sell through allowance programs are another great way to liven up sales channel activity

Winning With Your Sell-Through Allowance Programs

  • March 26, 2013

Winning sell-through allowance programs (STA’s) are a great way to protect your dealer’s margins and the overall price integrity of your products, but they have had a bum rap in some circles recently. The reasons for this are plain to see: some programs pay out way too infrequently to be effective, some tie up much-needed dealer cash, and some simply don’t pay out in a way that incents more purchases of your merchandise.  Driving more sales of your product is the “big why” for your program in the first place, right?  Right?

Many companies run channel marketing programs where they as the vendor are accruing incentive dollars and the accruals are being held back to pay for merchandise, trips or year-end cash back.  Sounds nice, but the more I travel (a dozen trade shows so far this year!) and the more folks I have spoken with, the more I see that the will seems to exist to move to a more formalized system for nearly everyone.

Look, I’ve been in this space for much of my career and it strikes me as a real shame to see any sales incentives program falter in the digital age.  It simply isn’t necessary.

So let’s look at the above-mentioned system of accruals. Typically a company might offer a 2% sell-through allowance to their channel partners in the form of one of these accruals.  Over the course of a year’s worth of sales cycles the accruals become liabilities to the vendor, meaning the accrual goes on the books. Since it now lives on the books, it does, in fact, need to get paid out and get off the books.

Since the amount needs to get paid out anyway, why not simply make your program work better with more frequent payouts? With all the technology available today, there is no need for this to be a painstaking exercise and the benefits to more frequent payout stack up quickly.

  • Making monthly payouts frees up more cash for the customer which your customers will certainly appreciate.
  • Sacrificing a bit of your cash flow to pay it out now provides support and reinforcement to the dealer and ties the money more easily to more purchases of your goods.
  • Paying monthly gives you the opportunity to say “thank you” twelve times during the year instead of just once at the end of the year.

From your CFO’s perspective, adding sell-through allowance as a layer to your overall sales incentive program gives the benefit of holistic reporting to establish true marketing ROI with each of your customers.

So, if you’re doing rebates and sales spiffs, why not layer STA’s into the rest of your incentives program and reap the rewards of happier, more engaged channels while adding some channel marketing effectiveness and metrics that you can really use?

Join the Discussion

Have something to add to this topic?

Wondering how you can sell in the COVID shortened sales cycle?

Learn tips on what you can do to secure your #sales with Taylor Macdonald, SVP of Channel Sales at @Sageintacct, in the new episode of #ChannelEdge.

Listen to the full episode here:

Do you know who is the most impactful person in the buyer's journey?

Unpack the #buyer’sjourney and its relation to #marketingenablement and #investments with @forrester's @MariaChien and our own @StevenKellam6 in a #interactivedialog.

Watch it here:

Join us on April 27th as our UK Marketing Director, @dgould1969, hosts a LinkedIn Live Event to discuss all things #PartnerEnablement.

You won't want to miss it. Sign up to join the discussion now:

#partnerengagement #partnerjourney

Do you know the impact a successful channel incentive program can have on your business? Learn about all the benefits of an incentive program in our newest blog.

Read all about it here:

#Salesincentives #ChannelIncentives #ChannelEngagement

Load More...

What do you believe is the channel’s biggest challenge today?

Upcoming Channel Events

Are we missing an event? Tell us about it.

Channel Partners
May 4-7, 2020
September 8-11, 2020
Channel Focus
Nov 17-19, 2020
360insights Relevance