Dealer incentives are integral for driving sales performance and strengthening relationships between manufacturers and their dealer networks. So much so that many dealers consider these incentives as part of their compensation and base their buying decisions on them.
Since incentives are so ingrained in the manufacturing landscape, you need to get them right if you want your program to capture dealers’ attention.
Economic pressures, technological advancements and evolving customer expectations are forcing business priorities to shift. They could also be shifting the effectiveness of your programs. If you’ve left your program strategy unexamined or unoptimized for a while, there’s a good chance they aren’t living up to their potential.
Now is a great time to rethink your approach. Below are three key indicators that your dealer incentive strategy has grown stagnant, plus how to solve them. If you’ve noticed these signs of declining performance in your dealer network, take action so your incentives can start getting the results you expect from them.
Related: 5 expert strategies to supercharge your channel incentive program
1. Declining sales performance
This is the most obvious indicator that your incentive approach needs an update. If your sales figures are trending downward despite running incentive programs, it’s worth investigating why.
Why this happens
- Outdated incentive models: Traditional “one-size-fits-all” incentives may not resonate with modern dealers or customers. This is especially true as channels become more complex and more partners are added.
- Lack of relevance: Incentives that don’t align with dealers’ specific needs, inventory or market challenges are unlikely to motivate them. Dealers expect targeted incentives, otherwise you’re just adding to the “noise” around them.
- Increased competition: Dealers are bombarded with offers from competitors that are competing for their attention. If your incentives aren’t compelling enough, or not targeted enough, they may lose interest, or worse actively promote a competitor’s product.
How to address it
- Personalize your incentive programs: Use data-driven insights to tailor incentives to individual dealers, focusing on what drives their customers.
- Introduce tiered rewards: Create structured programs where top-performing dealers receive exclusive benefits, while middle and lower performers receive smaller rewards and stretch goals to inspire higher performance.
- Regularly review market trends: Stay informed about industry updates and adapt your programs accordingly. For instance, if customer preferences lean toward environmentally friendly products, offer them more incentives that match those desires.
2. Lack of dealer engagement
Dealer incentive programs are only successful if your dealers actively participate. Any lack of engagement is potential revenue you’re missing. And a large lack of engagement can stall your program altogether.
Why this happens
- Cumbersome processes: Complex program requirements or unclear rules frustrate dealers, discouraging their involvement. If it’s too frustrating, they might decide the incentive is not worth the effort to obtain it.
- Insufficient communication: Communications are how dealers learn about the program, its rules and its benefits. Without them, dealers may not fully understand why they should participate (if they’re aware of the program at all).
- Low perceived value: If incentives seem insignificant or hard to achieve, dealers often won’t engage with them. They’ll focus on other incentives that offer a higher reward for their time.
How to address it
- Streamline processes: Design a user-friendly system for enrollment and, if applicable, claims. Automation tools can simplify workflows and reduce administrative burdens.
- Enhance communications: Proactively share updates about available incentives through email campaigns, in-person visits or an easy-to-navigate online portal. Provide tailored, role-specific messaging for maximum impact.
- Add tangible value: Consider offering perks such as exclusive training, access to new product lines, peer-to-peer recognition or marketing support to demonstrate your commitment to dealers’ success. This also helps strengthen your existing relationships.
Related: 5 ways to simplify complex incentive programs
3. Poor ROI on incentive programs
A strong ROI is likely the reason why you created your incentive program in the first place. Running dealer incentive programs will always require investment, but the returns should be worth it. If your ROI is failing to meet expectations, it’s a clear sign that your strategy needs to be adjusted.
Why this happens
- No clear metrics: Without clearly defined, measurable goals or KPIs, it’s hard to assess whether your programs are achieving desired outcomes.
- Revenue leakage: Disorganized systems, manual errors or inconsistencies in payout processes can drain profits unintentionally.
- Misaligned objectives: If your incentive strategy doesn’t align with broader business goals, you may end up rewarding the wrong outcomes.
How to address it
- Set better goals: Define how you’ll measure success (e.g., sales growth, increased market share or dealer satisfaction) and be consistent with how you’ll evaluate if each goal is achieved.
- Leverage data and analytics: Monitor incentive performance in real-time, using up-to-date technology to identify problem areas and optimize programs based on data insights.
- Automate payouts: Implement systems to calculate and deliver payouts accurately, ensuring timely and error-free incentives. This also helps build trust with dealers.
Take control of your incentive strategy
Recognizing these signs early and making proactive fixes can turn around a struggling dealer incentives program. It’s always a good time to refine your dealer incentives to align with current market dynamics and dealer expectations.
Investing in smarter, more sophisticated incentive programs elevates sales performance while also strengthening your relationship with dealers for mutual long-term success.
Ready to take the next step? Start exploring strategic dealer incentive solutions tailored to your business.