Setting Customer Targets in a Difficult Market

We all experienced COVID – what lessons can we take away?

The last few years illustrated that a widespread issue like COVID can wreak havoc on some businesses and industries, whilst others have enjoyed record sales growth. In some instances, the growth has been so substantial that the businesses would never have thought it possible. DIY hardware, grocery, homemakers, electronics, takeaway and delivered food have all prospered, while tourism and hospitality have floundered globally. But again, there are many businesses within these sectors that are also experiencing unprecedented growth as tourists, now confined to travel options within their state borders, are spending up in many regions.

How can manufacturers and suppliers ensure that they are maintaining and growing their share of wallet from their trade customers or channel partners in difficult markets such as the one we faced? Universally retailers and wholesalers have indicated that they are looking to reduce their range to cut costs, so it is imperative that suppliers are offering something to incentivise their brands.

Customer Targets for Incentive Programs

B2B growth and sales incentive programs can be utilised by suppliers and manufacturers to encourage distributors or wholesalers to sell more products. Through a combination of enticing rewards and relevant sales plans, customers can reach greater sales targets for your brand.
Traditionally, wholesale incentive programs like these set targets based on year-on-year growth. But is this feasible in a difficult market, such as in those industries hit hardest by the pandemic?
Here are some questions to consider when setting volume or value targets for 2021.

1) Is your growth/decline uniform across all customer segments?

As these programs overarch all the other discounts and benefits you provide, you are not restricted into applying the same growth rationale to each customer. Consider closely the progress of all of your customer segments; is it uniform? Are some segments outperforming others? Targets can vary and there should be transparency around the targets so customers understand your rationale, particularly if you have given them concessions in the target structure. It’s vital to ensure you alter your customer targets so they are attainable to ensure your retailers and wholesalers remain motivated, especially in such uncertain times.

2) Are there certain geographic regions of your business that have been impacted less/more than others?

While certain industries were impacted more than others, the pandemic also had variable impacts on differing locations. Much like above, it’s vital for your company to have the flexibility to vary growth targets for customers faced with the pandemic. Less impacted geographical areas have the capacity to shoulder more of your overall growth expectations compared to less fortunate customers.

3) Is your business willing to invest in tough markets by offering reduced targets?

By offering reduced targets over what was achieved pre-pandemic, you provide a token of good faith to customers. Alternatively, you could widen the target performance and payout ranges to take into account the volatility of the current environment. Several major manufacturers we deal with lowered their global growth expectations to being back to 2019 sales by December 2021. Incentives to customers that would allow that date to be achieved earlier would be well received by customers.
Reducing targets should not be seen as a loss. By maintaining positive relationships based on flexibility, understanding and greater value, you retain effective relationships and form stronger more loyal customers. By engaging with empathy and focusing on customer retention you increase their longer-term expected value.

Regardless of the base target rationale that you utilise, all incentives should ensure that the monetary or reward benefit is funded and paid for from the incremental sales and margins that the customer achieves. Incremental’s Upside Only self-funding model ensures this outcome each and every time. 120 programs delivered across 25 years and we have never failed to deliver growth and self-fund our programs.

Find out more about our self-funding model here.