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How to Reach Dealer Incentives Program ROI in 11 Steps

The idea of a reward program is familiar to most people: the program participant performs a desired action (such as purchasing more of a company’s products) and receives a reward for doing so. Dealer incentive programs are unique in that the reward recipients are not employed by you, the manufacturer in the product supply chain. Dealers are either business-owners or employed by distributors who resell your products. This can dilute the connection between your brand and the rewards dealers receive.

B2B sales necessitate go-betweens and middlemen. Every B2B sales channel is different. Dealers either buy from distributors or directly from you, then sell your products to contractors, consumers or businesses. To run an effective dealer incentive program, examine how your unique sales chain operates. Understanding your unique supply chain will help you determine which actions to reward and which kind of program structure will work best for you. Following these guidelines will help you set up an effective dealer incentive program:

Step 1: Outline Specific Objectives

Designate clear, specific objectives—numeric, if possible—for your program. You should have one overarching goal and one or two supportive objectives. The primary objective should track and measure the specific results you’re after, while the secondary objectives should measure specific steps you and your program participants can take to achieve the primary objective.

Step 2: Determine the Top Influencers

“Consolidation” is the name of the game in today’s market. With only a few big-name retailers controlling market share, the number of representatives manufacturers need has shrunk. It has also become more difficult for manufacturers to have sway over the promotional practices of these retail giants. Therefore, it’s essential to target those who have the most clout in your sales channel, then decide exactly what practices they can adopt to help you reach your goals. Promote discounts for your products? Provide consumer data? Incentive programs, like those provided by Loyaltyworks, use online technology to facilitate fast, two-way communication so your participants can be quickly notified about new promotions and submit sales claims to earn rewards, helping you build a consumer database.

Many companies choose to target the specific dealer who actually presents the product to the consumer. The caveat to this is that principal dealers may hesitate to join these types of programs, as it involves an outside party influencing their partner dealers. When you target salespeople, remember to do so in ways that benefit principal dealers as well.

Step 3: Work Out a Mutually Beneficial Strategy

It’s the nature of the supply chain beast that your dealers, distributors, and contractors often work with your competing suppliers. At the end of the day, your channel partners must do what’s best for their consumers and their organization, which may not align with your best interests. What you can do is offer dealers and other channel partners incentive programs that serve their interests as well as your own. Before you launch your incentive program, gather input from your sales channel. Dealers and distributors will often be more receptive to programs that help them distinguish themselves from the competition, improve their salespeople’s product knowledge and training, or increase customer loyalty retention. Loyaltyworks has a variety of program structures and features that can help you configure a program that meets all of these needs.

Step 4: Create the Program’s Structure

Now that you know who your top influencers are and how you can offer them worthwhile rewards, decide what you want them to do. Set specific goals—perhaps for particular products or services—that are attainable and measureable. Keeping your goals simple and realistic will boost performance amongst your middling majority of dealers who can generate the most incremental sales for you. How you structure your program is up to you and your unique objectives. Here are a few common strategies:

  • Reward dealers for selling more products than previous years. This structure is easy to budget, because rewards are based on incremental sales over a previous year, for which you already have the data.
  • Reward top performers in each department, region, or other category. This approach is also easy to budget, but tends to reward those who would have performed well anyway.
  • Set aside a certain percentage per unit of your new-product budge for a program aimed at getting dealers to commit to your product.
  • Give dealers progressively larger rewards for making incremental progress over last year’s quota or performance.
  • Offer dealers rewards for participating in co-op marketing. They can earn points for using co-op money, displaying advertisements or participating in an online training program.
  • Distribute rewards to dealers for selling or buying more of a particular product.
  • Offer rewards for submitting sales claims and other buyer information that can help you build a customer database.
  • Reward dealers for training salespeople—a well-trained sales force is a benefit to you and your dealer both.
  • Treat top sales channel partners to incentive travel events that combine training, engagement, and recreation.

Of course, you can always combine strategies to maximize your program’s effectiveness.

Step 5: Choose an Effective Reward System

The rewards you choose to offer your program participants are as crucial as any other aspect of incentive plans. Rewards must be appealing enough to influence the behavior of your channel partners, but within your budget. Organizations like the Incentive Research Foundation and Incentives magazine report that non-cash rewards like merchandise, travel and gift cards are not only more cost-effective for incentive program administration, they are more motivational for program participants.

Loyaltyworks offers an online shopping catalog with millions of non-cash options, from merchandise like electronics and tools to flight and event tickets. As your participants earn points through your incentive system, they can redeem those points for items in the online catalog. Unlike cash rewards, which tend to be lumped in with funds to pay for gas, food, and bills, non-cash rewards have personal and lasting significance to the participant.

Step 6: Develop a Program Budget

Carefully plan out an incentive program budget that can help you meet your goals cost-effectively. Loyaltyworks uses modular online reward technology in order to reduce the cost and IT involvement of your program’s features. Loyaltyworks’ direct relationships with vendors also results in lower prices for rewards.

Rewarding your top performers is one of the easiest program structures to budget for, since you know you’ll be rewarding a set number of participants, but that means you could end up rewarding them even if you don’t achieve your goals. Consider all the pros and cons when deciding which program structure is right for both your organizational objectives and your wallet.

When developing your budget, remember to allow for the possibility of participants exceeding their goals.

Step 7: Designate Administrative Control Over the Program

As a dealer in a potentially wide-reaching supply chain, you likely work with other business owners and regional managers. Using Organizational Structure tools, you can segment control of the program and assign specific permissions to particular individuals or departments. This way, informed managers can help you track each region or department.

Contact us to set up your dealer incentives program today!

Step 8: Establish the Rules

Think carefully about your program’s rules and lay them out clearly for all participants. It’s not a good idea to change the program stipulations once you’ve already executed it, as you could risk confusing participants and losing their interest. Make sure to start off with relevant, simple, effective rules in the very beginning. These rules should clearly explain all conditions for program participation. Make note of any tax or lottery laws of which participants may need to be aware.

Step 9: Market and Communicate to Your Program Participants

In order to maximize the effectiveness of your program, you will need as many participants as possible. To draw those participants in and ensure a high program adoption rate, you’ll need to market and communicate to those participants effectively. Loyaltyworks programs come with communication packages that help get you started by offering a multichannel communication approach that includes website, print and email mediums. The communication package includes automatic emails that participants receive for triggered events, such as registering into the program or receiving points. Different people prefer to receive communications in different ways, so make sure you offer options that reach as many people as possible.

You’ll want to select a theme for your program and reinforce that theme through kick-off events, sales presentations, and in ongoing program communications, so that the program sticks out in participants’ minds.

Step 10: Track Your Program’s Progress

The advantage that incentive programs have over other marketing efforts is that you can track your results to determine if the program is doing its job and earning you ROI. Loyaltyworks’ reward programs provide free reporting, tracking, and data mining tools that help you measure your program’s progress. You can gather details about your participants and their interaction habits. Information like this helps you narrow down your pain points and develop new, more relevant goals.

Step 11: Evaluate and Evolve

Think of your program as an evolving organism that lives and breathes alongside your company and its changes. Stasis is a death sentence for incentive programs. Goals that were relevant two years ago, last year, or even last quarter, may no longer be pertinent to your salespeople and your organizational needs. Update the program’s promotions and goals regularly to reflect the success you want to see. Reports will help you determine where participation was lacking and why, what promotions were most successful and how your program serves you best.

Incentive Research Foundation findings indicate that incentive programs have the potential to increase performance by up to 44%. That’s only if they are implemented correctly. By following these 11 steps, you ensure you’re doing all you can to help your incentive program reach your goals. Consultative incentive providers like Loyaltyworks can help you fine-tune your incentive program so that it achieves a substantial ROI.

Steve Damerow
CEO of Incentive Solutions and Loyaltyworks