In the earlier post Dealer Incentives, we had discussed about the various types of schemes floated by the companies to increase the off-take by the dealers. The change in purchasing behaviour desired through these trade partner schemes has to be clear upfront. Then only they can achieve their objective.

Trade Partner scheme objectives

The desired objective of the trade partner schemes can be one or many of the following:

1. Increase off-take of the product by the trade partner over several months, sometimes even more than a year. Generally targets assigned to each stockist or dealer is for a minimum 3 months period. The targets should be set up at least 5% or 10% or as per the company’s objective higher than last year achievement in the same period. Payouts are generally grand as incentive accumulated over the scheme period is high. It can be in the form of tours, gold, electronic items, etc.
2. Motivate the dealer to stock up the product by the trade partner in a short span. This is often a special price scheme valid for a short span. Generally, there are slabs in trade partner schemes and payout is often in form of cash back or gift coupons. Sometimes, payout is in the form of product itself.
3. Incentivize the dealer to purchase value added products or new products launched recently. These type of trade partner schemes are often the most complicated. The major portion of the incentive is on purchasing the new or premium products, and a nominal or no incentive on the existing/ flagship product. The companies often introduce incentive multipliers during the scheme period to further boost the sales of the focus products.
4. Annual Turnover discounts to motivate the dealer to do business round the year and not switch to competitors. This is a volume-based discount. Objective is to motivate the trade partner to do business for the whole year. This incentive is seen by the trade partners as pure profit from the business as often they have passed on all other discounts to their customers.
5. Incentivize a competition dealer to switch loyalty or to increase the shop share. Single brand outlets are given additional incentive by a few companies over multi-brand outlets. Sometimes the shop also gets incentive of it keeps the advertisement for a certain period of time. This is a short-term scheme to increase the shop share.
6. Incentivize the channel partners if they bring other influencers to company fold. Companies track the sale activity through these new influencers. The tracking mechanism can be physical passbooks, mobile apps, physical coupons placed with the product, etc.

How to make Trade Partner schemes successful?

Trade partner schemes can be made successful if there is proper planning done during the scheme formulation, enough engagement is built with the channel partners during the scheme period and satisfactory closure of the scheme is done. The scheme should have simple terms and conditions for the sales team to be able to explain it to the dealers and for the dealers to understand easily. Constant communication about the scheme or about achievement by the dealers helps in making the schemes successful.

Equally important is the closure of the trade partner schemes. The disbursement of the payouts has to be as fast as possible and with good transparency so that the beneficiaries look forward to the next scheme. Internally for the company, it is necessary that it analyzes what went right with the scheme and what went wrong and where did the scheme fly and where it was a failure.

A sample Loyalty scheme is attached for encouraging the channel partners to do business with the commodity company regularly as well as not to switch to a competitor.