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Types of Best Channel Incentive Programs in the FMCG Sector- Explained

  • Posted on July 30, 2022 by Robert
  • Reading time about 7 minutes
Customer loyalty software

Every business model relies on channel partners and secondary sales channels. From big distributors, sub-distributors, and wholesalers to retailers and then end consumers, the distribution networks operated and owned by large FMCG companies depend highly on their channel partners.

Building a good relationship with your channel partners is essential for your business success and to make them think of your products first rather than your competitors. Just like customer loyalty software is needed to retain your customers, you need channel incentive programs or distributor loyalty programs for channel partners. In this blog, we will learn about the best types of channel incentive programs that work perfectly for your FMCG businesses.

Types of Programs to Properly Incentivize Your channel Partners

To build stronger bonds with your business and your channel partners, you need a well-planned strategy before building a channel incentive program that helps in keeping them motivated in long run. What type of channel incentives work best for your partners?

To answer this and solve your queries, we have shortlisted some of the top channel incentive programs in the FMCG sector with the best examples-

1. Channel SPIFs

SPIF, also known as Sales Performance Incentive Funds is the concept where your partner move/schedules X numbers of products within a fixed time frame, and they get a reward. SPIF incentives can be financial, prizes, vacations, recognitions, etc.

This type is useful especially when you need to accelerate pipeline, finish old stock, support product release & other opportunities. One example is Samsung Mobile Valued Partner Program which encourages mobile B2B partners to build shared momentum & embrace more sales opportunities.

2. Channel Sales Incentives

Another common incentive program type in the FMCD sector is a sales incentive that rewards channel partners when they meet or exceed a specific sales goal. The sales incentive can be point-based rewards, gift cards, etc.

This is beneficial for businesses that want to scale in all directions by enabling them to leverage sales incentives to meet short-term & long-term business goals. An example is Indiakaloan, an advisory service in the banking sector offering sales incentives like vouchers & coupons to attain specific business goals.

3. Referral Incentives

This type of incentive program enables channel partners to refer potential customers & reward them with referral incentives. This has two objectives – one is to encourage channel partners to behave as brand ambassadors that can bring new customers and the second is to increase customers and sales.

Word-of-mouth referral is one of the powerful marketing tools. Using a reliable Referral Loyalty Program is the best way to offer an attractive incentive. One perfect example is a real estate company, KG Builders which offers a referral incentive of INR 9, 12,000 per referral sale.

4. Channel Rebates

Rebate can be defined as a refund/money back and this enables brands to encourage channel partners to increase their product orders. Aimed to generate demand & influence buyer preference, partners are rewarded based on order size, and frequency when they purchase a specific product.

Rolled out as either refunds or rewards, Rebates incentives are useful to increase sales quantity and encourage data collection to help businesses create effective marketing strategies in the future. One example is the rebate program used by Amway, an FMCG company that relies highly on channel partners where they receive a percentage of sales they made as rebates.

5. Marketing Incentives

As the name suggests, this incentive is associated with marketing development funds that are offered to partners to increase sales by creating brand awareness. Slightly different from other incentive program types, this provides incentives in advance to selected partners who are ready to use the funds for a specific marketing purpose.

Aimed to build trust among businesses & their partners, this type of program help partners in creating different campaigns that spread awareness. One example is LG, a renowned home appliance firm that ensures that its channel partners help in expanding their market during pre & post-sales.

6. Activity Incentives

Apart from sales and marketing, there are other ways your channel partners can help your business grow. They can act as extensions of your business where they get rewarded with activity-based partner incentives.

Here, partners help businesses by helping in managing relationships and contracts throughout their supply chain, scheduling demos, or other activities, which are beneficial for your business.

7. Co-operative Marketing Funds

You and your channel partner can invest together to conduct a joint-marketing initiative where both shares a common goal i.e. market extension. Marketing Development funds (MDF) incentives are given before the execution of the marketing activity while Co-operative marketing funds are given out after completion.

This type of incentive program requires mutual understanding of both business and partners to make it a success. One example is Huawei’s incentive program for its sales and service partners that offers different incentives like cooperative marketing funds for lead generation.

8. VARs Incentives

VARs (Value-Added Resellers) Incentives encourage channel partners to add value to the existing services by adding an extra feature in the product, new product, integration, etc. Your channel partners may have the best view of the current market trends and customers’ needs.

Adding value at the sales level can be a great help in encouraging the purchase. However, creating trust with VARs can be a challenge. One example is TTAP – a subsidiary of Toyota, which needed a new platform to connect real-time car data. For that, they partnered with a VAR called Techblocks & make use of the technology.

9. Training Incentives

These are the incentives given to partners when they spend time to learn about your products with the motive to increase sales. Giving proper knowledge about your offerings is a must as it will help them in answering customers’ queries with ease.

The main purpose of this program is to impart education to your channel partners about your brand & offerings. An example is Cisco’s channel partner program that offers a detailed channel partner guide with great insights into training incentives.

10. Loyalty Incentives

Rewarding your partners who are performing their best is essential to keep them motivated. Ensure that you don’t lose them to the ever-growing competition, which is why you need a loyalty incentive program for your channel partners to encourage them to continue their good work.

Build a connection to make sure that they feel valued. One example is JK Tyres, which is leading the loyalty and partner retention game through its point-based offerings & even has an app that enables partners to track their rewards in real-time.

Closing Statement

Hopefully, you must be now aware that channel incentive programs play an effective role in engaging and giving incentives to your channel partners. The FMCG market is so competitive that you need the right distribution channel to gain a competitive advantage over competitors and ensure that your goods reach consumers on time.

You also can optimize your customer retention program with incentives to make it run smoothly and deliver desired results like better engagement, higher retention rate, more purchase orders, etc. Whether you want to build a loyalty program for customers or channel partners, Novus is an all-in-one solution that enables brands to achieve the best results. To know more, connect with our experts and get a free demo to see how we can add value to your business.

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