For many channel customers (distributors, retailers and farmers), rebates play an important role in cash flow and profitability. Timed well, the same rebate dollars can be used to enhance customer relationships.
Many Manufacturers use rebates early in the season to enhance the effectiveness of their marketing programs. Let’s dive into some areas to consider with early rebates.
The first element to consider with early rebates is timing. There are two main questions to consider with early rebates.
- Key Purchase Timing: When are your customers making key purchasing decisions?
- Sales Team Activities: When is your sales team calling on your customer for planning or in-season support?
There are multiple ways to determine who will receive early rebates. Three common approaches include:
Including all accounts may be preferable if you need to influence a wide amount of accounts due to competitive pressure.
Sales Team Selection
You can use account early rebate selection in a sales rep portal so that the rebates are used to selectively reward supportive customers
Opt-in / On-Demand
Leveraging a customer portal, you can allow your customers to opt-in to be paid or paid on-demand, providing ultimate flexibility.
Consider the current state of your market, product position, and sales team capabilities to determine the account selection method that will work best for your program.
Protecting from Returns
One risk of early rebates is fulfilling on sales that could be later returned. There are a few strategies you can use to protect yourself from product returns.
Process early rebates with a percent of the total earned. Analyzing historical data on returns can help you select a percentage that provides the appropriate level of protection while delivering value to your customers.
Net calculation with other programs
Early rebates can be recalculated at the end of the year to determine the net payment amount. If this amount is negative due to returns, it can be combined with other program payments to recapture the return dollars.
Carry-over to the next season
In instances where overpayments can’t be recaptured through net calculation, you can carry-over early payments to the next season, reducing that season’s payments by the returns.
Long story short…
Timed well, with the right account and fulfillment strategy, early rebates provide another dimension that increases the performance of your programs.