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Choosing the Right Incentive Supplier for Building Materials Companies

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Choosing the Right Incentive Supplier for Building Materials Companies

I hate seeing companies waste money. Unfortunately, it’s something that happens often in building materials.

Two of the common ways building materials companies waste money are:

  1. Keeping the same program year after year
  2. Using outside resources who just take orders instead of adding real value

And I see both of these wastes happening with incentive programs.

Incentives are an important tool for achieving your goals and they can take many forms. There are simple ones like offering a discounted price on your products. More complex ones can involve travel, points programs, or rebates.

I see too many building materials companies not taking their incentive program seriously enough. They limit their thinking by repeating the same programs they’ve done in the past, or they copy from a competitor.

The companies that decide to work with an incentive company often choose the wrong one. Those are the ones that will do whatever you ask them to do as if you’re supposed to be the expert on incentives, not them. A good incentive company should help you develop an effective program to reach your goals.

Now, I’m not an expert on incentive programs either. I know how useful they can be, but I still have some questions about creating one that gets real results.

So, I asked someone with plenty of expertise on the subject. Christopher Largent of HMI Performance Incentives agreed to give me the answers I needed. If you’re thinking about developing an incentive program for your company, his answers will help you avoid common mistakes and guide you in the right direction.

Choosing the Right Incentive Supplier

Choosing the right incentive supplier can be difficult. The need to differentiate your company from competition while aligning to your brand and ultimately achieving the goals you’ve set forward can be a tall order.

So, what are some important questions and issues to consider when picking the right incentive supplier? Here are a few.

1. Does the incentive supplier understand your needs?

A good incentive supplier should take a consultative approach to understanding your goals. On top of understanding your industry, they should have a solid grasp on the channel you do business through.

A well-organized incentive design phase should include the following types of questions:

  • What are your business goals?
  • What are the unique dynamics of your go-to-market strategy and channel?
  • What is your market/sales forecast for this year? Next year?
  • What is your competition currently offering?
  • What does the ideal product mix look like?
  • Do you currently have any change management initiatives?
  • What do you want to achieve in what time period?
  • Who is your target audience (e.g., direct sales reps, distributor sales reps, dealers, contractors, technicians)?

These questions will help both you and your prospective incentive supplier understand how the two of you match up. It can also set the stage for the planning and envisioning elements of your incentive strategy.

This discovery process should also help you understand what the change in behavior will be. Once you know the behavior change and the audience, the next steps are to answer the following questions:

  • What’s the earning criteria (who’s earning and how)?
  • What’s the integrated marketing strategy behind it?
  • What are the program’s KPIs?
  • How does the earning criteria match up with your business?
  • And (the fun part) what rewards will you offer to motivate the change or key behaviors?

This might sound like a lot to do, but it’s all vital information to uncover and discuss. Any incentive supplier worth their salt will collaborate with you to sort through these questions and help you come up with the answers. Your incentive strategy will be part of your overall business strategy, so better to spend time and get it right.

2. “I’ve never really marketed before” or “most of my marketing looks like my competitors.” How will an incentive program be any different from what you’ve done in the past?

The most experienced incentive suppliers know how to bring value as a third-party incentive marketing agency. From the first question in the discovery process, a great partner will drill down to both what you need and what you don’t know you need. If they’re a true expert in your channel and industry, they’ll be able to share opportunities or ideas that none of your competitors have considered yet.

For instance, as a building materials manufacturer, you may want to drive a lift on a complicated but high-margin product. In conversations with the incentive supplier, you might say, “I need to grow sales of product X by Y date.”

However, as you move through discovery, the incentive supplier might find that, due to the complexity of the product, it might also be necessary to train those key points of influence (techs, dealers, etc.) on the ins and outs of the product. These points of influence may be uncertain on how to effectively sell the product and so a training and enablement strategy will be just as important as a promotion to their customers to help boost sales and capture mindshare.

3. I don’t want my audience to expect this reward. How do you keep the incentive from overshadowing my brand?

Your incentive strategy and program should integrate fully into your brand and not the reverse. The program or reward itself is never the driving force of your company’s go-to-market strategy; rather, it is a cog in the system, a benefit that comes with doing business with you.

The program is an extension of your brand and should never seek to be the reason a customer would do business with you, but be the cherry on top of the cheesecake, if you will.

4. What are the major categories of incentives? And what are the pros and cons of each?

Typically, incentive strategies are bucketed into four major categories based on the output that you’re looking to achieve. These strategies depend on the goals and audience you want to achieve and reach.

Creating Loyalty

These strategies typically target top performers or frequent buyers. They give them recognition for their status among the best or as part of the select group who are responsible for a large share of your business.

These strategies are all about creating lasting mindshare and stickiness to the target points of influence. These strategies typically use two reward vehicles: group incentive travel and points-based programs because of their ability to create lasting emotional connection through trophy and memory value.

The downside: when the expectations around the program are not properly set, they can become seen as annuities and expected by the recipients. Not achieving or participating can be viewed as a takeaway.

Driving Growth (Share of Wallet)

Often we see these strategies target the middle of the pack – the middle 60% of the audience base. This strategy looks at the accounts that have the highest capacity to grow.

We view this as an offensive play, targeting these folks with growth goals to help shift discretionary funds toward doing business with you instead of your competitors. The target’s goal will typically be personalized to the target point of influence’s ability to stretch. Their goals are set based on their historical purchase history and the business environment for that particular client – goals are often quarterly or annual in nature. In some instances, we see the program participant self-select their goals, creating more buy-in and a higher likelihood of goal achievement.

The vehicles for these programs are often a points program. Rewards points are typically only earned if the goal is achieved, in order to save the client from rewarding on loyalty unachieved. This same behavior can be achieved through group incentive travel, instituting a goal to go on the trip, as commonly seen in the building materials space.

The downside: if there isn’t enough knowledge or data on who the target audience is, the program can end up not being very rewarding for those at the bottom of the pack and thus might not move the needle for them.

Conditioning Behavioral Change (Achieving Transformation)

As the name suggests, these strategies target a specific behavior, or behaviors, that need to be adopted or implemented within a channel. These strategies come in many forms, but recently we’ve seen high adoption of distributors wanting sales teams to push more business to an eCommerce platform, a service provider wanting to encourage their channel partners to include sales techs more often in a deal, or a manufacturer wanting to encourage down-channel enablement through learning and certifications.

These programs typically utilize either points programs or promotions as the reward vehicle to achieve your goals, depending on whether it’s a long-term behavior or a short-term growth play.

The downside: these programs may need additional training built in, especially if it’s a heavy lift, like changing the way the audience sells. Additional promotions may also be necessary to keep the program fresh and top of mind.

Optimizing the Channel

Strategies in this vein typically aim to educate, train, or better understand a channel and their buying behaviors. Often, these strategies aim to either create or enhance the knowledge or data that you have on a certain down-channel target audience. This often comes in the form of having a vehicle for data collection or the ability to educate around the product or brand.

The downside: can be a difficult strategy to maintain with freshness and motivation toward your goal achievement. When it comes to education, not everyone learns the same way and so the client must be willing to switch their tactics in the event that the reward is not showing motivation.

5. I need to differentiate my company from my competition. How will an incentive program help me stand out from competitors with similar incentives?

Your incentive program should fully integrate into your brand. To take it a step further, your program should also be considered an extension of your marketing endeavors for you to use to promote your own value propositions, exude your unique culture, and become a better business partner to your customers/partners.

Through discovery, your incentive supplier should have a good handle on making sure your program doesn’t become a “me too” in your market. Instead, they should work to differentiate the strategy, the look and feel, and reward vehicles as much as possible to disrupt and maximize the stickiness of the program.

6. When is it time to stop or change an incentive that has been going on for several years?

Simply put, when the program stops achieving the desired business results. A program that becomes stale or expected by the audience is only one part of the failure. The main breakdown is if the solution stops achieving the desired business results with little ability to change its course.

Every program should be tied to a defined business goal that is measurable and consistently revisited by your team and the incentive supplier’s team collectively. You should consistently look at your program to make sure it’s still achieving the goal you set out to achieve. If it’s not, it’s time to reassess and tackle that goal from a different angle.

Wizard Strategy specializes in helping building materials companies grow their businesses through better understanding of your customers needs. If you’d like to learn more. Schedule a free consultation today.

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About The Author

I am the leading sales growth consultant in the building materials industry, I identify the blind spots that enable building materials companies to grow their sales and retain more customers.  As I am not an ad agency, my recommendations are focused on your sales growth and not my future income.

My mission is to help building materials companies be the preferred supplier of their customers and to turn those customers into their best salespeople. Contact me to discuss your situation.