Rebate programs can be a very effective incentive to drive distribution in the Convenience channel.  So why are so many Retailers still leaving money on the table, and why too are so many brands over-paying for non-performance?

We work with several customers who have Rebate programs which are used to drive distribution in the convenience channel.

This type of trade program has been around for a long time, and if utilized properly can be a highly effective way to provide incentives for retailers while gaining points of distribution.  In addition to motivating buyers, they can be structured in a way to meet the supplier’s overall new product and line extension objectives, as well.

So where do things break down?  As effective as these programs may be, the management of them can be daunting and protracted over many months:  pitching program terms, recording agreements, monitoring store-by-store execution over time, and accounting for compliance and payments on a store-by-store basis. We have seen very simple and basic programs, and we have also seen programs that are very complex with multiple levels of stipulations and exceptions, the latter being more common and quite a pain.

Sometimes, this pain can be offloaded to the broker, or in some instances avoided altogether by not managing all the details down to store level.  But, without the store-level detail, there is no way to effectively achieve program objectives.

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See a live demo on how leading teams are maximizing their Trade Funds through Rebate programs

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Retailers, despite having the best of intentions when they signed-up, have thousands of incentives they are implementing and sometimes fail to perform in compliance with terms, leaving “easy money” on the table, or in other situations getting paid for “non-performance” — because the burden of tracking programs is too challenging for most every team.

Suppliers similarly are overly challenged in tracking the programs’ rules, on a store-by-store basis.  It is too time consuming to sort out which stores are compliant versus which are not, and too difficult to prepare for simple conversations about what the Retailer could do to meet program terms and maximize their payout.  Why else would suppliers expend so much of their trade funds for outcomes that were never realized?  While maintaining ‘status quo’ and continuing to overpay can be a popular choice, more and more suppliers are recognizing that this is not a sustainable approach.

So, what are the secrets to maximizing your convenience channel Rebate programs?

    • Store-level data. Leverage your existing data.  Shipment data is widely available for suppliers and can be the fuel for more effective Retailer-Supplier collaboration.  Audit data and scan data can also be utilized.Sometimes the perceived lack of data or the fragmentation and hassle of connecting available data are such perceived barriers that companies simply “give up” on proper and timely management of contracts.  However the value of doing this far exceeds the challenge of getting properly setup.

 

    • Software exists that can fully automate the tracking and performance management of even the most complex Rebate contracts.   This will save teams literally hours and hours of admin work and avoid big, complex spreadsheets, human error and delayed payments — all real and significant risks.

 

    • Real-time Customer Communication. Many Buyers, if notified of the lack of compliance in real-time, will also correct the issue in real-time.   That’s right, many brands that run these programs are missing out on potential sales simply because no one is communicating the right information with data and terminology that matters to Buyers, in a timely manner.  Buyers are interested in knowing how to collect the Rebate dollars, if only there were a more efficient way to stay on top.

 

    • Closing-the-Loop. Too often sales teams get part of the solution, but miss the biggest part – closing-the-loop.  Lured by data vendors with the promise they can “do everything” — sales teams often find they cannot combine data sources, notify field team members in real-time, share store-specific recommended orders or track in-store activities that have been completed.  Without “closing the loop,” the team won’t learn which members have training gaps, where there are retail biases, nor learn as quickly how to make improvements for the next cycle.

 

Done well, Rebate programs are a win for both Retailers and Suppliers.

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If you would like to learn more about best practices in this area or see a live demonstration on how leading teams are maximizing their Trade Funds through Rebate programs, please reach out to us here.

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