When it comes to offering partner incentives, volume incentive rebates (or VIRs) are considered the most common. These are also usually the most effective, designed to create a mutually beneficial relationship between vendors and distributors. While incentivizing distributors to achieve high sales volumes, vendors remain protected from partners’ over-promising. Often referred to as a business best practice on its own, there are a few strategies to ensure your volume incentive rebate programs run smoothly.
Before we dive into best practices, there are a few other things to consider.
For many distributors, volume incentive rebates make up a substantial portion of their yearly earnings so managing these programs properly is extremely important.
As mentioned in another blog, incentive programs have many faults when not handled properly. Mismanaged programs, especially those with manual processes, frequently result in:
- Significant Delays
- Incorrect Data
- Miscalculations
- Processing Fake Claims
- Budgeting Complications
- Unnecessary Waste
- Human Error
Additionally, insufficient processes lead to unhappy partnerships between distributors and vendors, which can cause issues for future dealings.
When properly managed, Volume Incentive Rebates:
- Drive Engagement & Boost Sales
- Build Trust & Brand Loyalty
While giving you insights to:
- Optimize Product Performance & Promotions
- Monitor Sales Behaviors & Adjust Accordingly
Here are ten Volume Incentive Rebate best practices that will help you achieve your sales goals while keeping your programs manageable.
10 Volume Incentive Rebate Strategies & Best Practices
1. Establish Clear Goals & Objectives
Whether promoting older products or launching new ones, volume rebates can be a great incentive to help you reach your goals. Without a clear strategy, volume rebates can become a larger discount to your partners than anticipated. Plan ahead of time to determine specific growth goals, payment schedules, promotion length, sales caps, and rewards once goals are met. A well-defined plan will help avoid confusion and lead to success. The key here is to identify your goals early so that you can make necessary adjustments and refine them to ensure success for both you and your partners.
2. Structure Based On Channel Segments
Volume rebates are not a “one-size-fits-all” solution. What works for one partner or channel segment rarely works for another. For example, smaller partners may not be able to reach the same goals as larger ones, while larger partners may quickly exceed smaller goals resulting in higher unbudgeted payouts. Figure out which partners belong to which segment, then create achievable goals and strategies for each to produce optimal results.
3. Keep Things Simple
As with any other program, rules and policies that are too complicated or require too many behaviors often become too difficult to manage and track. When regulations are too complex, partners are also unlikely to participate. Your partners need to easily understand what you are asking, what it takes to reach those goals, and what they get in return. Additionally, over-complicating your program makes it harder for your staff to manage. When there are too many rules to keep track of, it’s easy to make mistakes, often leading to higher administration costs. Keep your programs simple for your partners, employees, and overall program success.
4. Vary Incentive Tactics
With volume incentive rebates, it is best to keep things fresh. Keep the duration short (preferably less than a year), vary your award amounts, and don’t use the same programs over and over. Using the same programs year after year tends to become an expectation. When partners assume that the program will always be there, they may end up feeling entitled and shifting their behaviors. Potentially even getting upset and causing issues if the programs were to go away. In order to maintain a sense of desire and increase partner engagement, it is best to vary tactics for long-lasting results and growth.
5. Specify How You Plan To Pay
If you plan to offer multiple incentive programs at once or as part of the same product/transaction, be sure to communicate how these plans will be paid out as a whole. You may want to consider paying on net price to ensure that you’re only providing rewards to the paid portions. Or, you may find it necessary to avoid multiple program payments. Either way, it is critical to specify how you plan to pay and make sure it’s clearly communicated so there are no surprises. Then once you decide how you intend to pay, pick a payment schedule and stick to it.
6. Frequently Update Data
Whether you provide a portal or frequent progress updates, keeping your partners informed is key to its overall success. Giving them updates not only helps keep them engaged but allows you to keep track of their performance so you know where to make adjustments.
7. Provide Effective Communication
Throughout the entire VIR program, it is crucial to communicate. Communicate to your partners. Communicate to your team. Everyone needs to be on the same page every step of the way. With incentive program management, there is no such thing as over-communication. Use every communication method necessary to ensure you’re conveying all program rules and regulations. Good communication also helps to build trust Fbetween vendors and partners.
8. Track & Analyze
Tracking your program performance helps you understand your channel, what’s working and what isn’t, and provides you with an opportunity to adjust. Any program without tracking becomes pointless. If you do not know how your programs are doing, you cannot accurately determine your ROI. Generally leading to over or underspent sales/marketing dollars and missing out on business opportunities.
9. Be Agile & Adapt
Successful and efficient volume incentive programs require agility. Companies that are not willing to make changes often lose partner interest and brand trust. You must be willing to adapt and adjust quickly when programs are not working.
10. Plan Ahead
Use your current campaigns as a guide for next year. Q4 is the time to start creating budgets and setting plans to execute. Vary your tactics to keep interests high but plan per your more successful campaigns. These will give you a baseline on what will work going forward.
Going Beyond With Computer Market Research
Ensure success for your volume rebate incentive programs by following these 10 best practices and finding a tool that allows you to do it all. CMR’s automation tools eliminate challenges from manual processes while giving you a platform to manage and track progress. Additionally, offering channel partners visibility into sales while increasing engagement.
Request a demo today to see how CMR’s automation tools can work for you.
Or, contact a CMR Rep with any questions at (702) 247-1120 or info@computermarketresearch.com.