Published on 2019-05-22

As distribution channels become less centralized, manufacturers must find new ways to build stronger relationships with channel partners.

May 20, 2019

By Mark Herbert, President and CEO, Incentive Solutions

dealer incentive solutionsWhile cheaper transportation and the rise of e-commerce have brought new opportunities to manufacturers, they have also paved the way for more competition. Logistics are no longer a limitation to entering new markets, and manufacturers have found themselves competing for market space with online mega-retailers, offshore manufacturers and other competitors.

Dealers and other channel partners have more options than ever, often at attractive price points. If traditional manufacturers can’t compete on price, as is often the case, what can they use to differentiate themselves and influence the people who influence the end-consumer?

Creating a New Value Proposition

Price point is a definite consideration for dealers and other B2B customers, but it’s not the only factor at play. According to the Harvard Business Review, as manufacturers’ offerings become more commoditized, other, more subjective factors begin to take a more prominent role in influencing business-to-business buyer decisions. Incentive programs can be used to appeal to other rational and emotional considerations dealers make when deciding what products to recommend to the end-consumers.

Connectiveness, cultural fit, component quality, trust, along with fun and perks, are all factors that make price less important. However, those values are more difficult to communicate than price, which is where incentive rewards come into play.

Engagement: Using Incentive Rewards to Inspire Better Communication

Manufacturers and dealers often do business on an ongoing basis. There is a degree of overlap in their organizational goals: both of them, at the end of the day, are trying to help end-consumers fulfill their needs. Often the ingredients for a true business partnership, are already in place. It’s just a matter of having a measurable strategy in place to create effective channels of communication and to build relationship capital.

A dealer incentive program can be used to open new channels of communication. Manufacturers often have gaps in customer data for their channel partners beyond the distributor level. How can manufacturers connect with dealers, personalize their marketing, and educate them on their brand if they don’t know much about them or, in many cases, how to reach them?

Many of our clients solve this problem by attaching point certificates to the product itself or integrating a rewards program with their warranty registration process or their company website. As dealers attempt to redeem their points, they are asked to fill out a form where they provide the manufacturer with contact information and relevant marketing data.

In various case studies, we’ve had anywhere from 10 to 95 percent active participation, depending on the size of the target audience and the program marketing budget. Additionally, marketing emails related to rewards program have achieved average open rates of up to 55 percent and CTRs of 17 percent, drastically outperforming manufacturing email benchmarks from MailChimp and HubSpot.

Connection: Using Rewards to Build Relationships

A study published in Psychological Science in 2004 found that people separate rewards into two separate markets – monetary (they have cash value) and social (they have relational or emotional value). Which type of reward is a more effective motivator?

The study found that people will expend more time and effort for non-cash rewards than they will for cash payments of equal, or even slightly higher, value. Non-cash rewards have social value. Dealers can talk about them, show them off to friends, and project emotions onto them. Rewards object are a tangible reminder that inspires feelings of connectiveness.

This relationship capital can be used to educate dealers on the value of your products and the core values of your company, build trust and train dealer behavior.

Growth: Looking to the Long-term

The applications of a dealer incentive program don’t stop after you connect with dealers and educate them on the value your brand has to offer them and their end-consumers. Once those relationships have been established, it’s important to maximize their value. Building customer loyalty is an ongoing effort with long-term benefits. In addition to creating stability for your bottom line, increasing account purchase volume and gaining access to new verticals, loyal customers become advocates for your brand.

Learn how to structure your program with Incentive Solutions’ free e-book.

mark herbert incentive solutionsMark Herbert is President and CEO of Incentive Solutions (www.incentivesolutions.com). He has more than 30 years of experience overseeing business operations within the incentives industry, including managing $60 million of incentive travel programs. He spearheads the development of the most innovative channel incentive technology to optimize the planning and fulfillment of incentive programs and meetings. Incentive Solutions currently manages more than 220 programs, many of which are in the insurance industry. Mark Herbert may be reached at mherbert@incentivesolutions.com.