How to Reach Dealer Incentives Program ROI in 11 Steps

by: Luke Kreitner November 19, 2018

Reward programs are familiar to most people (think Starbucks Rewards). But their close cousin - a dealer incentives program - isn't. Not only are most people not familiar with them, but the people who need them most also aren't sure how to reach an ROI using one. There's a lot of reasons why reaching ROI with your dealer incentives program may be hard, but it starts with trying to connect with your dealers.

Because most dealers are either business-owners or are employees of your distributors, they don't have you at the top of their mind. This creates a disconnect between your brand and their rewards, weakening the relationship.

B2B sales have always called for middlemen and go-betweens (though some argue that is ending). And while middlemen are common in B2B sales, every B2B sales channel is different. So to run a profitable dealer incentives program, look first to how your unique sales chain works. Understanding that puts you in the right place to pinpoint what your program needs to reach ROI. That includes deciding which actions to reward and how to structure your program.

While the reasons why dealer incentive programs are difficult to manage is simple, the fix isn't. So here are 11 ways you can drive your dealer incentives program to achieve ROI:

Step 1: Focus on your dealer incentives program's goals.

Outline one clear, specific goal for your dealer incentives program. This goal should be a number and backed up by solid data (as in, is it realistic for your industry?). For example, your program's goal may be to increase warranty registrations by 50% with dealers in a certain region in the U.S. This example goal is clear, specific, and has a numerical target to hit. Your program goal should mirror it.

Want more than one goal for your program? That's possible. So long as you limit the number of goals to two or less, you won't need to worry about juggling too many. Just remember - for every goal you set, have 1-2 supporting objectives. The first objective should measure specific steps to track and measure results throughout the program's life. The second should focus on actions you and your participants can take to meet the goal.

Step 2: Figure out who your top influencers are and target them.

In today's market, it's all about consolidation and the effects of it. A few big retailers control market share, leaving manufacturers few representatives to tap into. As a result, it's gotten increasingly more difficult for manufacturers to compete against retail giant prices and promotional practices. What can modern manufacturers do to become more competitive in this climate?

One thing manufacturers can do is target companies or people in their sales channel. These influencers help you reach your goals when you give the reason to do so, including exchanging customer data with you and promoting your product discounts. Adopt an incentive program to show your sales channel influencers what's in it for them. Some of the most effective incentive programs are online and use incentive technology to communicate with influencers, make it easy for them to submit sales claims, and support your consumer database-building efforts.

Many manufacturers target dealers known for selling their product to the end-customer. That's all nice and fine. But the caveat is this - principal dealers hesitate to join dealer incentive programs. For principals, participating in these programs means partner dealers could be swayed by an outside party. That outside party? That's you. So to keep down the confusion, do target salespeople in a way that benefits principals, too.

Step 3: Create a mutually beneficial incentive strategy

It's completely normal that your contractors, dealers, and distributors work with your competition. Your channel partners must do what’s best for them and their customers. Usually, their needs won't align with your best interests. So how can you get your dealers on the same page without asking them to work against their interests? Offer dealers and incentive programs that serve their interests and your own. That way, it's a win-win for everyone.

Before launching your dealer incentive program, collect information from your sales channel. What are your dealers most responsive to? What do they want? Your distributors and dealers will be more receptive to programs that help them distinguish themselves from the competition, improve their salespeople’s product knowledge, or increase customer loyalty retention.

Step 4: Structure your dealer incentives program

Once you know who your top influencers are and how you can offer them better rewards, decide what you want them to do. Set specific goals that are attainable and measurable.  Keep your goals simple and realistic. This will boost performance with your middle majority of dealers who generate the most incremental sales for you. Overall, how you structure your program is up to you and your unique goals. Here are some common strategies you can use to boost dealer engagement:

  • Reward dealers for selling more product every year. This structure is a simple one and is easy to budget. Why? Incentive rewards are based on incremental sales over a previous year. And you'll already have this data.
  • Reward top performers in each department, region, or other category. This approach is also easy to budget, has limitations. It rewards people who would've gotten rewards anyway.
  • Set aside a certain percentage per unit of your new product. With a percentage set aside, you can get dealers to commit to selling 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 win-win for you and your dealer.
  • Treat top sales channel partners to incentive travel events that combine training, engagement, and recreation.

Just as a note, you can always combine the above strategies to maximize your program’s effectiveness.

Interested in a dealer incentive program?

CALCULATE YOUR ROI!

Step 5: Choose an effective reward system

The rewards you offer your dealers just as important as other aspects of your incentive program. Rewards appeal to your channel partners. Appealing rewards influence your dealers' behavior - all within your budget. The Incentive Research Foundation and Incentives Magazine report that non-cash rewards are more cost-effective for program admins and more motivational for participants. One of the easiest ways to reward your dealers is to offer them an online shopping catalog with millions of non-cash options. Those non-cash rewards include the hottest merchandise, flights, event tickets and more.

Step 6: Develop a budget for your dealer incentives program

This part is critical. It's important that you plan out your incentive program budget in a way that meets your goals, but keeps costs down. You can do this with online reward technology that helps you track costs and is pre-made, reducing your IT overhead to nearly nothing.

For example, rewarding your top performers makes structuring your program simple. It's easy to budget for since you know you'll be rewarding a set number of performers. The downside to this structure and budget is that you may not reach your goals. To boost your chances of meeting your goal with a dealer incentive program, add in a set number of average performers. So consider the pros and cons when deciding structure, budget and goals.

On the other hand, it's always possible your participants could exceed your goals.

Step 7: Decide who owns the administrative parts of your incentive program

You likely work with many companies in different regions or districts. Even more, you may work with many business owners and regional managers. With online incentive technology that organizes program control by department, region or group, you no longer have to worry about running an administration-heavy program. Using these organizational tools and software, you can segment control of your program and assign specific permissions to different departments or individuals. This way, informed managers can help you track each region or department.

Step 8: Set your incentive program rules

Think thoroughly through your program's rules before putting them in place. Are they too complex for participants to understand? If so, simplify your dealer incentives program rules for maximum engagement. As for changing rules later, it's generally not a good idea. Switching up the rules of your incentive program may upset participants, causing them to lose interest in your program.  Be aware that your program could be affected by local tax and lottery laws.

Step 9: Market and communicate to your incentive program participants

Maximize the effectiveness of your program by bringing in as many participants as possible. To ensure a high program participation rate, you will need to market and communicate to those participants effectively. Effectively marketing to and communicating with those dealers means having some of the work being done for you. A communications package from your incentive management company helps you set up your website, emails, print mailers and more. Some communication packages include automatic emails that dealers get for triggered events. People prefer to get communications in different ways, so make sure you offer options that reach as many people as possible.

Select a theme for your program and reinforce it with kick-off contests, sales presentations, and in ongoing program communications. This way, the program sticks out in participants’ minds.

Step 10: Track your incentive program’s progress

One advantage dealer incentives programs have over other marketing efforts is this - programs can track your results and earn ROI. Incentive Solutions’ reward programs provide free reporting, tracking, and data mining tools that help you measure your program’s progress. With our reward technology, you can gather details about your participants and their interaction habits. This data helps you narrow down your pain points and develop more relevant goals.

Step 11: Evaluate and evolve with your dealer incentives program

Your program should be ever-evolving as your needs or your participants' needs change. So think of it as an evolving organism that lives alongside your company and its changes. For incentive programs, stasis is a death sentence. Goals that were necessary two years ago, or even last quarter, may no longer be what your company or dealers want. So update your program’s promotions and goals regularly to mirror the results you want to see. This is why data and program reports are so important. Reports help you determine where participation is lacking and why, what promotions were most successful and how your program serves you best.

Incentive Research Foundation findings show that incentive programs can increase performance by up to 44% when implemented correctly. With these 11 steps, you gain an insider perspective on how to help your incentive program reach your goals. Consultative incentive providers like Incentive Solutions can help you fine-tune your incentive program so that it reaches ROI.


About Luke Kreitner

Luke Kreitner is the VP of Sales at Incentive Solutions, an Atlanta-based incentive company that specializes in helping B2B businesses accelerate growth, increase sales, motivate channel partners and retain B2B customers.