B2B Distributors: Sail Past MRO Sales Goals with Incentive Programs

ITA Group
ITA Group

a sailboat going through the water fast

Maintenance, Repair and Operation (MRO) customers represent a significant share of most distributors’ business. But this a hard market to pin down, and “MRO” may mean something different to each distributor, depending on the types of products and brands you sell. No matter how you look at it, the MRO supply market in the US is enormous and distributors are the key to feeding the $500 billion-plus MRO product market each year.

How the MRO Market is Different

Now, we don’t have to tell you that selling to MRO customers is different than selling to a small business or a reseller. Often, procurement is more important. MRO customers are extremely price sensitive, and margins are relatively thin, but there’s normally enough contract volume to justify it. Online order system and tracking location purchase tracking reports become requirements instead of just value-adds. In the MRO world, customer loyalty is fragile. If you can’t deliver the right value at the right price at the right time, your customer will find someone who can.

The MRO market isn’t the place to think of offering perks and incentives as a customer loyalty strategy. Most companies have policies in place to discourage this strategy, and many don’t even allow employees to take a gift from a vendor valued over $25. Some companies even frown on you buying their people lunch.

So, if the MRO market is big for you, and you can’t use your market development funds to improve customer loyalty, what do you do? Start with your own sales force.

A Distributor’s Sales Force Is Key

The best opportunities to increase MRO sales for both you and your suppliers rest with your sales force. Your salespeople are closest to the buying influences. Their conversations can open prospects to new technologies, new services and new revenue sources for both you and your vendors. Focusing their time and attention can reap huge rewards. 

Your vendors know this. Think about how many times a supplier rep has talked with you about an incentive program or a promotion they want to put in place for your salespeople. They need your people to tell the MROs about their products and services. They know your people already have the most direct relationship with MRO buyers, and they desperately need to leverage those relationships to be successful. Why else would they want to run promotions?

Still, it’s a huge effort to manage a distributor incentive program or promotion. First, the supplier must ask your permission. Then they have to enroll your people, launch the incentive program and keep your people engaged. Then they have to get sales results from you to track what each person has done and how much to reward them.  That’s a big investment for a supplier, but it’s worth it if they can capture the time and attention of your people.

Concentrating and Controlling MRO Sales Force Efforts

But what if you were in control? What if suppliers could simply fund promotions directly through you? For them, it would mean speed to market, more effective communications and reduced tracking requirements. You already know your salespeople. They’ll read messages from you when they’re far less likely to read promo materials the suppliers send. And you have every transaction already tied directly to the right salesperson. For a supplier, it becomes easy and effective to use your sales force to get their exciting new product market. For you, it means control.

Let’s face it, some of the products your suppliers want to promote might not be what you want to push. Or your supplier might be trying to start a promotion at a time that doesn’t fit well for you. Maybe five others suppliers are already running promotions. The supplier doesn’t know that, but you do.

Putting yourself in the driver’s seat makes you a better partner and focuses your people on doing the right things at the right time to maximize results for both of you. 

Also, taking control of vendor promotions to your sales force can actually save them money by avoiding costly communications campaigns and expensive tracking systems that are completely outside their core business. That could free up vendor funds to help you manage the program for them.  

Getting Started with MRO Incentive Programs

First, you’ll want to investigate some technology to help. Today’s incentive management platforms can integrate with your own to make managing incentive programs simpler than ever. It’s far less expensive to use an existing incentive management platform than try to build one yourself. Look for a platform that incorporates email communications to help keep your sales people engaged. You will also need tracking capabilities to show each individual salesperson where they stand.

Finally, make sure any incentive management platform you’re considering includes flexible reporting. This makes it simple to show your suppliers what they’re getting for their incentive program investment and streamlines vendor promotional billing. 

Next, you’ll want to talk to your vendors. Discuss how you want to help them concentrate your team’s sales efforts to create a win for both of you with targeted incentive programs and promotions. Investigate using co-op or market development funds for the program rewards as well as your program administration. And don’t forget to look at creating a promotional calendar to maximize attention and help your vendors plan promotions around new product roll-outs. 

So, when you’re looking at ways to drive MRO business, be proactive with your suppliers in building programs that reward your sales force. It’s a win-win proposition for you both. 

Check out Parts 1, 2 and 3 of the B2B Channel Partner's Journey blog series: