4 Co-op Marketing Incentive Program Mistakes Even the Best Manufacturers Make
By providing a Co-op marketing incentive program that enhances profitability, training, and support, you are able to help generate new opportunities for business growth.
Ever hear that old saying “you can’t have your cake and eat it too”? If I were to guess, I’m sure you have. In many regards, these are wise and wonderful words to ponder.
But as brilliantly insightful as those words stand true, they serve no relevance regarding Co-op (Cooperative Marketing Funds). That’s because when a manufacturer implements a Co-op marketing incentive program for its channel partners, a two-way street of opportunity and success, surfaces.
Partners deploy a hefty amount of elbow grease into marketing their brands. So, when channel manufacturers create a win-win-situation when they reward their partners’ efforts. Manufacturers reach a broader scale audience through co-branded association and can spend less money on in-house advertising efforts, while channel partners can build a stronger marketing campaign, increase sales and extend brand awareness.
Equally Shared Benefits of a Co-op Marketing Incentive Program (Between Manufacturers and Channel Partners)
- Reduced marketing expenses
- Increased awareness of product and brand
- Increased brand loyalty between product and brand
- Fortified marketing strategies
- Increased ROI
It’s evidently clear that when implemented correctly, Co-op marketing incentive program works for all parties involved. But for various reasons, channel partners don’t seem to be taking advantage of these extremely valuable incentives due to a “lack of participation.” Channel manufacturers reportedly spend 50 billion dollars on Co-op programs each year for distributors, resellers, and retailers—but only a small percentage actually retain the money that’s available.
Why is that?
Why is such a fruitful, effective and simple incentive so difficult for channel partners to “reap the benefits of?”
Here Are The 4 Top Reasons Why Your Co-op Program is Failing:
1.) Too Many Regulations, Too Much Jargon:
Like you, your channel partners are busy. And because some of the terminologies may be foreign to their vocabulary—confusion rears its ugly head. Partners tune-out when there are confusions on program qualifications.
2.) “Open-to-Interpretation” Guidelines:
On the contrary to too many regulations, program rules which are not descriptive enough or present objective scenarios instead of subjective guidelines are equally damaging.
As a manufacturer, you are well-versed in the subject matter of incentive programs. However, your channel partners might not know one darn thing about them. Measuring sales, allocating funds, analyzing metrics and simply understanding the process of the sales funnel could well be the biggest hurdle when deploying your Co-op marketing campaign.
4.) Traditional Practices
Managing Co-op funds via traditional methods such as Excel spreadsheets, chicken scratch reports, emails, and phone calls can easily manifest into chaos.
A Video Guide for Starting a Co-op Marketing Incentive Program
Welcome to your guide for starting a Co-op incentive program. We have created a list of 5 questions you will need to answer before starting your program.
3 Things you should know before starting your Co-op Incentive program
1.) How Will Your Funds Be Awarded?
There are 2 basic choices you have when answering this question, either Co-op incentive program or market development funds. A Co-op incentive program is money accrued based on a percentage of sales while market development funds are a set amount of money decided on by the marketing team. An advantage of choosing a market development funds program is it will be less burdensome for the partner, however, a Co-op incentive program will offer a clearer description for both the partner and the vendor.
2.) What Is the Duration of Time Over When and Which Accruals Are Accumulated?
Usually, this falls on a monthly or quarterly basis, but it can also be as detailed as a 3-month campaign. Management will need to decide the best way to generate sales.
Another important question to ask yourself before starting your Co-op incentive program is what are the methods to which accruals or fund allocation is provided? Most of the time this will be a claim request. If you are trying to do this with Excel, there can be many problems including no reminders for partners or vendors when funds are about to expire. A manual Co-op incentive program MDF process can also result in a channel partner not knowing how much they have to spend. Both of these reasons are why billions (yes, with a B) of Co-op incentive and MDF dollars get left on the table each year.
3.) How Should Documents Be Included in Co-op Claims?
The main thing you will want to collect as a vendor is the invoice of activity such as a trade show for $10,000. Once again, if you are not using an automated co-op solution or MDF solution for this process you may be stuck using fax or email to submit and receive documents. This can be an exhausting process as there can be missing data. If you are using an automated process, a partner can scan the invoice and attach it to the claim. The automated co-op marketing system does not allow you to submit a claim unless the invoice is attached.
4.) Who Should Be Notified in the Approval Chain?
The last question you need to ask yourself is who should get notified during each step in the approval chain. Generally, it will go from
- Prior Approval Requests
- Claim Requests
Your Co-op incentive program needs to have some business rules in place in order to decide what requests get sent to who.
Some general examples include:
- One person evaluates requests under $5,000
- A different person (usually a manager) evaluates requests over $5,0000
- Another person will evaluate requests when there are no funds available.
This can be a very labor-intensive process trying to figure out who approves which request.
When automating the processing of your Co-op incentive program, you can set up workflow rules that automatically send the request to the right person. Once it is approved or denied, an email is automatically sent to the partner and creates an audit trail.
Improve your Co-op Channel Incentive Programs through Automated Technology
Founded in 1984, Computer Market Research (CMR) brings over 30 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 Co-op funds. Our cost-effective SaaS application is the perfect tool for any business looking to strengthen their Co-op marketing strategy with channel partners through innovative solutions, which converts data into intelligence. Free yourself from the constant headaches of “proof-of-performance” and track your funds through tangible, quantifiable information.