We live in a time of incredible technological advancements and as a result, we live in a time of unprecedented competition in business. The upside of this is that the consumer marketplace has become full of high quality, comparatively low-priced goods. The downside of that, of course, is that when companies are no longer competing on quality, they begin to compete on price.
Manufacturers have had to become very hands-on about this price competition at the front lines and this is reflected in the increased experimentation with sell-through allowance programs as sales incentives.
The challenge with this however, is that historically sell-through allowance programs have been very unpopular with retailers. The reasons are numerous, but for this article, we are going to focus on two main complaints that companies have with sell through allowances: retailers end up unsure of what the final value of their inventory was at the time of sale and the manufacturers often have little visibility into the claim and reimbursement process and therefore suffer from being out of touch when determining pricing in their marketplaces. These two factors, combined with an increased HR drain to administer the programs, have kept sell through allowance programs from having what is perhaps its rightful place as an extremely valuable and win-win sales incentive.
The Dealer's Dilemma:
Tony Scaffeo, former VP of retailer Soundsaround, now with Future Shop, sums up the retailer's visibility challenge succinctly in a video interview with Marketnews.ca:
" If your inventory is not valued properly, you really don't know what you're selling it for. You think you're selling a TV below cost and that you're getting the money later on, but you have to be real careful that your money is coming in properly or you're really going to be upside down on your P&L statement."
Retailers who finance their inventory using a floor plan based on bad P&L data are in for trouble and, as such, have traditionally had a problem with sell-through programs.
The Manufacturer's Muddle:
Manufacturers, for their part, really need to be able to measure the results of their sales incentive programs, but it is also important that they track where the pricing of their goods are going.
Alright Technology, Get Me Outta This...
If technology is what got us to this marketplace, let's look at how technology (specifically the right software) can make it all better.
Look at your entire process with an eye for what could be automated and start with the way your dealers enter their claims. If a dealer or chain can upload a file exported from their POS system directly into your sales incentives software platform, many problems are solved right out of the gate including the usual time burn by a member of the retailer's staff. The resulting benefit for you is that a lot of your admin challenges are sorted out because there are fewer discrepancies associated with keystroke errors, non-compliant paperwork, etc. Your team, especially your territory managers, can spend less time sorting out issues with your programs and more time selling and building relationships in the field.
But This Is About Visibility...
Speaking of technology, the right software will also give everyone (you and your dealers) real-time visibility into what the final sale price is for each piece of your inventory. Your retailers can use this reporting to make sure their P&L statements are in order for their lenders but the real visibility advantage is to you, the program operator. With your enhanced visibility into your sales channel, you can keep an eye on data such as transactions and run rates in real time.
You and your team can now measure program effectiveness (again, in real time) and, more importantly, you can track who in the marketplace is leading the way with price adjustments. You can then react quickly and appropriately. You rock!
Learn more about 360insights, channel incentives, SPIFFs, rebates, Co-Op/MDF, volume incentives, and sell-through allowances.
