Types Of Channel Rebates

Channel rebates are basically payments that manufacturers provide to their retail partners as a reward for attracting more customers. There are a couple different types of channel rebates that a manufacturer might provide - linear and target. Linear channel rebates are paid for each unit sold, and target channel rebates are paid for the number of units sold above a certain target.

In order to have an affective rebate system, it is necessary to have some sort of incentive manager to track sales progress throughout the chain of retail partners. Manufacturers often use channel rebate software to manage to the rebate system as effectively and consistently as possible. Channel rebate software can track sales levels at all of the different retail locations, whether rebates are provided per unit or for surpassing a sales target.

A good target rebate incentive manager will help achieve channel coordination when demand is not influenced by sales effort. When demand is influenced by retail sales effort, though, a properly designed target rebate system will still achieve coordination, and a win-win outcome for everyone involved. It is hard to achieve such a result with linear channel rebates in either case, which is why most companies choose the target incentive system.

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