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.
Step 2: Designing Your Incentives
During a product launch in a new market, sales incentives should be kept higher to gain momentum. Some examples of offers that may be designed are:
1. Account-based incentive: A $50 case incentive for each new off-premise account opened. A $25 cash incentive offered for each on-premise account opened by the distributor’s sales representative.
2. Total accounts opened: A $1000 cash incentive is offered to the distributor if 200 stores are opened as new accounts in a quarter.
3. Time based incentives: The incentives run for the first month or a quarter. For the purposes of achieving maximizing your winery’s sales success, both you and your distributor will need to work hard at developing your launch incentives.
4. Key accounts incentives: Work on getting branded retailers, floor displays, famous restaurant house pours and distributor houses.
The launch is over and you want to keep selling. Incentives are good but not the end all of selling so make another trip to work the market with your distributor’s sales representative and organize regular tastings at retail stores or restaurants. A winemaker’s visit to talk about the wines with the distributor’s sales representatives and accounts also works to boost interest in a brand and is a great time to incentivize.
Here are some examples of on-going incentives that may be offered:
1. Hand-selling incentive for retailer: For every case sold per week, the retail store owner receives a bonus. Because a professional is leading the process, potential customers have the opportunity to not only hear about the story of the brand but also be able to ask questions. An excellent promoter is also good at human behavior and can assess where the prospect is in the buying cycle, and move him/her closer to a sale. Be sure to use educate your retail customer on your brand philosophy. The more information that they share with the customer, the more personal the experience and the higher the chance of a successful sale.
2. Repeat Orders: This should be launched after a brief gap from the launch period offers. It will help in getting re-orders and therefore promise longevity to your brand after the initial round of orders. For example, offer $5 per case for off-premise and $10 for on-premise for all repeat orders.
3. Display incentives: An obvious benefit is that your brand will stand out in the crowd with a fabulous display, as opposed to a sea of bottles on a store shelf. It's hard to go unnoticed when your branded packages are stacked high with sharp-looking personal promoters in full view.
The Wait Wines Display In One Of The Chain Stores In Ohio State, USA
a. Offer incentives to the sales representative for product placement. It could be a smaller bonus for placing your product on the rack that is at the eye-level of the customer rather than on the bottom shelf.
b. Offering a bonus to the retailer and salesperson for a 25 case display stack in a prime location of the store, that is mostly near the entrance and the first to catch the customer’s eye as they enter the store. This is even more beneficial for your brand if run during the holiday period when the customer numbers are the highest and there is a better chance of the stock being depleted as well.
Yellow Tail Wines Floor Display at Valley Liquors In Wimington, DE
4. In-Store Tasting Incentives
The best part of in-store tastings are the daily sales totals. At the end of a tasting you have an immediate count of how your wine was received by the bottles sold. This information is key in planning the next event, as well as making any adjustments necessary to sell even more the next time.
Keep your retailers updated with reports on your success. At the end of the day, money talks. If you can keep your partners happy with strong quarterly numbers that reflect solid depletion rates across your distribution and retailer channels then you are sure to be one of their favorite brands to work with.
In-Store Tasting should always be a line item in your marketing budget if you plan on focusing your resources on ensuring high depletion rates. Sight, sound, taste, touch and smell are all heightened through one moment, which is sure to lead to many new customers who will be dedicated to coming back for more.
You should work on your incentive programs based on each market and time of the year. Your distributor would know its customers and market better, so it is best to discuss your sales incentives plans on an annual basis with your distributor. See an example of a promo calender below. (example use only - Click to download the file)
There is no denial or debate about the fact that your wine is of unsurpassed quality, your packaging is phenomenal or your craft beer tastes like no other, but sales are also a real aspect of your business and incentives are a predominant factor to drive sales. Stagger your sales incentive program and tailor it as per the time of the year so your stock is moving all year long.