Should your sales incentive programme for distributors be based on cash rewards or non cash rewards?

Should your sales incentive programme for distributors be based on cash rewards or non cash rewards?

March 12th 2021 - customer loyalty

Having a distribution network enables your business to grow and reach a much wider audience. It's a fantastic way to expand into new markets with less risk and upfront investment. Just like your in-house sales team, your distribution network will need support and encouragement when it comes to smashing those sales targets. 

Rewarding distributors for meeting your sales objectives is an essential part of keeping them motivated and engaged with your brand, but what's the right approach? Cash is never a bad thing, right? Or are rewards more effective? Let's find out...

 

Non-cash rewards help to promote the right behaviours 

Although having a distribution network can be great they can also end up being unsuccessful if your brand doesn't stay at the forefront of the seller's mind. It can be surprisingly easy for your product to get pushed to the back of the shelf if you don't reinforce positive brand association or give them a reason to talk about your products. 

Since the source of a cash reward may be quickly forgotten about, it's better to create engaging reward programmes that help build brand loyalty. You want your distributors to take up training and improve their knowledge of your product, but if you're merely dishing out a cash reward in exchange for their time on a course or online tutorial, it may come across like remuneration for a chore. Non-cash rewards or personalised experiences can help to create buy-in and encourage sellers to be even more authentic when pitching your brand, because they’re truly invested. Most importantly, they make your brand more memorable. Experiences tend to stay in people’s minds far longer than cash and create a positive association with your brand, particularly if you get creative. A great example of this, Ford devised a penalty shoot-out style game incentive scheme to reward those who sold three cars - with prizes ranging from £50 vouchers to football and entertainment merchandise. From a psychological perspective, there are a couple of other important factors at play. When deciding whether a reward is worth the effort, studies have found people get a kick (no pun intended...) out of knowing they have received something based on their performance. They are also strongly motivated by the social kudos this gets them among their peers.

Learn more about incentivesmart's engagement platform. 

Personalisation builds better relationships 

While cash is always a welcome addition to the monthly budget, it won't feel like a treat or a reward if it's simply swallowed up by the monthly bills – which is where most cash rewards usually go. Just ask yourself, if someone gives you cash as a gift, how likely are you to keep it aside for a little treat? 

If you only rely on monetary rewards, it means that each distributor gets the same form of acknowledgement, and let’s be honest, that doesn’t make you feel very special! A non-cash reward, on the other hand, can help to build up the excitement and motivate the distributor to meet their sales targets so that they can enjoy a unique gift, experience or something personal to them.

If you're just compensating individuals for selling your products, they won't differentiate between your brand and your competitors that they may also work with. A non-cash reward encourages sellers with each small win because it brings them closer to something much more engaging and incentivised. 

It's worthwhile mentioning that recognition plays a huge role in establishing positive relationships with your distributors. If your only form of contact is the occasional check-in to drop off brochures or an email confirming their monthly bonus round-up, you're missing out on an essential opportunity to create a strong bond between your brand and the seller. With a reward and recognition platform, you can keep track of the measurable achievements a particular distributor has had in a sales period. With this information, you can reach out to them personally to show your appreciation. A little gesture like this can really go a long way!

 

Cash rewards cost more... for both parties!

Whichever way you look at it, cash rewards are more expensive, there’s no denying that! Not only is there a hefty amount of tax involved, but it's also hard to predict how much of your budget you'll have to set aside as the market fluctuates. What's more, it's not just your business that will pick up the tax bill, the recipient will also suffer a deduction. This can result in a slightly sinking feeling when the monthly tally comes in because it may look like a distributor has had a particularly good run, but once all the deductions have been made, they may feel like their efforts outweigh the amount received. 

Non-cash rewards are usually taxed at lower rates and can be obtained at a discounted price by the business. This puts a little more control in your hands. As a result, you can make more effective long-term plans for your reward strategy and still keep distributors happy and motivated by ensuring they get something special and worthwhile for all the work they’ve put in. 

 

With the help of a strategic reward and recognition platform, you can encourage the behaviours you'd like to see accompanying your brand's sales process. Excellent customer service, improved product knowledge and above and beyond actions can turn your distribution channel into a network of brand ambassadors. At Incentivesmart, we specialise in placing motivation and engagement at the forefront of your sales strategy. Speak to our experts today for a free trial of our platform and find out more about our tailored services. 

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