How to Design your Sales Incentive Programs

In this article, BTN covers how wineries, breweries, distilleries and importers can design their incentive programs for distributor’s sales reps and retailers.

Sales and incentives go hand in hand in any industry and environment. On the get go it is important to understand that this is an integral part of your product launch and to keep your brand thriving in the market. It is what keeps sales representatives and ultimately the distributor interested and motivated in moving your product.

First: The Legal Stuff

In some states in the US, sales incentives are a norm whereas in others statutory regulations prohibit the use of incentives. Make sure that you are not stepping over the law when offering incentives to your distributor.

Second: Your Margins

Before going into the nitty-gritty of offering sales incentives, work backward to see the margins you have for your brand. Never offer incentives that do not work for you. If you cannot afford it, it is not an offer you can extend.

Some producers have lower priced products which may not have high enough margins. Sales incentives on these should be designed by volume. Some producers have a portfolio of products with some higher value products mixed in with ‘loss leaders’.

One has to take into account the mathematics of their brands before designing a program. For example, if offering $10 per case is going to put you in the negative then you will have to think of a different incentive to offer. If a trip to a South African winery is more than you can account for, then you have to get creative and come up with more affordable experience based offers that are still attractive to the sales person or retailer.

Step 1: Designing a Sales Incentive Program

Discuss the incentives you plan to offer during launch and thereafter with your distributor. This will keep expectations clear on both sides. It will also ensure that higher incentives being offered at launch are not seen as precedents for the year to follow.

The sales incentives you offer should be measurable and achievable to hold value. If the offer is convoluted, one will not bother to understand it. Keep it simple, straightforward and worthwhile for you and the distributor or salesperson.

The offer should also be relevant to the person or organization for it to be effective. If the sales incentive per case you are offering is much lower than the other products in the distributor’s portfolio, your offer will mostly be overlooked. You will have to design a different offer that is just as if not more compelling than others. Similarly, offers for off and on premise accounts should be designed as such because the quantities cleared by on-premise accounts are vastly lower but their value is measured in brand placement, value created and the focused time with the consumer. Design most offers to be of a shorter term to keep them interesting and introduce new offers throughout the year. An offer that runs for a longer duration could be one with a more substantial prize.

Continue reading this article at BTN Academy.

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BeverageTradeNetwork

Connecting the beverage alcohol industry by bringing wineries, breweries, distilleries, wine importers, beer distributors, beverage and wine brokers together.

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