebate program on its own is going to fall to the margins as the salespeople focus on selling brands who are more in touch with their needs.
360 has published an infographic titled 10 Ways Technology Can Enable Customer Loyalty. If you are reading this article, chances are you already care a lot about doing a great job of creating effective sales incentives and so I highly recommend having a look at the infographic for inspiration to help you build more engagement as your continue to refine your programs and create new ones.
A lifelong technology entrepreneur, Jason Atkins is the founder and CEO of 360insights. 360insights is the world's first Channel Success Platform, allowing brands to run spiffs, rebates, co-op/MDF, and sell-through allowances all processed and paid with 100% audit and powerful analytics to predict what to do next. For more information, visit: http://www.360insights.com.