How manufacturers can establish an effective rebate strategy

No matter your industry, customer loyalty is a critical aspect of your business. Acquiring a new customer is one thing, retaining them is another altogether.

And, as we all know from our personal experiences, as customers we want to be rewarded for our loyalty to a brand. We want personalised offers. We want brands to have the context of our previous interactions. We want to feel valued.

Part of that loyalty in the B2B component of manufacturing comes via rebates, a contractual obligation based on metrics or performance – from paying on time to achieving a certain level of sales. If a distributor hits those performance metrics, they’re rewarded financially and have a stronger incentive to maintain the partnership instead of shopping around.

It’s a proactive strategy to enhance customer loyalty, as opposed to a reactive discounting when a customer sees a better deal elsewhere – and it’s a win-win situation. Distributors get a financial reward on the products if they hit targets, manufacturers keep the customer. Everyone’s happy.

The concept is nothing new. What’s new is the idea that the program can be automated, user-friendly, simply configured, not coded, transparent and carry minimal risk of human error. Thanks to a new Salesforce Manufacturing Cloud enhancement, manufacturers can start thinking about building competitive advantage through smarter rebate management.

The challenge of managing manufacturers’ rebates

Most companies have an enterprise resource planning system that will process the initial transaction. However, the challenge with rebates is that you need to collect the data from the end customer based on how they have performed. This information needs to be validated and cross-referenced against the contract, then the rebate calculated and processed.

And that rebate will differ from client to client. In fact, any client will have multiple rebates, based on different types of incentives over different products, paid at different times.

For many manufacturers, this has traditionally been manually managed through spreadsheets, which consequently creates a significant margin of human error, as well as a significant overhead. It’s a time-consuming process – countless emails, checking and double-checking. If there’s a problem, the sales team gets involved, the pricing team, the finance team. And then you have to delve into the information once more – was the data correct? What does the contract say? Where is the contract? What’s been paid? Why?

Not only does it become a time-consuming process internally, it has repercussions externally too. After all, it’s a legally binding contract to which you need to adhere.

And that’s not to mention the consequences of getting it wrong. If your customers aren’t given the correct rebates in a timely fashion – or, worse, are having to chase you to receive the correct rebates – you’re delivering a poor customer experience and eroding the loyalty you’ve built up over years. A lot of distributors can be demanding in their requirements, and if their needs aren’t met, the relationship weakens considerably.

It’s a complex process and, for manufacturers with fewer resources, some might skip more sophisticated rebate programs entirely. But that approach risks missing out on the personalisation and partnership that distributors increasingly expect.

Collaborating transparently on rebates is important to increase engagement, facilitate negotiations, reduce overheads and administrative time and, importantly, improve supply chain communication.

So how can manufacturers approach it in a smarter way, or perhaps even kick off the kind of rebate program that was previously in the ‘too hard’ bucket?

Solving the manufacturing rebate challenge 

The key to delivering an effective rebate program lies in having a complete and transparent view of every aspect of the customer’s account and relationship with you. That means developing a single source of truth that captures every agreement and every incentive, and automatically triggers rebate payments based on performance metrics.

Utopia? Maybe. But it’s an achievable utopia.

Salesforce’s Manufacturing Cloud has recently been enhanced with a rebate management tool that enables manufacturers to do just this. Because it sits within Salesforce’s CRM, it holds and manages the whole customer lifecycle, from the client origination to contracts and rebates. You also don’t need Manufacturing Cloud to leverage this tool.

Once established, it can give everyone who needs account visibility a 360-degree view of the customer, which helps inform conversations, offers and retention strategies, and enhances customer service at every step.

Of course, getting started is often the hardest part of any technology implementation. Regardless of where you are on the rebate journey, a quick pilot scheme is often the best way to prove return on investment. Because it’s an ‘out of the box’ solution that requires no coding, manufacturers can get the system in, configure it to their need, load up a couple of clients to test it out and see how it works – you can validate the business case quickly and simply.

Building a customer-focused business 

As we touched upon earlier, in our own consumer lives we know the value of great customer relationships, and manufacturers’ channel partners want to be just that – partners. They need a relationship that’s much more than the transactional, and the whole concept of loyalty is about adding value to the customer.

Rebates fall under the loyalty umbrella, and the beauty is it’s a sticky arrangement that benefits both parties – provided it’s managed well.

Previously, manufacturers may have consigned rebates into the ‘too time-consuming’ basket, or have managed them manually with varying degrees of success.

The new rebate management tool from Salesforce means those days are a thing of the past – and when you’re dealing with rebates that can potentially account for millions of dollars, the risks of getting it wrong – and the benefits of getting it right – are huge.

Find out how we can help you get more out of Salesforce Manufacturing Cloud.

Not using Manufacturing Cloud? You can still benefit from Rebate Management – learn more.

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