Taking advantage of price rebates and incentives is an excellent method for driving additional sales in the coming year. With rebates, you don’t directly slash the price of products and services but instead, incentivize the purchase of products. Once customers fulfill all the incentive requirements, they will receive their rebate, which helps them save money and boost sales. However, you don’t want to go about creating price rebates and incentives blindly. Doing so may open you up to massive financial losses as your net profits dwindle. So, before you dive headfirst into the world of price rebates and incentives for the upcoming year, here is what you need to know about B2B incentives.
Why B2B Incentives?
When discussing possible sales prices with customers, it is common for customers to over-promise the volume they intend to buy. They want to make sure they land the sales price, and by promising to purchase a larger amount, it increases the probability of the sale price becoming a reality.
This is fine for the client, but it can spell trouble for you as the manufacturer. For a discounted price to prove profitable for you, reaching a specific volume of sales is necessary. So when a customer promises to purchase 4,000 units of a particular product but then ends up buying only 1,000, it can seriously impact your bottom line. In essence, the customer wins by scoring a nice discount, yet you’re left dealing with a financial loss.
Instead, by creating a rebate offer, you incentivize the volume purchase. Essentially, it is safeguarding you and your company. The client will only receive the discounted price when they reach an agreed-upon volume (or if they make purchases by a set date or buy products they wouldn’t normally order). In the end, it is the best of both worlds. Customers will save money, and you’ll still reach the necessary sales volume for the deal to become profitable.
Broken Customer Promises Can Be Big Problems For Your Business
When a customer promises to make a large order, your business will increase production or divert resources from one product to boost the manufacturing of a different product. And yet, should the customer pull out on their large order, it will leave you with a serious problem. You’ll have a large supply of products you may not be able to move right away, and it may also leave you short of another product. So not only will it not generate the kind of sales you believed were to be possible, but you’ll have a surplus of material on hand that can take time to off-load (and you may be forced to sell the products at a steep discount, to clear up storage space in your facility). Either way, you’re left with a large financial mess.
This means broken client promises can end up costing you tens of thousands of dollars (if not more). It may result in the loss of other customers who are forced to look elsewhere for the material you could not manufacture (you were too busy increasing production of the product the first client said they would order). It may also block the retention of new customers. Do you want to put all your faith in a client’s promise to make large bulk orders?
It doesn’t matter how long you’ve been doing business with the client. It would be best if you did what’s best for your business and the client at the same time. And the best way to do this is by crafting B2B incentives and rebates.
Different Kinds of Rebate Programs
There is no shortage of rebate programs you can create for your customers. Some incentive rebate methods include volume, growth, retention, and mix rebates. There are also channel management rebates, which cover ship and debit rebates, price masking rebates, and indirect customer rebates.
Deciding which rebate works best for your business and your customers can be tricky. Not all rebates work for all business models (or client types). Suppose you are unfamiliar with executing B2B incentives and would like to help generate the right kind of incentive model. In that case, you owe it to yourself to work with the sales professionals at Incentive Insights.
Help With Your B2B Price Rebates and Incentives in 2022
Price rebates and incentives, when executed correctly, can make a dramatic difference in your company’s overall sales. It can help increase the desirability of certain products and increase order numbers from current and new customers. However, all of this will only prove financially possible with the right execution of said incentives. Instead of blindly crafting rebate programs or guessing at price points for incentives, it is far better to partner with a professional service provider that understands what incentives work, what rebates will prove the most profitable, and how you can both make money and increase sales while saving your customers money at the same time. Incentive Insights is exactly the company you need to work with. So, whether you have questions about rebate programs or are ready to begin designing these incentive programs for the coming year, there’s never been a better time to contact Incentive Insights than right now.
