What a difference a year makes. For a while now, wholesale distributors have faced market changes that impacted and transformed their business. But the past nine months have put further strain on companies with supply chain disruptions, threats of disintermediation, and tariff uncertainties. Their customers have been affected as well, and they now have higher expectations and a more savvy approach to buying products and services. In this changing market, can wholesale distributors retain customer loyalty while protecting profits and remaining competitive in the market?
One way companies address this challenge is by offering incentives or rebates to their customers. This isn’t a new idea. These kinds of programs have been used to boost sales and retain customers for a long time. But with more buying options available to customers, distributors need to adapt their offers to make them more attractive while driving sales and winning a share of the customer’s wallet. Another article in Industrial Distribution further discusses how defined, measurable programs can be used to maintain your loyal customer base.
Building successful programs isn’t easy. They need to provide value for the customer, but also need to meet company goals including expense and profit. Here are a few things to consider when creating or evaluating your incentive and rebate programs.
Measure to Manage
No customer incentive program is designed to fail. But have you identified clear goals and objectives? How will you measure them? Measuring specific goals helps you assess the impact of your programs and adjust them, if needed, to achieve the best results. This is especially important if they’re are part of a larger strategy. Analytical tools can also help to ensure that one program isn’t having a negative effect on another.
Understand Customer Value
How do customers perceive your programs? It’s helpful to monitor customer experience and take every opportunity to improve. This can include adjusting a current program, or designing new programs, even targeting specific customer segments. Understanding what is important to customers can help programs be successful.
Once you’ve measured your programs and understand your customer’s view, then what? Incentive and rebate programs can be very complex and hard to manage – especially if you’re using a manual spreadsheet process. By automating parts of the process – with intelligent technologies, for example – programs can be modeled, analyzed and optimized to ensure they’re both attractive to customers and profitable for the company.
Bottom line: effectively and efficiently managing customer programs can protect your valuable customer base and your company profits.
Lynn Lupo is a Solution Manager with the SAP Wholesale Distribution Industry Business Unit. Leveraging her industry expertise, she supports go-to-market and enablement efforts both in- and outside SAP. Lynn is also a point of contact with the Americas' SAP Users' Group (ASUG), supporting customers and industry initiatives. She has worked at SAP for over 20 years, honing her skills in communication, enablement and thought leadership. Lynn holds a BFA in Music/Theater from Illinois Wesleyan University.