For manufacturers developing incentive or loyalty programs, the most important step is identifying the appropriate target audience. Most manufacturers are used to selling and marketing to their distribution partners. They have company or agency sales reps who actively call on the distributor partners. Quite often, manufacturers even have rebate programs for the distributors and are using mass-marketing tactics to communicate their value proposition to an audience as large as possible.
However, distributors usually carry competing brands distributor principal doesn’t have much influence over the specific products their contractors or dealers are actually purchasing. They typically don’t care what product is purchased, as long as it’s purchased from them. Quite often, the point in the channel with the most influence over product selection is the contractor and/or the distributor sales representative. Unsurprisingly, these are two points in the channel that are most difficult for the manufacturer to communicate with.
Of course, as a manufacturer, you would love to have access to a database that informs you exactly how much of your product contractors purchase. This type of access allows for a surgical approach to communicating directly with the people most responsible for selecting your brand. There is only one catch: in order to build this database, you have to get the information either from the distributor, who may be hesitant to share customer information, or directly from the contractors themselves.
In order for the contractors to voluntarily provide their contacts’ information and purchasing history, they need to be rewarded appropriately. The “value proposition” must be worthwhile for the contractor to complete a claim form or provide their invoices as proof of purchase. Therefore, the amount you can allocate towards the reward must be sufficiently motivating for the contractor. A good rule of thumb: if the average contractor is able to earn approximately $500 in reward value over the course of the year, most will participate. Not only does this “pull-through” method enable you to incentivize individuals who have the ability to ask for your products, but you now have a direct link to communicate with that individual.
In the case of manufacturers with low-ticket items who are not able to allocate enough funds to contractors, perhaps the distributor sales rep may be a more appropriate audience. Distributor sales reps may not be primary brand selection decision-makers, but they can be a significant influence. Getting $500 worth of reward value to the distributor rep is much easier because they are capable of selling much more brand products than a single contractor buys. This is “downstream push-through” method and also allows you to communicate directly with a significant influencer in the distribution channel.
An ideal solution is a combination push/pull strategy that engages the distributor reps and the contractors. In this set-up, distributor reps provide the contact and sales information for the products contractors have purchased. This allows you to establish two databases and communicate with the primary influencer.
Remember: identifying the appropriate target audience is essential. As a manufacturer, if you target the contractor without an appropriate value proposition, you’ll have very little participation and be left wondering why your incentive program didn’t work.
By: Jeff Cagle
Director of Sales
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