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10 Steps for More Attention in Your Distribution Channel

Dec 25, 2014

Capture the attention of your distribution channel with reward and recognition programs designed based on the principles of behavioral economics.

 

Channel Distribution

Overview

The goals of the manufacturer and those of the uncontrolled distribution channel are often at odds. The channel wants to focus on high-margin products and increase total sales, while manufacturers want channel partners to promote the whole line and increase market share for the manufacturer’s brands. Channel partners want more autonomy and exclusive access to end users, while manufacturers want more control and their own access to end users.

Your uncontrolled distribution channel has a lot of places to focus their attention. Reward and recognition programs have long been used to engage the channel and align their activities with manufacturers’ goals. Applying behavioral economics to your reward and recognition program designs can cut through the clutter to capture more than your fair share of your channel’s discretionary focus and effort. Here are ten best practices to follow that use behavioral economics principles to design the most effective reward and recognition programs.

Mix it Up

Even the best solution doesn't work all the time. There's a reason why the P90X ? workout works. Build a calendar and introduce new structures every few months to keep things fresh and participants engaged. Once participants are on the hedonic treadmill and are eager to move to the next level, they will pay more attention to new promotions that offer the chance to earn additional rewards.

Too Much of a Good Thing

Too much cash in the system results in a reduction of sales. When people say they want cash, what they’re really saying is, “I want to work less and get paid more.” When that cash is coming from the manufacturer, there’s the added conflict of compensating channel employees. Hedonic rewards, like travel, merchandise and entertainment, are highly emotional and make people feel good about what they have accomplished. Re-consumption occurs every time they remember the experience or show off the reward they’ve earned.

Obey the Rules

When it comes to getting results, a program’s rules structure is almost as important as the awards offered. Even the most appealing rewards will be wasted if your rules structure isn’t right. Make sure your rules structure is aimed at getting the right audience to perform the desired behavior. Consider what you are trying to get done and then determine everyone who needs to change their behavior to accomplish it. When targeting dealership salespeople, for example, don’t forget to engage their sales manager with rewards for overall achievement or an over-ride of their team’s performance.

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