Growing Demand Of Channel Rebates

There is a growing trend among channels to implement channel rebates or a SPIFF program. These are more often loyalty incentives that are given to partners for their dedication to the channel strategy. Typically, these take the form of discounts or rebates in the 2% to 10% range. These channel rebates replace traditional volume deals and encourage distributors, retailers, or other channel partners to remain or become committed to a channel. There are a number of reasons that many channels have a SPIFF program to motivate their channel partners.

As more and more manufacturers continue bringing similar products, many of them try to bring in partners while still maintaining their reputation. Channel rebates offer incentive for partners to join a channel and benefit that partner. In addition to similar products being introduced into a market, there are also new technologies that are emerging that displace once dominate suppliers. In order for these companies to continue to profit in the market, they will offer channel rebates and loyalty incentives to slow the acceptance of competitors entering the market.

Roles within the channel are also evolving, making a SPIFF program more beneficial for partners. As some partners are taking on roles beyond their original expectations, it becomes imperative for channel rebates to come in to help keep certain partners focused. Also historically, manufacturers used volume rebates, order quantity discounts or end of quarter deals to motivate channel partners. However, it is generally an inefficient method of handing out incentives. While volume deals drive short term sales, they do more harm than good in the long run. They create a false demand, lead to order spikes, stock outages and lower margins for suppliers and their channel partners. Channel rebates or a SPIFF program can provide the focus that suppliers desire without the negative behavior.

Back To Articles