updated - June 5, 2020 Friday EDT
Scenario: You have an innovative new eyewear product that you think has the potential to shake up the industry. Once you bring this item to market, your channel partners and customers may be reluctant to purchase (perhaps it's more expensive than your competitors' products, and people are worried that they may not provide the results you promise). So, you provide sales incentives to your channels offering a reward to the partner who sells the most products.
Your B2B channel partner engagement needs to play a critical role in growing your business. That's how you begin to build brand loyalty, that's how to establish relationships both among your partners as well as their customers.
The actions in which you take as a manufacturer or B2B brand to motivate your channel partners to promote your own product over that of another becomes a channel incentive. Hopefully, if you're able to provide a value proposition (that is, a reason why your product should continue to be chosen over its competitors), your brand will continue to be the first choice by your partners and their customers even after the incentive has completed.
Increasing the sales of a struggling product is a typical reason for many brands to consider building a channel incentive program, but it doesn't need to be the only one. There are other benefits of incentives that can lead to positive change, including:
An increase in brand awareness,
Support your channels to place your product in a more attractive spot on their shelves,
Grow the market share within your industry,
Quickly get your product to market by persuading partners to order and stock your product faster, and
Turn your channel partners into brand ambassadors and loyal advocates of your product.
Depending on your business goals as they pertain to various incentives, there are several options you can implement that may work more favorably for your business - and be a better option for your channel partners. As well, although it may be popular to correlate the idea of an incentive as a cash prize, there doesn't need to be a monetary reward linked to your incentive. Here are a few options you can consider:
Rebates. A rebate provides channel partners with a cash-back motive for selling a certain amount of products within a specific time frame. For example, if your channel partners can sell 40% of their stock of your glasses within the first month, you'll provide them with a 10% rebate on their next order.
Staffing Headcount. After your channel partners touch a specific measurable goal, your brand can provide your channel partners with the right training tools (at no cost) or incentive for hiring someone who can directly work on product-placement and marketing your product to their local audience.
Sales Performance Incentive Fund Formulas (SPIFFs). SPIFFs are provided to the sales partners who directly promote your brand to your channel partners and anyone else who may decide to stock your product. They motivate sales representatives to recommend your brand above others in exchange for an incentive or reward.
Regardless of the options you choose for developing channel incentive programs, be sure to take caution when deciding which incentive is best for your brand and to reach your goal. Oftentimes, incentives can work in the short-term but only last as long as the promotion is in effect. It's essential to continue yielding other methods of building your brand loyalty while effectively and permanently changing the behavior and way in which your partners interact with your product/company.
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