Blog, Pricing

Top 5 Benefits of Incentive Management

By David Anderson
June 18, 2018

Rebates and incentive programs are powerful tools for any B2B selling organization. Depending on your industry, they can be used to simply create directed incentives to spur desired buying behavior, or they may even be the primary vehicle in determining net price for customers. Regardless of how you use these incentives, they generally require serious effort to properly manage inside any business.

There is usually tension, even in multi-billion dollar enterprises, between the selling team’s desire to use these powerful tools to drive business and the team responsible for measuring and tracking them. As sellers, we were taught to keep the use of incentives to a minimum, because our finance team had limited resources to manage the hours of effort required for blunt-force manual data collection and spreadsheet work for the revenue accounting work needed to implement the imaginative programs our selling team would dream up to close business.

However, throwing up organizational barriers around incentive programs is exactly the opposite of what businesses should do. Building an organized and effective competency to manage incentive programs can not only result in a revenue boost, it can also be a massive competitive differentiator for your business.

Investing in a proper capability to deliver and administer rebate and incentive programs can provide your selling teams with capabilities that can set you apart from your competitors, including:

  1. Alignment. A collection of selling tools that align the incentives for your channel partner or customer with your own needs
  2. Enforcement. A framework for enforcing commitments with your customers (unlike open commitments that are often seen in negotiations)
  3. Controlled Concessions. The ability for sales to offer controlled concessions as a tool to close deals
  4. Support. Creative pricing structure and program support that creates competitive differentiation
  5. Competitor Pain. The ability to inflict administrative pain and costs on competitors who follow and match your incentive programs without a proper system to manage them

Executing on incentive programs typically comes with substantial effort for the management and validation of claims, and for revenue accounting (accrual and charge tracking). Investing in a capability to support the design and administration of incentive management programs will reduce the cost and effort incurred, and will often find money associated with untracked or improperly paid claims that are common in manually administered programs.

Investment in incentive management should be considered an investment in a strategic capability for differentiation of your business relative to your competitors.  This investment will not only reduce your costs but will empower your organization to broadly adopt the use of these beneficial programs in a way your competitors cannot match.

To learn more about effective incentive management, join the webcast, Is REBATE a 4-Letter Word on Wednesday, June 27. Dave will be joined by William Humsi of Simon-Kucher & Partners.

  • incentive management , incentive manager , rebates

    David Anderson

    David Anderson is a Boston-based Business Consultant with Vendavo. Since 2001 he has led and consulted on pricing & commercial process transformation at some of the world’s largest companies. After joining Vendavo in 2016, he has specialized on driving value & outcomes with Vendavo’s high tech, medical device, and process industry customers. Dave is a manufacturing process engineer by training (BS, MSE from Kettering, Purdue), and received his MBA from Harvard Business School.