Auto Dealer Incentive Programs

'Motivating our dealers is the key to our success.' Thesewords from the company president changed the entire tone of the sales meeting.Talk of cutting back or eliminating the company’s dealer incentive programs wasimmediately shelved in favor of ideas on how to use such initiatives to help thecompany grow.

The president had been through these down business cyclesbefore and knew that eliminating the programs would hurt far more than it wouldhelp. Organizations that discontinued or severely trimmed their dealer anddistributor programs more often than not failed to regain those relationships.By keeping its incentive programs intact, the company was sending a clearmessage that it recognized and valued its dealers' time and attention.It takes a lot to make a business successful. But when it comes togetting your product to end users, no one is more important to a company thanits dealers and distributors.

Think of these key players as the oil in theengine-without them, your business simply won't run. While recognizing andmotivating dealers is key in good times, it is of paramount importance in downcycles. You need to keep your sales and marketing efforts rolling, or you mightas well close your doors. One of the most cost-efficient and effectivemethods for keeping distributors focused on your products are sales incentives.A well-planned and orchestrated program motivates your dealer network withawards that recognize their excellent customer service, clever marketing andoutstanding sales performance. Incentive programs help convince brokers thatyour products are worth their time and energy. They prove that you're seriousand aggressive about your sales and marketing efforts. While other companies maybe retrenching, your company has a prime opportunity to expand its market share.Incentive programs are one of the best ways to establish strongrelationships throughout your distribution network.

Also these efforts can fleshout the dealers who believe in your products and are eager to work with you.Perhaps the greatest advantage of running a dealer incentive is that it paysfor itself. The resulting sales gains will more than offset your costs. Thisbooklet provides a clear understanding of how a dealer incentive works andoffers suggestions on improving existing programs. TARGET YOUR AUDIENCEAnyone who is involved in the distribution and delivery of your productis a perfect candidate for an incentive program. Hence, smart organizationsoften run multiple programs simultaneously. They may also choose to create amulti-tiered incentive that includes everyone-distributors, jobbers, wholesalersand resellers.

When creating and updating the database on your participants,make sure to note demographic information such as age, marital status and genderas well as any data on personal interests. It's helpful to separate theinformation by region since dealers and distributors usually operate within aspecific area. Ideally, set up a small rotating advisory group ofparticipants to work with the program's architects.

This will cut down onproblems later on. Interact with your biggest producers on a regular basis, butalso be sure to keep an ear open to your entire audience. Conduct yourresearch as carefully and as thoroughly as you would for a program targetingyour customers. In many respects, dealers and distributors are your mostimportant customers. DEVELOP A STRATEGY Increasing sales is theultimate goal of every dealer program. Of course, getting there is the toughpart. Your objectives must clarify exactly what you want your incentiveprogram to accomplish, as well as how you plan to do it.

Your goals should be:Simple and specific Steer away from broad terms such as 'increasesales. 'Rather state, 'increase sales of software 10 percent between March andJune:' Realistic Have an ambitious agenda, but compare your goals topast history. If your company has never come close to its objective, make sureyou can support why this time will be different.

Keep in mind that programsaimed at increasing sales during a slow period won't come close to peak-periodnumbers. Measurable If you can't gauge sales performance in specificterms, it will be difficult to prove the program was a success. Also, you needto be able to compare the program against past and future initiatives.Well-timed Programs should be run when they will do the most good.Also, adjust your objectiyes to suit fluctuations in the business cycle. Theobjectives will influence the program's structure and rules. Dealers who haveparticipated and won awards for several consecutive years will expect rulesconsistent with previous campaigns. If you're trying something differentthat may eliminate some of these people from the winners' circle, you have twooptions. You can either have a good reason ready that will convince them toparticipate, or expect a few to walk away from your program.

Of the twoprogram structures closed- and open-ended-each has its pros and cons. A fixedbudget caps the total number of winners. However, they tend to recognize thepeople who probably would have performed well anyway. Close-ended programs workbest for groups of top performers with fairly equal track records. Anopen-ended design doesn't put any limit on the number of winners. Dealers tendto respond better to this design.

Unlike internal salespeople, distributors canchoose whether to participate. If they don't like the odds of winning, they willignore your program and probably your product. Tiered incentive programswork especially well with dealers and distributors because they allowadministrators to cast a wider net.

Also they make it easier to group dealersand distributors by region and performance levels to ensure a competitivebalance. For instance, an insurance company introduced a merchandise catalogwith several levels to reward its national network of independent brokers. Theopportunity to earn merchandise at several levels throughout the program keptpeople selling, even when they knew they wouldn't qualify for the upper tier.As you design your rules and structure, keep these issues in mind:Give participants time to participate. Be wary of designs that asksalespeople to cram their sales into a short period rather than promotingconsistent performance. Sink-or-swim selling isn't the best long-term strategy.It is best to reward salespeople who can establish relationships with customersand learn their needs.

Short-term, or spurt programs, work well as partof a larger program. These shorter incentives allow administrators to reactto unexpected market changes or to push specific products. Consider makTiered incentive programs make it easier to group dealers anddistributors by region and performance levels to ensure a competitive balanceing sprint programs part of the beginning and end to ensure a fast startas well as a strong finish. Don't become spurt happy, however. Participantswill catch on and may adjust their sales to take advantage of the shorter, morelucrative sprints, instead of selling throughout a program.

Giveeveryone a chance to win. The belief that 80 percent of your sales comesfrom 20 percent of your people is more reality than myth. But what about theremaining 20 percent of sales? Don't overlook the best and most promising ofyour up-and-coming producers. Motivating this group can push your sales numbersfrom good to great. Also, these are the top performers of tomorrow.

An automanufacturer improved its sales nationwide because it reconfigured its dealerprogram to do a better job of rewarding this group. Upon analyzing the numbers,management found the top people were giving all they had to the program; themuch-feared complacency had not set in among this group. However, the data alsoindicated the best of the middle tier were actually bringing in a higherpercentage of new sales in comparison to the top producers.

The middle group'soverall sales were lower, but they were doing a remarkable job of generating newbusiness. Yet the past program wasn't rewarding this middle tier for theirefforts.

Also, consider giving distributors the support they need to runtheir own campaigns. In addition to promotional materials, this may involve thechance for them to earn extra awards to use to reward their own people.Track everything. Throughout the program you should know whichdealers are selling which products and how much they are selling.

You need thisinformation in order to plan effective spurt programs. Also, keep a closeeye on award redemptions. Don't be afraid to make changes to merchandise awardsin the middle of a program. But don't use a bulldozer when a hoe will do.Sometimes a little tweaking is all that is necessary. The Web providesadvantages.

These days, most dealer incentive programs offer some onlinecomponent. Considering the geographic diversity of the audience and their easewith computers, the web is a natural fit. The actual per-employee cost ofthe awards should be the same for online programs as traditional plans.

However,online programs save planners money through lower labor and printing costs.The Internet offers a near real-time environment that includes validation ofthe salesperson's behavior, processing of the transaction, account statementsand award fulfillment. Using a customized Web site, participants can shop fromthe online catalog and track the status of their awards. Also, they can monitorhow they or their team is doing overall.

Such flexibility in awards is amajor reason for moving online. Employees have choice, and administrators cansee which items are popular thereby enabling them to make changes as needed.The main knock against Web programs is they are considered too impersonal tobe the sole form of recognition. Most planners include a personal note or phonecall to the dealer to combat this problem. In addition to administration andaward redemption, the Web can help administrators achieve their business goals.It has become an effective method to train scattered sales forces on newproducts. Considering the technology available, some training programs resemblethe most advanced computer games. A telecommunications company used theInternet to increase suggestions from its off-site repair network, believingthey were a good source for sales opportunities. The field staff would look forholes in existing client systems or be alert regarding comments on thecompetitors' products.

Repair people received points for such leads and evenmore points for tips that generated business. PROMOTE YOUR PROGRAMPlanners have a lot of nightmare scenarios. But one of the worst ishaving a great program that no one knows about. Since dealers can choosefrom a multitude of programs, a strong promotional element to your incentivecampaign will help break through the clutter and grab their attention. You haveto get the word out and keep it going, so make communications a top priority.Participants should be able to enroll and participate in several ways: mail,Web, telephone and fax. People won't participate if it looks too complicated ortime consuming. All these options allow participants to communicate at theircomfort level.

If your company has an in-house graphics department, get theminvolved at the beginning. Also, experienced award manufacturers or distributorsshould be able to offer their expertise. When planning your communicationcampaign, consider the following: Use teasers to drop a hint about thecoming program. Teasers are often accompanied by a gift related to the program'stheme or grand prize. Send an announcement piece clearly stating therules, objectives, structure, length, awards, etc. Also include contactinformation for questions or comments. Design kickoff materials thatgenerate enthusiasm for the program.

If time and budget constraints allow, stagea live kickoff at your annual sales meeting or at a trade show that a majorityof your participants will attend. Use promotional pieces during theprogram every few weeks. Remember, a message has to be delivered several timesbefore it's completely absorbed. The more you reach out to people, the moresuccessful your program will be. Distribute mailings to updateparticipants on their progress on a regular schedule. Email works especiallywell for this purpose. Updates are a wonderful opportunity to get in front ofparticipants.

Along with the final standings mailer, send acongratulatory note and a letter from the company president thanking thedistributors for their contribution. BUILD THE BUDGET The goalis to strike a balance between an award large enough to be motivating and onethat fits your budget. A successful dealer program will pay for itself, but youwill still need to spend money up front for promotion, awards andadministration. There are a variety of ways to develop a budget. Someplanners allot per winner about four percent to seven percent of the base pay ofthe average participant.

Others prefer to figure five percent to 10 percent ofthe value of the expected sales as the total cost of the program. In termsof closed versus open programs, the fixed plan allows you to establish a firmbudget at the start and is easier to plan financially. One downside toopen-ended programs is they tend to generate higher administrative costs, andthe total price tag is unknown until the campaign has ended. However, ifdesigned correctly, extra sales generated will more than cover such costs.Regardless of the method, the majority of your budget-about 70percent-should be spent on awards. Promotion is next, claiming 15 percent to 20percent.

This figure is a bit higher for dealer programs in comparison to othertypes of incentives because you have to work harder and spend more to get thisgroup's attention. Administration usually requires about 5 percent. Theremainder of your money goes toward training. This budget line is especiallyimportant in dealer programs if you are launching a new product.EVALUATE THE RESULTS If you established concrete, measurablegoals and tracked your participants' behavior throughout the program, you'llhave no trouble seeing the results of their efforts.

Detail what worked and whatdidn't to help those who plan the next incentive. This important analysis willhelp prove the success of the campaign and point out ways to refine futureprojects. Ask the administrators if they encountered any problems and whatthey thought worked particularly well.

Be sure to explore all the intangibleaspects of the program. In particular, get their input regarding the objectivesof the program, training and ideas for future awards. If possible, speakdirectly with recipients to learn what they thought about your dealer ordistributor program.

Sales Incentive Program

If you think they would be more honest responding throughan anonymous survey, then make one available to them. The bestdealers ignore my products once they reach the top award level of the program.Any suggestions? Design the program so a participant is never donewith it.

One option is to offer top brokers a chance to earn extra merchandisein addition to the top-level awards. Since this will be a very small group, makethe rewards as personal as possible to increase their appeal.- Q.A lot of the participants are using my debit card program for groceries andpurchases under $100. Is this a problem?

Factory To Dealer Incentives Ford

The good news: These peopleare reminded of your program on a regular basis. The bad news: Your program maypossess little to no trophy value. It is being lumped with salary and won't holdtheir attention for very long.

Change the design so distributors regularlyhave the chance to earn a large lump sum, such as 500 points. Once they see thehigher level awards are within reach, they will start saving the points fordream merchandise.

Then your incentive will once again be an award program andnot a grocery subsidy.- Q.How often should I change merchandise awards? It depends on yourprogram and participants. If you offer a lot of trendy items, be aware they maynot be so hot in a few months. Also, if your program attracts the same people,more frequent updating is necessary. With ongoing incentives, such as a catalogor debit-card program, new merchandise can generate renewed interest. Whentrying to weed out less popular awards, be sure to compare merchandise that's onthe same level.

Auto Dealer Incentive Programs Free

Keep in mind that early in the program the top prizes may havethe lowest redemption rates simply because participants haven't had time to earnthem.