Channel Incentive for FMCG; The Challenges and Solutions

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Feb 2, 2022 • 10 min read

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Today, the FMCG industry is evolving and expanding, resulting in many companies launching huge and sophisticated product lines. Customers become the driving force for the demand and inventory strategies of local retailers. As a result, channel partners are more exposed to multiple competitors than ever before.

Therefore, trading conditions are changing with the evolving retail environment. At the same time, the role of sales representatives has changed, too.

They are now actively maintaining channel relationships and ensuring brand relevance in the face of high distributor turnover. Given the above situation, FMCG firms need to work closer with sales and channel partners to create value and reward them accordingly with attractive incentives to build a sense of affiliation with a brand and encourage them to sell more.

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As we know, the best partnerships are those that are a good fit for everyone involved; from company to distributor partners. That’s why implementing a channel incentives program that supports your partnerships and your brand is considered as a wise choice.

Why do FMCG Companies Need a Channel Incentive Program?

Channel partners need to feel engaged with a brand to stay connected. Discounts and cashback programs are no longer sufficient to improve channel performance.

Targeted incentive programs associated with quick sales support are a sequence for building healthy channel relationships, especially in the FMCG sector. Comprehensive sales incentives and easy redemption can be a great way to stay connected with your partners.

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So, here are some reason why business need to consider the implementation of channel incentives:

  • To increase revenue

When you have a partner program in place, you can rely on your partners' sales teams to expand your product base in the market. Because your channel partners are selling your products for you, your company can reap the benefits – without having to spend as much money on marketing and advertising, resulting in higher revenue.

  • To increase market share

Your partners are in different locations, so your business can produce results in addition to your customer base. Partners have the flexibility to provide additional services and products to their desired customer base.

Not only does this benefit the distributors, it also helps to upsell to your brand. Your distributor sees revenue and your business is tied to the success of their services. This is useful for partnerships because the product and its services work together in a complementary and successful way.

  • Fast-tracking the adoption of new products

Channel incentive programs allow organizations to track partner performance and incentive or reward usage digitally through a platform or an app. You can determine if a program and reward for a particular product is working, and if you need to reassess other programs and rewards to increase interest in participation for the distributor partners.

  • Supplying referrals to increase market visibility

As a basic, distributors already have an existing customer base to buy different products. In the past, these customers may not even know about your products. Distributors help discover your products by motivating these customers to buy your products. This gives the company a stronger market position, especially if it is trying to enter a new market.

  • Building profitable relationships with partners

Tangible rewards have a significant impact on your distributor performance. By rewarding their achievements, you build gratitude and long-term trust in your product. The more loyal your distributor is to your brand, the more profitable your business can be.

Therefore, it is important to provide appropriate incentives to build that long-term relationship. If there are incentives for the distributors, a beneficial relationship is created because companies can get more sales and the distributors are getting decent rewards.

Challenges in Channel Rewards, Benefit and Incentive 

Channel partnerships may present a variety of challenges that need to be addressed to ensure  mutually beneficial relationships. The channel partner's network manager faces some common issues.

Most of these can be effectively mitigated through collaborative efforts to encourage and reward engagement. The following are some of the challenges that may arise before implementing channel incentives:

  • Multiple vendor
  • Manual administrations, inventories and reporting
  • Lack of usage behavior and insight
  • Delayed delivery
  • No customer support

Key Elements of Successful Channel Incentive Program

Building and maintaining partner engagement is essential in channel marketing. However, it is also a major challenge for many companies. 

To increase sales, the product needs to be ready and available on the market. Product placement is very crucial, thus companies are heavily dependent on distributor partners and merchants.

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Effective communication and partner involvement are important to ensure the success of all involved parties / partners. Here are some important tips to keep in mind when creating and running a channel partner program:

  • Maintaining relationships 

We all build relationships, both personally and professionally. When a strong relationship is  built, all parties get some satisfaction and value. This is not easy, but not impossible as well! Your incentive program should treat your channel partners as an important asset for the brand itself.

  • Listen and follow up

Relationships always need to include two-way communication. Brands need to "listen" to their partners and try to help if they find any difficulties. Channel partners have closer relationship to your end-customers, and are more exposed to competition. Therefore, listening to them is essential to understand their challenges and problems and give solutions to those problems.

  • Develop a responsive channel partner program 

Your company needs to invest in understanding their distributors; their needs and difficulties. This will help brands develop channel partner programs that address the needs and challenges of their partners. When the company takes care of their partners pain points, this in turn will help the distributors to sell more to the end-customers. This, of course, will improve ROI for the company.

  • Allowing constructive suggestion

Seek productive suggestions from partners to help you sell more. Marketing materials provided by major companies may not be sufficient as they may serve the end customer rather than the partner. Ask your panthers to provide their input and then create customized marketing materials that can help them sell better for the end customers. Open communication will make them feel valued and encourage more engagement to your brand.

  • Empowering channel managers 

Channel managers provide partners with the tools and resources they need to get the most out of their branded marketing collateral. Show the benefits of the incentive program to your channel manager and provide the manager with the right tools to maintain the involvement of partners. 

How to improve The Performance of Channel Partners in The FMCG Distribution Channels?

Despite a proven track record of improving channel performance, factors such as execution and poor design can reduce the performance of incentive program. Your program is as effective as you make it. These best practices can improve the performance of channel partner in the FMCG distribution channels:

  • Training rewards 

By rewarding your channel partner for completing the training, you inform them and empower them to sell more products. 

    1. Get certified 
    2. Completion of a training  
    3. Participation in webinar 
    4. Answer the quiz 
  • Discount on end user information 

Add discount opportunities to your product so that end users can earn rewards by submitting specific information, such as: 

    1. Contact information 
    2. Age, gender, marital status 
    3. Lifestyle information (hobbies, etc.) 
    4. Communication preference
  • Segmented promotions 

Distributors can be segmented into different groups to customize the goals, eligibility, or duration of each reward program.

    1. Region
    2. Verticals
    3. Performance levels
    4. Partner type (dealer, retailer, etc.)
  • Rewards activity and engagement analytics

Access your incentive dashboard and analytics to assess the results of your incentive program. Analyze your participants activities, such as:

    1. Registration
    2. Redemption activities
    3. Email clickthrough rate and open rate
    4. Program engagement level

Channel Incentive Program at TADA

Channel incentives platform will allow your company to automate and scale channel incentives across a broad set of partners. Recognizing the efforts of distributors and vendors is beneficial as everyone wants to know that their contributions are valued for your success. TADA channel incentive solutions increase loyalty by encouraging partners to make more efforts to sell your products in return for tangible compensation.

TADA channel incentive program has helped many brands manage and motivate their distributors by giving them a broad range of rewards available for certain target sales achieved. TADA prioritizes personalizing client needs by providing the following unique points:

  1. Manage and monitor target-achievement-reward in real-time
  2. See and be aware regarding the progress of each distributor
  3. Transparent to distributor
  4. Various redemption options
  5. Easy and fast redemption process 

TADA can be a one-stop solution for those of you who are confused about how to reward the sales team or other employees, clients, channel partners and customers. With easy integration and integrated reward catalogs, we can help you create the most suitable incentive program for your business. Request your demo now!

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Nuraini

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