Executive Summary - Channel Sales Incentive Success
A Fortune 500 manufacturer and distributor were faced with the challenge of motivating their Master Resellers to increase sales and marketshare in each of their key sales territories.Â The company had used various forms of incentives in the past with some success and many repeat winners, but was facing formidable new challenges due to a recently reduced budget for incentives and an increase in competition in the marketplace.Â Company objectives for a new incentive initiative were as follows:
- Increase revenues by not less than 20% over the previous year
- Increase VAR marketshare in all territories to a minimum of 30%
- Increase net operating income by not less than 10% of revenue
An in-depth analysis of the internal and external environment, in which the company operates, was conducted. Based on this analysis; objectives, rules and awards were put in place for an ROI Incentive Program.
Over a period of nine months, the following program results were achieved:
- Total revenues increased by 32%.
- Market share increased in nine of twelve markets, in excess of 30%.
- Net operating Income increased to 19% of revenue.
The non-financial results included:
- 30% of the Master Reseller reward participants were first-time reward earners.
- Program participant surveys yielded 87.3% â€śexcellentâ€ť ratings.
- Turnover of key Master Resellers decreased by 2% from the previous year.
The incentive program yielded the following Return on Investment (ROI):
Total Incremental Improvement: $ 3,934,700
Total Incremental Costs: $ 3,186,900
Total ROI: $747,800
(To determine the return on investment for this program, all additional incremental sales and costs were calculated, including increased operational costs and incentive program costs)
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