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Reseller & Distribution Promotions
Before reviewing the promotions, it is important to note that there are often problems with reseller run promotions--specifically compliance. I have paid for endcaps for the entire month, that weren’t setup until the
second week. I have paid for ads, only to have the wrong product or the wrong price listed (one time my “special” price was double the normal store price). I even received a notice from a reseller (CompUSA, of
course) that said that, because of the administrative effort, they were no longer sending proof of compliance (i.e., no copy of the ad)--of course I responded by saying that without proof of compliance, I was no
longer sending the MDF checks (it seemed to work).
Understanding the possibility of noncompliance will help you keep a watch out to ensure you get what you paid for. This is important since you must get a positive ROI (rather than “just” a better rapport with the
store) to justify the expenditures. Also, I found that many reseller driven promotions drop cash to their bottom line, while hardly showing an increase in sales, while a few seem to be worthwhile.
Following are some of the most common promotions that can be attempted with resellers and customers.
Retail
- End caps. An end cap is the shelf at the end of each aisle. It is supposed to be a high visibility, high traffic location that can showcase your product, separate it from the competition, and is worth a premium. I have found an increase in sales by purchasing an end cap (actually a series of end caps for the entire chain). However, the spike in sales has seldom surpassed the cost except once, with Netscape. In this case, with the #1 best-selling software product in the world, we kept running out of inventory. The end cap was the only way to prevent being out of stock, and it actual increased sales to finally justify the $36k to $70k expense. Otherwise, they produce a negative return. One concern about end caps, and you have to request that it doesn’t happen, is that they don’t move ALL the product from the regular shelf to the end-cap, otherwise a “branded” prospect can’t find you in the regular section, may not notice your end cap, and purchase a competitive product.
- Run of Press (ROP). An ROP is typically a small 1 - 2” add that highlights your product. It works OK if you combine it with an aggressive promotion--either a price reduction or rebate. it is the modest
way to contribute to the store traffic.
- Rebates. I have had success with rebates, but only temporality--if they run too long, the customers consider the pricing permanent and you loose the advantage of an impending event.
I always prefer mail in rebates, finding that for any amount under $30, I get a 10-15% redemption (they influence every sale, but only cost for the few that bother to send in the rebate). In-store rebates effect every sale--I sometimes use them when I am non-competitive on price and want to equalize the playing field.
- In-store Signage. I’ve been hit up by some chains to pay for my name on the light panels around their store. I have never done it, so I don’t know if it works--it would be hard to track, and so I wouldn’t
do it.
- Standup Displays. These can work like permanent end caps. However, I find that most displays are setup away from the main product category, and hence may make it difficult for someone to find you.
Hence, I’ve never done them, nor do I know the potential ROI.
- Kiosk. Some locations have terminals where you can actually try the software before you buy it (especially the game consoles). This seems to work good for games, but I don’t see it as much lately. My
experience was that the machines were down too often. The cost didn’t seem to bad though.
- Spiffs. Spiffs seem to get the sales reps to pay attention to your product if it is new and seems best if they have to complete a questionnaire (paper/fax or on-line) to ensure they know your product’s
key selling points. However, the results are short lived--loose the spiff, loose the attention. By the way, watch the store guidelines for spiffs--some are not allowed--in which case I give away merchandise
(software, T-shirts, etc. instead of cash).
- In-store Training w/seed NFR copy. This is one of the most effective approaches to get long-term buy-in from the sales reps. It is true that a sales person sells what he knows, and knows what he
uses. the key is to teach him about the product and then offer a copy for a discount (not for free--since they will not value it as much, and the install rate goes down significantly for free, versus a small
cost). I typically sell the NFR copies for $10 to $20 (unless it cost less than that--in which case I give it away). This is by-far one of the best uses of my funds. See training within the links for companies that do this inexpensively.
There are other types of “payable” promotions such as contest, product highlight while on hold, etc.
VARs and System Integrators
Spiffs and especially training w/seed copies are often my most effective promotions within VARs and System Integrators. I’ve also had success with bundles and impending event product or support and customer training
discounts that they can pass along.
Sales Incentives
There are promotions for the customer to pull sales, and promotions to the sales reps to push sales--it is important to leverage both push and pull to maximize sales. Whenever working with sales it is important to
run the right kind of sales incentives that have the maximum motivational impact. I learned early in my sales management career that apx. 30% of the motivation is setting the goal, while 70% of the motivation
occurs by the recognition and reward after a sale or goal is achieved. The degree of motivation by sales is determined somewhat by the faith they have in your integrity--keeping your promise to deliver the
award. This requires meticulous and timely follow-up to reward good behavior.
It is easy to follow-up timely with a few sales people, but difficult when you have thousands--especially indirect reports, like resellers. It is times like this that a system comes in handy.
It is also important to know all the methods to have sales incentive success. For both of these objectives I recommend checking out SalesDriver. Click here or on the banner to find out more, and download an invaluable white paper on effective incentives.
Following are three of the seven secrets to making sales incentives work:
- Cash is not king. Maslow knew how to motivate a sales team. It is important to note that we work for what we need, we work harder for what we want.
- The A-B-C’s of motivation. Motivate the middle to maximize results.
- “What’s in it for me?” Make your rewards personal.
Click this link and download the pdf to learn the other four secrets, and the complete details for all seven sales incentive secrets.
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