Dealer incentive programs are the initiatives taken by businesses to encourage their dealers and distributors to sell more by incentivizing their efforts. A dealership can be considered successful only when it adds value to the business as well as the dealers. Strong dealerships can bring unexpected growth to your business. However, you need to ensure the satisfaction of your dealers and distributor for this.
Even the most dedicated dealers can become less efficient at times. Although they work for their profit, it becomes necessary to encourage them to perform better. To keep them motivated for a longer period, the best way is to incentivize their performances.
You can build healthy competition among all your dealers or plan other types of incentive programs that align with your business.
1. Open-Ended Strategy
Under an open-ended incentive strategy, you can encourage your dealers to sell more than the previous year. Set a sales milestone slightly higher than their last year’s sales quota and offer attractive incentives for achieving their goal. These programs are budget friendly as you only need to reward the dealers on incremental sales.
You can also do it via a plateau-based incentive program. This type of program sets different goals and offers higher incentives for achieving higher goals. For example, set different milestones at 5%, 10%, and 15% of their last year’s sales. The higher milestone they achieve, the better incentives they receive.
2. Closed-Ended Strategy
This strategy is based on the concept of rewarding the highest-performing dealers. You can reward the top performers region-wise, category-wise, and based on other factors. Also, you need to plan whether you are going to offer these incentives monthly, quarterly, half-yearly, or yearly.
Along with the category-wise top performers, you can make your program more exciting by rewarding the overall topmost performers. If you are offering category-wise top performers incentives monthly, you can keep a different incentive scheme for the overall 3-5 top performers of the year.
3. New Product Introduction
When you launch a new product in the market, it becomes difficult to encourage your dealers to sell these new launches. They are already comfortable with selling the older ones and don’t want to complicate their process by learning about a new product. But with a well-planned incentive scheme, you can make your dealers sell these new products in the market.
It can be done by offering higher margins on these products as an introductory benefit. You can reward your dealers in the form of some monetary or non-monetary benefits for achieving a particular number of sales for a newly launched product.
4. Presales Incentives
When you give your dealers a yearly or half-yearly sales target, presales incentives can come in handy to help them stay motivated. While your dealers are focussing only on the yearly goal, you must focus on short-term as well as long-term sales goals. You can allow them to collect a part of their incentive commission in between. Or offer some small non-monetary gifts to remind them of the bigger incentive they can receive after achieving their goal.
5. Training Incentives
Educating and training your dealers is very important as they are the ones to deal with your end users. If they don’t have a thorough understanding of your products/services, they will not be able to explain them to the consumers. It affects them as well as your business.
So, creating dealer education programs and certifications becomes essential for every company, especially when you expect most of your revenue to come through dealers. But how can you make them enrol in these education programs?
Offer monetary incentives or certifications or other types of benefits upon completing an education program. After they complete the certification, you can send them on a fully-funded trip and ask them to visit your offices there. They can learn new things there and implement them after coming back.
6. Product-Specific Programs
When you want to boost sales for a particular product, the best way to do it is to offer additional margins or some incentives on it. Motivate your dealers to sell these products on a priority by offering them additional bonuses or rewards that they value.
However, you might be putting the sales of your other products at risk. So, implement such a scheme only when you need to push the sales for a particular product.
7. Split Incentives
A split incentive program can add excitement to your dealers’ programs and improve dealer productivity. You can ask two or more dealers from different locations to work together and achieve specific sales targets. This can be done by offering double bonuses to both dealers without any differentiation, i.e., each of the two dealers receives equal benefits upon reaching the target.
8. Dealer-Affinity Programs
To make the best-performing dealers valued, you can organise special meetups. Such meetups should provide the dealers with opportunities for networking, learning, and interacting with relevant managers at the company. Dealers from different locations and backgrounds can connect and learn from each other.
9. Sales Pusher Programs
To promote sales during a particular season, you can come up with short-term incentive schemes for your dealers. These schemes can either be target-based or performance-based. Offering bonuses or incentives based on short-term sales goals can be very effective in accelerating sales during a particular period.
10. Database Programs
The importance of customer data needs not be defined as every business is aware of it. This data will help you understand the interests of your customers and recommend products relevant to their needs. As your dealers are connecting directly with your consumers, you can collect customer data only through your dealers.
Incentivizing customer data collection by your dealers would be the best way to do it. The more data they collect, the more rewards they offer. Using your customer data in the right manner can be much more profitable for a business than you might have expected.
Build The Most Effective Dealer Incentive Program
Dealer incentive programs must be simple and offer rewards valued by your dealers. You can reward the dealership or specific employees at the dealership. The brand’s relationship with the dealership plays an important role here. However, rewarding the dealers personally for their business and achievement is also important.
RewardPort can help you create and execute an effective dealer incentives program for your business. RewardPort offers you access to thousands of the latest rewards products and a quick setup for the program.
Frequently Asked Questions: -
Increasing profitability is a sum total of trust, value and costs. While cost reduction is important, it only serves as baseline hygiene, i.e., increasing the survivability of the dealer’s business during hard times. Gaining the trust of the consumers and offering value will ultimately improve the revenue potential for them.
Brand loyalty, defined as repeat purchases of a specific brand based on the perception of higher quality and better service than any competitor, is not price dependent. Companies with high brand loyalty grow revenues 2.5 times faster than their peers in the industry.
Any dealership which meets the minimum qualification criteria should be eligible to participate in the dealer incentive program. For example, regional dealerships, dealerships with a specified minimum turnover, etc., can be the criteria for qualification.