Besides generating sales, well-planned channel incentive schemes improve customer service and brand loyalty. You need to design incentive schemes based on your objective, which invariably would be to sell more volume, channel partners’ potential, the association of a partner, product categories being sold, and different types of incentive schemes. You need to pick one which best serves the purpose and keep you as well as your partners happy. Typically, the principal company comes up with a slab-based incentive scheme.
A product needs to be readily available in the market for sales to take off. Product placement is the first thing that needs to be done; other factors of marketing will only kick in after the product is available. Therefore, companies rely heavily on retailers and partners. In order to ensure the success of all the parties/partners involved, effective partner communication and engagement is pivotal. Moreover, some partners may have multiple principal companies for the same segment of the product.
Manufacturers and brand owners spend a huge amount of money towards incentives to channel partners. They know that partners are crucial to their success and help their product reach the end customers faster. When rewarded appropriately, the channels are capable of bringing business through huge demand from customers. The more the manufacturer produces, the more revenues they can generate.