Rebates: the way that product-based businesses incentivize their customers to buy more of their goods, are complicated. While much information is available about supplier rebates and the ways in which suppliers can claim as much of their rebates as they are entitled to, less has been written about customer rebates: the other side of the story.
Benefits for both distributors and resellers
At Enable we believe that when both parties value collaboration and open working, they understand that full visibility is in both their best interests. Our CEO, Andrew Butt, explains how the Deal Economy is actually a $500bn opportunity for distributors and resellers – but it’s not just about the money.
As Andrew explains, “Vendor funds were meant to be a growth engine for suppliers and resellers – but that vision has been lost in the complexity of managing deals. It’s time for distributors to take a more strategic approach.”
That’s why we’ve written an ebook called The Complete Guide to B2B Customer Rebate Management, to help those who are looking for a better way to manage complex deals with their customers. Here’s a summary of the key points from the ebook. To find out more, download the full content.
What is customer rebate management?
B2B customer rebates are how large companies (like manufacturers) incentivise their customers, or vendors (typically those who sell to multiple groups of people, such as chain stores, buying consortia, distributors etc.) to sell specific products within a specific time. Common tactics used to increase vendor sales include marketing development funds (MDFs), volume rebates, market-specific pricing funds or special pricing allowances (SPAs), and co-op funds. Customer rebate management is the process of managing those deals accurately and for mutual benefit.
When used effectively, customer rebates can help create, track and manage more profitable deals in order to gain more sales, more consistently, while improving customer relationships.
The challenges with maintaining B2B customer rebates
Unfortunately many challenges face those managing customer rebates. Historically deals have been hard to track: mostly due to a lack of adequate, easy-to-use systems and partly due to the sheer volume and complexity involved in managing rebates, often resulting in confusion between manufacturers and their customers as well as and the inability to get a true sense of the ROI of joint business plans or marketing activities. As a result, manufacturers may: accrue for liabilities incorrectly; have difficulty understanding net-net margins; suffer from missed deal earnings, missed opportunities and sub-optimal partner relationships; and provide poor service through delays and confusion in claims processing. The result isn’t just a lack of business insight. In worst case scenarios, incorrectly accrued rebate allocation has actually resulted in failure to comply with government legislation, job losses, and even imprisonment of company directors.
Why manual systems and processes are so dangerous
To get a broader view of why spreadsheets are so dangerous for rebate accounting, take a look at this blog post which covers into the topic in detail. Essentially, the risks associated with using manual systems include insecure data, a lack of robust processes, the need for financial accountability and the desire to avoid key person dependency.
What the world looks like when everyone is using the right tools
Once manufacturers decide to move beyond using a short-term fix to being able to manage deals with a proper system deal consistency improves. Deals become more clear and defined in unambiguous terms as well as more purposeful, effective and manageable. Having a systematic, agreed approach in place means that Information is readily available, communication between all parties is more like the Tower of Babel than a game of broken telephone and misunderstandings and discrepancies are significantly reduced – if not eliminated entirely.
Be a forward-thinking manufacturer
If you would like to improve partner relationships, efficiency, rebate accuracy and predictability; gain real-time visibility; improve financial compliance to reduce audit risk, accurately forecast customer rebate liabilities and grow business by doing more deals, more often, with more focus that are accurately tracked using the same language, we recommend you take a further look at how deal management software like DealTrack can help.
Forward-thinking manufacturers know that good customer rebate management is about developing common business plans and shared goal setting, investing in customer relationships for mutual success and creating partnerships based on shared goals and a solid foundation.
Ultimately, those who are embrace a genuine relationship with their customers based on openness and mutually-beneficial sales are more likely to stay ahead of the game.