Customer and Distributor Incentives

Posted in Marketing and Strategy Terms, Total Reads: 1256

Definition: Customer and Distributor Incentives

To build key relationships, to inspire motivation and teamwork, to increase productivity and thus to increase sales, the sales team of any firm and its customers, require unique benefits, excitement and relaxation. These are known as incentives.

The incentives are usually provided in form of cash offerings (termed as prize money for being good in something or in meeting the target). But sometimes, certain incentive programs can be formulated with the help of many companies which are professionals in such program offerings. These incentive programs can be customized to intrigue the distributors while still being within the companies’ budget. These programs help motivate the distributors to focus on products of a company and thus grow sales. Also, they make the distributors feel as if they are truly part of an exclusive group and the same time enhancing their loyalty to the company.

Incentives play an important role in supporting the achievement of KPI (key-performance-indicators) targets. So, the structuring of such programs should be done carefully. A general approach followed to structure an incentive program, consists of the following steps:

• Specify the objectives of the incentive program

• Determine who and what is critical

• Determine the award system

• Develop a tracking plan

• Develop the budget

• Decide who will run the program

• Write the rules

• Establish communications plan

• Consider the role of training

• Launch and track the program

• Conclude the program

• Demonstrate appreciation

• Evaluate the results and incorporate changes in the next program


Incentives can have a negative influence. For example, when the companies have to eliminate or reduce the incentives for some reasons (mostly financial reasons), it is often found that morale is lower than that before the incentives were installed. This leads to higher turnover and reduced productivity.

Hence, this concludes the definition of Customer and Distributor Incentives along with its overview.

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