Why Channel Incentive Programs Are Important

With 75 percent of world trade traveling through a sales channel, according to Forrester, channel incentive programs are seen as a versatile and essential navigational tool. Even in a picture-perfect economy, manufacturers, distributors, and wholesalers are tasked with finding ways to promote customer loyalty and outsell their competition in the vast and nebulous channel.

It is well understood that today’s HVAC end-user acquires their unit at a place deep within the channel, far from its starting point with the manufacturer. More often than not, a homeowner places the entirety of their buying power into the hands of their contractor, trusting they are well- versed in the current product market. By acknowledging this power source and incentivizing the dealers, contractors, vendors, and resellers who hold it, channel incentive programs begin to work their magic.

Channel incentive programs are a form of behavioral modification used to align current and potential channel partner behaviors with business goals. Identifying these internal goals and the partner behaviors that contribute to their achievement is the first step in formulating an incentive strategy. Examples of these goal-aligned behaviors include:

• Increasing total sales volume;
• Increasing high margin product sales;
• Fast-tracking the adoption of new products;
• Accelerating the sale of older inventory;
• Encouraging cross-selling and product bundling; and
• Supplying referrals to increase market visibility.

Channel incentives are used as a customer loyalty and retention technique, as well as a way to increase channel enablement by educating channel partners on a product. With an online platform, a channel incentive program acts as a streamlined form of digital marketing and offers the ability to collect often unattainable channel data. A well-executed channel incentive program will ensure that contractors, dealers, and vendors are motivated and equipped to effectively sell target products.

Incentive Strategy in An Altered Channel Landscape

 In an economic downturn, keeping businesses afloat is priority. While a global decrease in spending may force a level of stagnation, businesses that aren’t seeking new ways of growth will not be able to withstand a recession. For the HVAC industry, this means investing in creative solutions to assure their brands come to mind when these limited channel opportunities arise.

Cultivating a growth strategy requires the collection of research and data, both internally and on current customer demographics. Now is the time to analyze go-to-market strategies and identify potential company weaknesses. With the cancellation of in-person meetings and trade shows, what are the alternate ways in which to promote a product? From there, shift the focus onto the contractors and dealers who are continuing to sell the product. What are their limitations and how can the sale of your product be made easier and more enticing?

A channel incentive program effectively creates a socially-distant approved digital platform that serves as a direct line of communication to channel partners. Be it through email, mobile app notifications, or the reward site’s homepage, brands can continue the seamless connection that builds customer relationships. Companies can also collect important partner feedback through the issuance of surveys and structure-motivating promotions that can be achieved despite the current market state. Brands that offer sales and rewards to contractors will be positively-reinforced as these incentives are collected during times of need.

Is Now the Time to Launch a Channel Incentive Program?

While a company’s initial reaction to an economic downturn is to tighten wallets and minimize costs, an investment today can capitalize on the opportunity that competitors are ignoring – by capturing both market share and mind-share within the sales channel. In times of economic uncertainty, channel partners are keeping their eyes open for the most beneficial sales opportunities, and with a properly structured incentive program, a forward-thinking company can earn their recognition and loyalty. From adversity comes innovation – and laying the foundation for a channel incentive program today can help keep business growing both within, and well past, a recession.