Top 10 Ways to Improve Your Incentive Program—and Mistakes to Avoid
Dealer incentive programs are only as good as the time, insight, and strategy invested in them prior to implementation. If you manage your program the right way, it will help you increase sales and promote loyalty among your dealer principles, retail sales associates (RSAs) and installers. But, as with any other channel marketing strategy, no one trick works like magic to make incentive programs effective.
The inner workings of your incentive program should depend on your company’s unique goals and interests. Maybe you want to motivate dealers to sell more new, high-margin products. Or maybe you want to train and engage your most valued dealers in order to make it easier for them to do business with you. There are a variety of tools and techniques you can use to reach your specific, desired outcome.
Follow these top 10 ways to improve your incentive program and you’re golden.
Top 10 ways to improve your incentive program:
- Set Specific Goals
- Set Clear Rules
- Ask Your Dealers or RSAs for Feedback
- Avoid Only Rewarding Top Performers
- Engage Your Audience
- Not Adjusting Rewards According to Risk Aversion
- Engage the Competitive Instinct
- Offer Versatile Rewards
- Collect and Utilize Data on Your Program
- Measure Success in More Than Revenue
The more specific your incentive program goals are, the better it will be. Vague goals like “sell more” don’t help you much. Ask yourself questions like…
- What, exactly, do you need to sell more of? High-margin items? Surplus inventory?
- Who do you want to sell more to? Dealers in a particular region, perhaps?
- How are you defining your incentive program’s success? An increase of sales by 10% by the end of the year? Moving out old inventory?
Lay out S.M.A.R.T (specific, measureable, attainable, relevant, timely) goals to reach a clear and informed objective. Then you’ll have a solid foundation to build your incentive program on.
Make the rules of your program clear right from the beginning. Who’s invited to participate? If you’re running sales incentive promotions, which products qualify, and how will you validate sales claims? Don’t leave room for people to cheat the system and try to reduce dealers’ and RSAs’ ability to leverage unfair advantages. Hold everyone to the same standard.
Avoid giving the impression that your incentive program and its objectives come from “on high.” Your dealers, RSAs and installers will be more inclined to be active in your program if it feels like a team effort, so solicit their input and feedback. Ask them if they find the program’s goals reasonable and its rewards worthwhile. This creates emotional buy-in, ensuring those participating are engaged and invested. They’ll feel instrumental to your program’s success, which makes that much more rewarding.
Particularly for sales incentive programs, only targeting top performers can be a huge missed opportunity. After all, only a small percentage of your dealers or RSAs is made up of superstar performers. The majority are likely average in terms of their value to you, but motivating this group can have a much greater impact on your business than motivating those in the top tier. According to CEB, a best practice insight and technology company, if businesses increase both high and middle salespeople’s performances by five percent, the middle group earns the business a revenue increase 60% higher than top performers do. Make sure you’re not overlooking the group that has the most room to grow.
A lack of promotion and marketing can extinguish even the most thoroughly planned-out channel incentives program. Know how your dealers or RSAs prefer to be communicated to—it’s okay to ask them. Do they prefer emails or flyers? Are they surgically attached to their smartphones? Find out where their attention is and get your program’s value proposition in front of them. Use an incentive program provider that offers exciting, engaging, contemporary communicating options such as texting and mobile apps. It’s easier than ever to market your incentive program, so use all the communication tools available to you.
Incentive programs are agile marketing tools, so take advantage of their flexibility by adjusting your reward payout according to your risk aversion state. During times when your organization or department is risk averse, consider increasing the number of promotion winners but spreading your incentive budget a little thinner. If risk-tolerance is higher, reward fewer earners but pull out the stops and offer head-turning rewards with greater value. Adjusting reward payout according to your financial situation allows you to reap the benefits of channel incentives at all times.
Never underestimate how powerful a motivator competitive instinct can be—it’s Mother Nature’s 100% organic driver. If you’re running sales promotions as part of your incentive program, consider pitting top dealers or RSAs against each other, for example. Display a public leaderboard that tracks top performers, keeping engagement and excitement levels high.
Versatile incentive programs, such as those based on online reward points, allow you to deliver rewards that match the value of your resellers’ efforts. Let’s say a dealer’s RSA worked very hard negotiating a sale for weeks with a potential customer, poring over the pros and cons of different materials, eventually convincing them that a big investment is worth it. Now imagine this RSA receives the same reward amount as an RSA who sold a few extra, low-margin products by chance. You can bet the first RSA will feel that all their hard work wasn’t that appreciated or worth being proud of. Reward that first RSA with enough points to redeem them for a gigantic, 4K HDTV or a cruise for two.
Maybe in the future, we’ll be able to hook incentive programs directly up to your brain so you can instantly update the parameters and objectives. But, with current technology, channel incentive programs can’t read minds. They must be monitored and regularly updated to reflect your ever-evolving business needs. Examining program analytics such as engagement activity reports and sales promotion results will help you determine how successful your program is, and what changes you should consider making in the future. The good news is, the longer you operate your incentive program, the more data you can collect to make it even better.
It’s important for your RSA or dealer incentive program to achieve financial ROI, but financial gain isn’t the only indicator of success. You can offer rewards for a variety of behaviors, such as participating in product education training, providing feedback or submitting customer surveys. You might want to increase your revenue flow and shorten product delivery time by offering your dealers rewards for placing orders through your online portal. You can use your program to improve your business in virtually endless ways.
When dealer incentive programs fail, it usually comes down to impatience, an approach that’s either too simplified or too complex, or a basic misunderstanding of how incentive programs actually work. Being cautious of these 10 mistakes will help you avoid wasting your time on a program that doesn’t do its job. As long as you put in the effort to keep your dealer incentive program relevant to your organization, it will become an increasingly valuable marketing tool.