Rebates are a fact of life and the first marketing group rebate negotiation, in 1968, was designed to capture incremental revenue (for a wire company) with the distributors collecting the funds for a social engagement.
But the core issue was the manufacturer sought growth / increased market share.
Vendor published programs such as Legrand’s Cornerstone program, Leviton’s Excalibur program, Thomas & Betts‘ Signature Service, Hoffman’s Meridian and more are “standardized” programs, offered to distributors who meet certain performance expectations (sales volume, category commitment, etc). They were all designed to generate growth (either conversions, some share shift or stimuli to focus sales and marketing efforts).
Many of these programs have remained the same for years.
And here’s where we need your help.
Channel Marketing Group is working with a client who reaches many distributors. They are seeking distributor input on what these programs should look like nowadays / into the future.
So, we need your help by taking this survey. At the end you can also register to win one of three Microsoft Surface’s AND they will donate $10 per response to the NAED Education Foundation.
We need your input by Tuesday, August 9th.
Additionally, share your thoughts below, anonymously, on:
- Why a manufacturer should offer a rebate if it is not based on growth?
- What other supply chain / inventory management elements should be included as an element of a rebate program?
- What is the role, if any, of business development activities in a vendor published program? (i.e. Marketing funds / co-op, promotional activities, planning processes, etc)
Manufacturers, do you feel you get an appropriate return on your vendor published programs or are they a “necessary evil” / recognition of supporting distributor profitability?
If you are a manufacturer rep, what are your thoughts on the issue.
So, do vendor published rebate programs work? Do they drive growth?
Thanks for your input. All feedback is confidential.
2 Comments
Good read about rebates…
For a smaller company like us, a lighting company, I see these as a ‘foot in the door’ necessary evil. Many distributors will not stock or add your company to their vendor list unless you offer some kind of rebate.
Does it drive decision? Marginally
Good topic and I am sure with a lot of differing opinions. I am not a distributor but I speak as a manufacturer’s representative. When I got in the business back in the early 80’s rebates, if offered, were from .5%-2% at the most. They were appreciated and manufacturer’s were rewarded with a commitment for the lion share of a distributors business. Rebates were often based on growth. Today, rebates for many are in the double digit range and are “expected”, with little or no appreciation expressed or shown. Worse yet, seldom is there any commitment from the distributor to assure continued business. Very seldom is it tied to growth (with the exception of Imark). They get a rebate regardless of if there is no growth. This being the case there is no incentive to commit when there are many others waiting in the wings to take whatever they can get and pass on a rebate to boot. Too often this is not the exception anymore. The lowest price with the biggest rebate gets the order these days. A sad scenario. Why has manufacturing and distribution allowed this to happen? There is less thought into how low of margin on will sell at when they know there is a double digit rebate at the end of the day. I don’t envy the manufacturer, distributor or rep. As a rep I know we are paying the price for this rebate, co-op, and terms discounts and dating movement. Somebody has to pay the ultimate price for it and it isn’t the ones who makes those decisions, it is the rep. Over the past 10-15 years many of our factories have slashed commissions from 20%-70% and more has been put on our plate to boot. Along with the rebates, co-op money, discount terms and more, the rep is then asked to pay $100’s of dollars to sponsor the distributor activities and throw in door prizes as well.. What happened to the rebate and co-op funds? In spite of it all, it is still a good business that happens to have some very disturbing trends.
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