Baseball Team on Bench

So many accounts, so few hours in the day. You’re a big manufacturer or wholesale distributor with hundreds or even thousands of accounts. Your sales team compensation is largely or entirely commission-based. In the course of an average day, who do they tend to call on? The biggest, most important 20-30% of accounts of course; there simply isn’t enough time to connect with every single account so you look after your bread & butter accounts.

But consider a few realities…

High Volume, Low Margins. Those top customers are also high on your competitor’s prospect lists; as a result, these accounts tend to be over-serviced and often afford little room for sales growth. Further, because they’re so sought after, they can negotiate more aggressively, playing you and your competition off against one-another, often resulting in some of your lowest margin business.

Small-Medium Accounts – Big Opportunity. What about all the smaller accounts your team doesn’t have time to pursue? In total, they actually represent an incredible opportunity for sales growth and higher margins – if only you could get in there and call on them all and capture more of their spending.

A reward program can help. Reward programs are actually automated performance-based selling engines. They increase your visibility with accounts, ensuring you are more top-of-mind when it comes time to place orders in your category; you can easily use your program to target specific sales gaps or opportunities with strategic bonus offers, designed to change customer behavior.

Consider these results experienced by a wholesale distributor in the automotive category who launched a reward program targeting tire shop owners. We looked at over 10,000 transactions, comparing 8 months of pre and post program data:

  • Participating dealers increased purchase frequency by 45% versus only 2% increase by non-reward users
  • Reward-earning dealers made more than 3X the # of purchases than non-participants
  • Reward-earners spent 27% more per transaction than non-reward dealers
  • Reward earners increased total spending by 53% and outspent non-reward dealers by almost 300%

Results like these are quite common. The reason more and more companies choose to employ reward programs is because they deliver terrific ROI when structured and operated properly.

Key Program Traits for Maximum ROI Impact

  1. Sound Offer Structure. Plan your offer structure so it makes sense for your economics; the more valuable the sales outcome for you, the richer you make the associated reward value for your customer. Use reward tiers, graduated to reward your best customers at a higher rate than customers of lesser value.
  2. Program Awareness. Tell people. Get as many customers to sign up as possible; the program can’t influence them if they aren’t involved in it.
  3. Ease of Use. Make it easy for your customers/prospects to join the program; offer some sort of “welcome” bonus to get their attention and take a moment to sign up.
  4. Sales Team Involvement. Introduce a companion reward structure for your sales team, designed to ensure they encourage as many customers/prospects to sign up for the program as possible.
  5. Ongoing Engagement. Don’t use short duration programs; they are hugely inefficient; plan an ongoing program that encompasses both short term and long term sales objectives and create limited time and/or ongoing reward offers tied to these objectives; your customers will be able to accumulate more rewards and be increasingly influenced by the program.
  6. Program Visibility. Keep your customers in the loop about their reward status by sending out a monthly reward email that includes their reward balance; be sure to communicate new bonus offers tied to specific sales in these emails as well.

A good reward program is a valuable sales tool, providing added account coverage for smaller accounts and more leverage for your sales team when they call on bigger accounts.

By Graham Farrell, President, Lift & Shift Loyalty Programs