Vendor Sponsored Distributor Incentive Programs
- by Robert Savellis
- Jul 13, 2016
- 2 min read
A two sided perspective
Having worked for both vendors and distributors many of my customers ask me for my thoughts on vendor sponsored incentive programs with their distribution partners. IT industry vendors for years have used incentive programs to influence distribution sales staff to recommend their product over a competitors. My answer? There is a place for incentive programs, but, the program must be designed with distribution management consultation to minimise conflict. Secondly, the incentive program must be an element of an overall campaign to be most effective. Many vendors have a one program fits all mentality that misses the mark in most distribution organisations.
In identifying the reasons why Incentive Programs are not always effective it is important to understand the objectives of each partner. The main objectives of each partner are as follows:
The Distributor - The executive within the distribution organisation have the following objectives that relate to the incentive program:
Sales managers directing staff not vendors.
Sell through aged stock.
Achieve revenue and margin targets.
Sell stock that attracts more margin.
Spread sales across all vendors.
Receive target rebates.
The vendor - The vendors objective:
Encourage sales staff to convert other vendors product sales to theirs.
Encourage sales staff to speak about their products to the distributors customer base.
Encourage the distributor to purchase more stock.
Develop product evangelists or product specialists within the distributors sales teams.
Sell through aged stock within the vendors warehouses.
Clear end of life stock.
Launch product.
To ensure an effective incentive program both partners need to discuss and agree to the purpose, processes and implementation of the program.
Some tips on designing a successful incentive program:
Work with your partner to understand their requirements and negotiate a mutual beneficial agreement.
Include the incentive program as an element of your overall strategy.
Do not make the program too general.
Do not run the incentive program for too long or too often.
Launch the program, with sales and marketing management present to display their buy-in.
Make sure there is clarity in the messaging and the programs terms and conditions.
Do not make it difficult for sales staff to submit their sales data, where possible use the distributors internal data.
Work with marketing to create internal sales collateral even if you provide a template as a start.
Always provide updates to the sales team throughout the program.
Prior to the start date makes sure stock is available and staff have received their product training.
Successful people surround themselves with the right people, call Productive Sales and Marketing today on 02 95233269 or visit our website and complete the contact form www.productivesm.com.au
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