How Top communication of schemes improves distributors sales coverage

How much should you spend on marketing and how do you measure the ROI?

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Channel Incentive for FMCG; The Challenges and Solutions

What is a Trade Scheme?

 

The normal terms of trade is that every trade partner in the chain(Distributor, Wholesaler, Retailer, etc) make a certain pre defined margin on each product they make. This margin is the gross profit of the trade partner. Trade scheme is an additional monetary benefit that is given to the trade partners. This additional margin is usually structured around a time period which can range from a few days to an year. A few forms a trade scheme might take are as follows.
 

Flat discount – Reduction in purchase price leading to higher profit per sale

  Progressive discount – Higher reduction for higher purchases which encourages partners to sell higher amounts of products

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  Free items – Giving additional products for the same price

 Lucky draw – A few lucky retailers stand to earn big rewards

  Slab based rewards – Similar to progressive discount but rewards instead of discount

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Trade schemes are tools in the hands of a brand to ensure that the trade partners are encouraged to sell more of their products. Designing a trade scheme which would attract trade partners to sell more of a brand’s products is the most important aspect of a Sales manager’s job.

For distributors, marketing isn’t about clever advertising. Promotions can be effective as tactics, but you can’t measure marketing by product sales because too many other departments are involved.

Marketing objectives and measurements should be about how you acquire, retain and build wallet share with customers. With the right approach, you can determine the optimal budget and measure the ROI of your marketing efforts.

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Distributor sales incentives and rebate programs can be deployed to accomplish strategic goals within the distribution channel. These goals might include structuring promotions to drive sales of high margin products, move old inventory to free up space or speed up the adoption rates of new products.

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Cobranding can help increase Width and Depth of Distributors beatwise Coverage

There are important considerations to take into account to ensure the success of a distributor incentive program. Utilize these best practices for maximum ROI.

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How to improve The Performance of Channel Partners in The FMCG Distribution Channels?

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Despite a proven track record of improving channel performance, factors such as execution and poor design can reduce the performance of incentive program. Your program is as effective as you make it. These best practices can improve the performance of channel partner in the FMCG distribution channels:

Training rewards 

By rewarding your channel partner for completing the training, you inform them and empower them to sell more products. 

Get certified 

Completion of a training  

Participation in webinar 

Answer the quiz 

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Discount on end user information 

Add discount opportunities to your product so that end users can earn rewards by submitting specific information, such as: 

Contact information 

Age, gender, marital status 

Lifestyle information (hobbies, etc.) 

Communication preference

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Segmented promotions 

Distributors can be segmented into different groups to customize the goals, eligibility, or duration of each reward program.

Region

Verticals

Performance levels

Partner type (dealer, retailer, etc.)

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Rewards activity and engagement analytics

Access your incentive dashboard and analytics to assess the results of your incentive program. Analyze your participants activities, such as:

Registration

Redemption activities

Email clickthrough rate and open rate

Program engagement level

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Best Practices for 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐨𝐫 𝐒𝐚𝐥𝐞𝐬 𝐈𝐧𝐜𝐞𝐧𝐭𝐢𝐯𝐞𝐬!

Distributor sales incentives programs are deployed to accomplish strategic goals within the distribution channel. Below are some of the best practices to keep in mind. 

The goals incentive programs may include structuring promotions to drive sales of high-margin products or moving old inventory.

Utilize these 4 best practices to maximum ROI.

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 𝐀𝐧𝐚𝐥𝐲𝐳𝐞 𝐘𝐨𝐮𝐫 𝐀𝐮𝐝𝐢𝐞𝐧𝐜𝐞: The success of your distributor incentives programs depends on being able to personalize your marketing to your distributor sales reps (DSRs). 

𝐀𝐥𝐢𝐠𝐧 𝐏𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧𝐬 𝐰𝐢𝐭𝐡 𝐎𝐫𝐠𝐚𝐧𝐢𝐳𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐆𝐨𝐚𝐥𝐬: Having specific, measurable outcomes in mind will allow you to structure your distributor incentive program to achieve those outcomes. 

𝐑𝐞𝐠𝐮𝐥𝐚𝐫𝐥𝐲 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐞 𝐰𝐢𝐭𝐡 𝐘𝐨𝐮𝐫 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐨𝐫 𝐒𝐚𝐥𝐞𝐬 𝐑𝐞𝐩𝐬: To maximize the effectiveness of your incentive program, you should strive to provide participants with relevant, engaging communication regularly. 

 𝐓𝐫𝐚𝐜𝐤 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐨𝐫 𝐈𝐧𝐜𝐞𝐧𝐭𝐢𝐯𝐞 𝐊𝐏𝐈𝐬: key performance indicators are metrics you can track with a Sales Incentive & performance management technology” to ensure your incentive program is on pace to achieve its goals.

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Analyze Your Audience
The success of your distributor sales incentives and rebate program depends on being able to personalize your marketing to your distributor sales reps (DSRs). During the registration process, make sure you are collecting accurate contact, firmographic and demographic data to personalize your promotional marketing.

Align Promotions with Organizational Goals
Having specific, measurable outcomes in mind will allow you to structure your distributor incentive program to achieve those outcomes. The ability to run multiple promotions by product, region or organization can allow manufacturers to be really granular in tackling specific objectives.

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Strategically Select Rewards
Your rewards should be scalable to different levels of performance. After all, you wouldn’t want to award your VIP accounts and part-time customers the same amount of value. The types of reward you offer also depends on the length of your promotions. Debit-card based SPIFFs and rebates are more suitable for short-term promotions, whereas merchandise rewards or incentive travel would make more sense for long-term, loyalty-based promotions.

Fmcg-brands-Buffet-Frozen-foods-and-Komin-Alkaline-water-Cobranding.

Trade Schemes for Trade Promotion

Some of the Trade Schemes:
Buy Cadbury’s products worth Rs.3000/- and get 30 any chocolates worth Rs.5 free.

Buy a box of Munch and get 1 Munch free.

Point-of-purchase displays i.e. product displays and information sheets are useful in reaching the consumer at the point of purchase and often encourage retailers to support ones brand.

POP promotions can help win precious shelf space and exposure in a retail setting. From a retailer’s perspective, a POP display should be designed to draw attention to a brand, increase turnover, and possibly distribute coupons and sweepstake entry forms.

Companies do P-O-P displays as and when they have sales promotion schemes going on. Some companies that do a lot of P-O-P displays on a regular basis are Gillette, Vicks, Duracell, Pepsi, Coke.

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Cash rebate

This is a form of delayed value promotion for the retailer. Only after the proof of performance is furnished, the retailer is given a cheque for the amount of discount.Once a retailer has met the laid down conditions, the rebate is given to the retailer. The advantage of this method is that the rebate is given only after the retailer has performed to qualify for the rebate.

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Free goods

A free goods promotion is a deviation from straight price cut. The promotion offer to trade is in the form of extra quantity of purchased product “free”.Free goods deal often encourages resellers to stock more during the promotion period. For the manufacturer, it is an excellent promotion because it costs less than it otherwise appears.

Buy 24 Close Up toothpaste and get 1 free.Buy Cadbury’s products worth Rs.3000/- and get 30 any chocolates worth Rs.5 free

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Trade coupons

It is a manufacturer-initiated sales promotion, however, the coupon distribution is undertaken by retailers, either through local print medium or in some other manner. The important thing about such coupons is that they can be redeemed only at the distributing store. There is an agreement between the retailer and the manufacturer that some agreed allowance will be paid to the retailer. Generally this is in the form of re-imbursement of some amount of money to the retailer for each coupon redeemed. The distributing retailer gets the double benefit due to the increase in store traffic and the incentive of reimbursement from the manufacturer. This is a string incentive to the retailer to arrange displays and promote the coupon offer.

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SPIFFS (also called ‘push money’)

It is a monetary reward given to the salesforce of the dealers to sell a manufacturers product. For example, a manufacturer of washing machines may offer Rs.500 to each sales person who sells the manufacturers’ brand of washing machine. The SPIFF money varies as does the willingness of the dealers to allow the salesforce to accept the offer. Dealers who carry product brands of different manufacturers generally hesitate to allow such offers.

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Incentives

Incentives to the members of the trade include a variety of tactics like awards in the form of travel, gifts, or cash bonuses for reaching targeted sales levels that induce retailers and wholesalers to give a firms’ brand added attention. The incentive does not have to be large or expensive to be effective. Another form of trade incentive is referred to as ‘push money’ i.e. SPIFFS.

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Sales-training Programmes

An increasingly popular trade promotion is to provide training for retail store personnel. This method is used specially for consumer durables like personal computers, exercise equipment, etc. The increased complexity of these products has made it important for manufacturers to ensure that the proper factual information and persuasive themes are reaching consumers at the point of purchase. For personnel at large retail stores, manufacturers can hold special classes that feature product information, demonstrations, and training about sales techniques. Another method to give information would be the use of videotapes and brochures.

Fmcg Job Interviews and Hr Practices

Trade shows

At trade shows, related products from many manufacturers are displayed and demonstrated to members of the trade. Literally, every industry has trade shows.Their representatives are there to explain the products and services and perhaps make an important contact for the sales force. Trade shows can be critically important to a small firm that cannot afford advertising and has a sales force too small to reach all its potential customers.

Fmcg Distribution Pictorial of various process involved.

Features FMCG Companies Should Look for In Their Distribution Management System

Better control on trade promotion and schemes: For an FMCG company, promotion and schemes are two of the biggest drivers of the business. Companies usually spend a huge sum of money in these activities. But there are two pertinent questions which many a times remain unanswered

Are the benefits being passed on the to the retailers?

How successful are my ongoing schemes?

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One of the simplest ways to get answer to these questions is to implement Distributor Management System which will ensure all necessary checks and balances at the time of invoicing and will also provide you an analysis of performance of each scheme.

In Fmcg Business, what is the Market Potential(MP)?

How will the distributor and area incharge salesman achieve  sales target?

 What is Market Potential?
The market potential is the estimated size of the business of any particular product in an area

 Why is Market Potential important?

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Market Potential is important to ‘guestimate’ the expected revenue of any product, launch business of a new product
Market Potential is always useful in understanding the expected business of any distributor while undertaking a new appointment
 Market Potential also helps in finding the right company-distributor fit basis expected ROI

Pre-Concept(We will take soap as an example in Latur city)

Total Addressable Market(TAM) – TAM is the total market for soap in Latur. It is important to know what percentage of TAM are we aiming at when we try to find market potential

Serviceable Addressable Market(SAM) – SAM is TAM but for a specific target audience. For example, people who are interested in using herbal soap in Latur

In some cases, we also calculate Share of Market(SOM) which is essentially SAM when there are many players in the market

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Methods of calculating MP
Data Sources – Nielsen Reports, Primary Research and Secondary Research

 Town Benchmarking(Simplest method)
 Market Potential of soap in Latur
 Town population – 5 lakhs
Soap Category Sales – 5 Crores
 Taking benchmarking of Ahmednagar as a similar town with a 10% market share, we assume the expected the sales of Latur as 50 lakhs

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 MP basis outlet classification(Let’s try with a different category | Bulb)
 Outlet Category – Hardware and Electrical
 Dealer per Lakh(DPL) – Outlets per lakh population – ~80
 Outlet universe ~400
 Categorizing these 400 outlets into three outlet classes basis expected sell in(PDO – Per Dealer Output)
Gold Class – 50 outlets – 10000/-
Silver Class – 100 outlets – 5000/-
Bronze Class – 250 Outlets – 1000/-
– Total MP ~12.5 lakhs

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Good control of trade promotion and schemes

Promotion and schemes are two of the biggest drivers of the business for an FMCG company. Generally, companies spend a good amount of money on these activities. But there are two relevant questions which many times remain unanswered – 

Are the benefits being passed on to the retailers? 

How successful are my ongoing schemes? 

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One of the easiest ways to get an answer to these questions is to implement a DMS – Distributor Management System which will ensure all essential checks and balances during the time of invoicing and will also support you with an analysis of the performance of each scheme.

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It is important to understand that we cannot exactly find MP and it is always a guestimate. The key here is to find the correct mix of research through human interactions and available literature to arrive at a market potential figure

With an idea of bringing world class quality and superior milk products to Indian homes Pioneering – Ventures conceptualized India’s first industrial-scale collection and distribution platform for high quality milk- “MilkLane”. With that as vision, they started focusing and collecting consistent quality of milk, which is safe from toxin and antibiotics with no adulterants and preservatives. With this idea, they started offering, high quality UHT milk in convenient 500 ml and 175 ml and made from the same milk is their latest offerings 500 gm MilkLane curd.

Goal

How CRM Solutions Address Sales Call Challenges

Distributors typically have a growing priority list of new products and focus items. With multiple accounts consisting of several different departments, it is easy to become confused about which product was presented to which group. Without the ability to review which people have already been presented a line or product, it can create the impression that the salesperson is unorganized when the same products are presented again and again. 

Effective communication and implementation of schemes to have an impact on Scheme’s ROI.

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Offer Sales Enablement for Eligible Products
Building brand preference depends on enabling your DSRs to effectively sell your products to dealers, contractors and wholesalers. There are a variety of ways to offer this enablement, such as:

Creating interactive quizzes based on content or training videos;

Requiring mandatory virtual or on-site training to qualify for promotions;

Utilizing your reward program communications to educate participants on your product lines; and

Rewarding participants for attending important trade shows.

Why Schemes Communication is a Challenge?

The culprit: Quite often, sales reps open their trunk, look for what is inside, grab a sample or pieces of literature and work up a plan on the fly. Although it may be a common practice, most are not aware of the effect that it has on their income and the cost to the firm for which they work.

In a recent article on Distribution Strategy Group, the author said that the typical distributor sales call costs the company $250 for every face-to-face interaction. That price per sales call for manufacturer reps is likely just as high or higher. One of the biggest negative results from not planning a sales call is that the sales call tends to only focus on one situation, product or manufacturer.

Schemes launched by the company is not communicated effectively till the retailer since most of the schemes get limited only till the channel partner’s end and eventually creates unawareness among the retailer’s on the scheme information. In general, the trade scheme information reaches to less than 50% of the targeted retailers. For even most organised companies, there is no guarantee on the exact number of stores since end beneficiaries are unknown in number.

Most of the trade scheme application happens at the distributor end during the dispatch process rather than at the time of order taking hence the retailer lacks the motivation to place an order above average order bill value and the scope of improvisation on range selling is not met.

Also, due to this, the company lacks any validation process to verify distributor’s claim as well. And in most of the cases, it become too much time consuming for the account team to settle the claims.

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Business impact due to ineffective communication and implementation of schemes

Lack of retailer motivation in selling scheme based SKUs and hence this leads to lesser market reach of the products at the target segment.

To avoid the situation of stock out, which generally happens during any festive seasons like Holi, Diwali, company over produces some the SKUs having lesser shelf life. For Example: Milk Industry, where the sale of dairy products shoot up drastically during festive season. In case the Sales target is not met, the company plans to launch schemes of these products post the festive season. In such scenario’s ineffective communication and implementation of trade schemes leads to dumping of products having lesser shelf life.

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At the end, the company fails to achieve the Return on Investment (ROI) on the launched scheme model.

 

How tracking Daily Sales

ensures effective communication and implementation of schemes and claim settlement.

   Broadcasting of text messages on schemes

 Enables broadcasting of text messages on schemes to the retailers.

Social-media a channel for fmcg brands

This feature enables the scheme information to reach out to retailers instead getting limited only till the distributor’s end.

   Schemes Information on Home page of the app

SalesDiary enables broadcasting of text messages on schemes to the retailers. This feature enables the scheme information to reach out to retailers instead getting limited only till the distributor’s end.

   Auto apply of Schemes while booking the order

Scheme (QPS &VPS) configured at the backend enabled the Scheme to be auto applied while booking the order- This solves the major problem where the schemes application happens while order taking rather than happening at the distributor end while dispatch process. This leads to increase in range selling and average order bill value. Also helps to push the SKUs which has lesser shelf life in the market. (Caused may be of over production during festive seasons.

   Distributor Claim Settlement

Distributor Claim settlement became hassle free and lesser time consuming as the scheme sales data turned out to be handy.

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One thing that distributors and manufacturers’ reps have in common is that they are tasked with selling multiple products to customers; the more products and services they talk about, the better the results of their call. 

It is simple math. One salesperson who typically promotes one item or line on a sales call, is relying on a limited number of people who might have an opportunity for that one item or line. Another salesperson who promotes five distinct products or services on a sales call, has a five times greater chance of identifying somebody in that group of people who might have a use for one of the products. 

Rejection-is-sales-and-fmcg-salesman

The idea of planning sales calls seems logical and simple upfront, but it runs into roadblocks. 

An increase in urgent customer issues is forcing salespeople into reactive mode, which kills their schedule unless they allot for crisis time in their schedule. 

Without tools for accountability to plan sales calls each week, the greatest of intentions usually dies a slow death. 

Salespeople tend to forget the professional steps they used to grow large accounts in the first place.  

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Switch Things Up to Keep Your Program Fresh
Even an effective incentive program can reach a point of diminishing return. It’s important to switch up your promotions to keep your program exciting and interesting. Point multipliers and limited-time promotions can quickly boost sales growth or re-engage inactive accounts. And adding elements of gamification, such as leaderboards, spin-to-wins, achievement badges and on-the-spot point bonuses will make your program engaging and rewarding from end-to-end.

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Seek Feedback and Analyze Results
Finally, you will want to arm yourself with data points to continuously improve your program. Seeking participants on surveys will help you add enhancements to your program and personalize your relationship with distributors. Analyzing KPIs and calculating ROI helps you prove program success and equip you with insights to make your next distributor sales incentive or rebate program even more successful!

Next: What is a suggested list of schemes a Fmcg Company should give to its distributors?

Team DigitalGumma

A Professional Team Of Over 25 years of experience in Sales & Marketing operations, Channel (Direct & Indirect) Development and Distribution, and Key Account Management in the FMCG Sector. AREAS OF EXPERTISE Sales & Marketing: Conceptualizing and implementing sales promotional strategies as a part of brand building and market development effort. Business Development: Handling infrastructure development of sales & distribution systems and increasing coverage & penetration to have maximum market share. Channel Management: Identifying and networking with financially strong and reliable dealers/channel partners, Super Stockist, C&F resulting in deeper market penetration and reach. Ensuring cost-effective logistic operations & seamless materials movement to ascertain sufficient inventory levels at each sales outlet/ distribution channel. Evaluating performance & monitoring distributor sales and marketing activities. DigitalGumma.com website has everything you need to create a fully personalized, high-quality free showcase website. Get the word out about all the amazing things you’re doing. Easily email your contacts or share on social media to tell everyone you know. Sell Anything Anywhere To Anyone. DigitalGumma.com is a business development platform motivated to ideate connect propagate to millions of users worldwide. Create a beautiful, professional web presence. Our expert team members collaborate across digital marketing specialties to produce powerful results. Build your next digital marketing plan utilizing the latest internet technology, explode your online presence with a Fully Managed SEO program, and maximize your profits.

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