Manufacturers & Distributors ARTICLE -

Review Your Rebate and Incentive Program

Offering Incentives Can Mean Extra Income All Around

Target Audience: Manufacturing and Distributing Companies, Manufacturing Company Owners, M&D Industry, Manufacturing Accountants

Regardless of how your supply chain operates, there’s no denying that cash back can be a motivator across the board — from distributors to retailers to consumers. That’s why rebate and incentive programs have held steady as a solid way for manufacturers to boost their bottom lines. There are a variety of ways you can leverage cash-back incentives to move inventory and increase profitability.

Reaching the End User with Rebates

Rebates can provide the carrot consumers need to make purchases they might be on the fence about, especially if they think the rewards will be worth the effort of the application process. In the midst of the current credit crunch, most auto manufacturers are offering customer incentives in the form of instant cash rebates, which can fuel a down payment or provide motivation to spring for a more expensive hybrid option.

Want to sweeten the deal? Throwing in extras such as free maintenance or an extended warranty could be what it takes to lock in customers and secure their loyalty.

Reward Current Sales

Industrial manufacturers can reward loyal customers, encourage purchases from multiple product lines, and move new or less-than-popular inventory by offering rebates to builders and contractors. For example, in exchange for using a newly introduced I-beam, a steel company could offer a builder discounts or cash-back incentives on future purchases. The more I-beams they purchase, the more substantial their rebates will be.

Move Your Rebate Offer up the Chain

Sometimes the best way for manufacturers to move their products out the door is to offer incentives earlier in the supply chain to distributors and dealers. Stalled inventory means stalled growth — and providing the people who encourage the sales of your products with incentive to up their output can keep sales fluid. For example, if you deal directly with retailers or auto dealers, offer cash-back rewards for selling overstocked items or ordering more inventory.

Consider offering your distributors incentives in the form of discounts from list prices in exchange for increased performance. For example, a plastics manufacturer could offer a profitable distributor 15% off a particular type of tubing. If it costs the distributor 10% to sell the tubing to a customer, they’re able to retain 5% as a reward and an incentive for continuing to keep sales strong.

Ease Financial Incentive Use

Despite the financial incentives rebates provide, some consumers may be hesitant to cash in because they perceive the application process as confusing, with a small window of time for submission and a vague return process. In the past, some manufacturers came under fire for making consumers jump through hoops, only to delay payment. However, many states, including North Carolina and Texas, now require rebates to be paid within 30 to 60 days.

You can make the process even more user-friendly by opting for automated redemption, which allows the rebate holder to enter information from their receipt online, initiating the redemption process. Automation speeds the rebate redemption and gives consumers the ability to track the process from beginning to end.

When it comes to distributor, builder and dealer incentives, keep lines of communication open to stay on top of what products could use an extra push, what incentives have worked well as motivators and which distributors deserve to be rewarded.

Win-Win for a Rebate or Incentive Offer

Getting the most from a rebate or incentive offer means providing quality, worthwhile incentives and the means to see the process through to fulfillment. If offered correctly, the entire supply chain will benefit, inventory will move more quickly and your company may realize a welcome boost in sales.

Find out how our M&D accountants can add value to your business. Email us or call us at 1 (888) 875-9770.

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