Understanding Ship and Debit/Channel Incentive Rebate
If structured correctly, the channel market is like playing dominos, seamlessly weaving its way towards its enviable end with consistency and ease. Unfortunately, creating this type of transaction within your channel industry isn’t quite as simple.
The business cycle is a complex landscape—intricate to its core, entrenched with risk, doubt and the very feasible threat of failure. But perhaps there is a way to minimize defeat and maximize progression without losing valuable clients along the way, and transparency is one of the best ways to achieve it.
Establishing transparency within your B2B hierarchy presents a plethora of opportunity. After all, inside a business are people, and people, like to be treated like…people.
One the most effective strategies for developing a consistent ‘business culture’ within your industry is to provide a structured rebate program. Many, if not all, B2B incentive programs lose their intended value for a number of reasons, but we won’t bore you with the specifics as to why.
A New Form of Channel Management
Enter the ship and debit process, a surprisingly unfamiliar, yet extremely profitable B2B rebate program where a supplier credits its distributing partners’ marginal loss due to a competitive situation, such as competitor pricing or market saturation. If the supplier’s “into stock” price is sold at a higher margin than its distributor, the supplier covers the marginal difference via a submitted claim.
From there, the claim is either deferred or accepted based on prearranged guidelines made specific by the manufacturer.
Greatest Challenges: Ship and Debit Process
Now, on the surface, the process may seem simple enough, but when you take a closer look, the “approval” procedure is highly complex, requiring precise calculations, which often leads to disputed invoices, erroneous rebates, loss of income, loss of channel partners and an increase in work-inefficiency.
The less structured a manufacture’s ship and debit program is, the less likely your ‘business channel model’ will be transparent, and/or overall successful.
Managing, employing and ensuring compliance regarding a ship and debit claim is a multifaceted procedure, which necessitates a sufficient amount of time and resources to be allocated concerning each claim. It’s virtually impossible to accurately measure claim request(s) if a business opts to use a manual process.
Essentially, the only strategy to successfully implement a ship and debit incentive program into a manufacturing business is to utilize an automated-streamlined platform, which provides manufacturers with structure and flexibility over claim guidelines. Additionally, implementing an automated system allows you to analyze (real-time) data of your industry, track sales, establish tangible pricing requirements and consistency within your business channel.
According to Steve Raymund, former CEO and chairman of Tech Data, one of (if not the biggest) issues with the ship and debit model is that channel partners have come to “expect discounts” at the latest possible moment. These last-minute claims create a negative ripple effect, further delaying the price to the end-customer or point of sale (POS) transaction as well as slowing down production and allocating more time/money/energy/resources to manage special pricing agreements (SPA).
Greatest Benefits: Ship and Debit Process
Ultimately, and if deployed correctly, the ship and debit model can advance business operations dramatically. The mutual benefits of this type of rebate platform allow Consumer demands and special pricing agreements enviably interchange, which is why employing a ‘closed-loop’ solution to the unpredictability of the marketplace is so valuable.
Core Strengths of the Ship and Debit
- Increase Productivity
- Establish transparent relationship with channel partner(s)
- Control costs
- Develop consistent business process (internationally)
Leverage the Power of Automation to Rid your Team of ‘Channel Partner Ambiguity’
Computer Market Research (CMR) brings 32 years of experience into the indirect channel sales industry. Through our state-of-the-art automated software, businesses can amplify their B2B marketing efforts via a clear and concise platform that robustly and intuitively assists the managerial process of channel partnerships. From optimizing trade promotions to customizing unique program guidelines, from building effective distribution channels to establishing transparent and objective B2B communication—CMR helps businesses maximize their marketing efforts with distributing partners that is built around a common goal of success. Our cost-effective SaaS application is the perfect tool for any business looking to strengthen their bond with channel partners through innovative solutions, which converts data into intelligence.