Sales reps live to sell. But a well-crafted incentive program can breathe new life into things.

Crafting the perfect incentive program is like baking the perfect dish for a special meal. It calls for a balance of ingredients, baked at just the right temperature for just the right amount of time. And no matter how good it turns out, there’s going to be somebody at the table who just isn’t into it. So too with incentives for distributor sales reps, whether they’re buy-one-get-one-frees, cash spiffs, gift cards, cruises or plasma TVs. Some reps will respond, some won’t; some managers will push them, some won’t; some programs will yield results, others won’t.
To be sure, devising a successful incentive isn’t easy, according to those with whom Vet Advantage spoke. But manufacturers and distributors can increase their odds of success by keeping three things in mind. First, the incentive must be achievable. Second, the manufacturer or distributor must make sure the reps understand the rules of the game. To increase the odds of that happening, the program must be simple. And third, reps need to know on an ongoing basis where they stand in relation to the goal.

Incentives are always well-received by reps, who are, by nature, competitive, says Greg Underwood, director of sales for Virbac Corp., Fort Worth, Texas. But they will tune out a program that they think is out of reach. “If you offer me an incentive [whereby] I could earn a million dollars for running a four-minute-mile by the end of the year, I won’t start practicing tomorrow,” he says. So too with reps. Rule No. 1, then, is to make the incentive program achievable.

Cash or no?
Assuming the program is, indeed, within reach, the most basic questions facing manufacturer or distribution managers are these: Should the incentive put cash in reps’ pockets, or should it be some kind of gift, such as a trip or TV? The answer is… “That depends.”

“Most people want the money,” says Robert Zeide, president of PCI Animal Health, a Secaucus, N.J.-based distributor with 15 sales reps. “It’s nice to get a trip, but in today’s environment, reps want to control the money. They don’t want a trip they don’t want to take, or they have no one to go with. More than at any time in the recent past, money is the best [incentive].”

Paul Covill, vice president of TW Medical Veterinary Supply, Lago Vista, Texas, agrees, to a point. “If it’s a short-term promotion, monetary incentives seem to work best. Everybody loves cash. But if it’s a longer-term promotion – say, a quarter or a year – a bigger prize works well. TVs, cruises, vacations.”

Simply recognizing good work by top-selling reps can go a long way toward supplementing cash, says Covill. It can add fun to the mix too. TW Medical, for example, holds “blitz days” to stimulate sales of specific products. On such days, manufacturers might offer money to the next rep who sells a buy-five-get-one-free deal. Results are projected for all to see, giving rise to some friendly but spirited competition. “Everybody loves to be on top,” he says.

The best manufacturer programs tend to be regular and easy to understand, continues Covill. They incentivize not only the distributor rep, but the customer as well. Easy-to-understand supporting literature is a must, he adds.

How long is too long, how short too short?
Another ingredient of a successful incentive program is that it be just the right duration. Covill believes that in most cases, month-long programs are too short. Reps who are on a two- or three-week selling cycle need time to learn the details of the program, then present it to their customers. The problem is, by the time they visit those customers again, the promotion or program has almost run its course, and they’re on to the next promo.

“If you keep [the promotion] 90 days, you can really drive the business,” he says. To up the ante, the manufacturer can tie the quarterly program into a longer-term (say, a year-long) one, with the opportunity for a rep to earn a grand prize at the end of the year over and above the quarterly incentives.

UltiCare’s recent buy-one-get-one-free promotion for pet glucose meters was a two-month program, explains Rick Fedie, the company’s director of business development. Anything shorter is likely to fail, he says. “It takes 15 or 30 days for the reps to understand what’s going on with the promotion. Then they have to act on it. So, 30-day promotions are pretty tough to take advantage of.”

Direct to the customer?
Some promotions offer something for the customer, others for the rep. Which is best? Fedie believes that when a company is trying to make a dent in the market, it should offer incentives direct to the customer – such as a buy-one-get-one-free. It’s a “pull-through” strategy designed to drive demand. Ideally, the manufacturer can couple it with some kind of incentive for the distributor rep, to provide the “push.”

But free products to customers can also present a challenge to reps, who may lose a sale next month or quarter because of it, says Zeide. The exceptions are promotions built around a specific purpose or event, such as Dental Month, or flea-and-tick season.

Same old faces
Distributors who spoke with Vet Advantage agree that if possible, manufacturers and distributors should design incentive programs that spread the wealth, so that the dollars and prizes don’t go to the same reps (usually veterans) all the time.

“You want to [reward] people who are newer or not as successful,” but could be, says Zeide. And there are a variety of ways to do so. For example, a program could reward reps for bringing on new customers or hitting a certain target of growth in sales.

“We usually try to set up a couple of different contests, so the more senior reps with the largest customer base aren’t always getting the prizes,” adds Covill. Sales growth and new customers are two metrics that can be used to do this. “Whoever-sells-the-next” promos are another way to level the playing field and generate some excitement.

UltiCare’s Fedie isn’t so sure. “If a rep is hot on a product and selling a lot, and you’re paying them a lot, pay ’em more,” he says. These are generally your heavy-hitters, and you want to encourage whatever it is they’re doing, he adds

Simple does it
Above all, successful promotions are simple. “Think about it from the distributor rep’s side,” says Fedie, who at one time was a med/surg distributor sales rep. “You’re a jack-of-all-trades and a master of none. At any one time, there are 15 or 20 promotions going on. What you are going to remember is 1) what’s the biggest payout or bang for my buck, and 2) how simple is it.”

Covill agrees. “Some programs are too complex. Make it simple, and easy to monitor and manage.”

Ongoing communication is essential, adds Underwood. “Incentives that go bad typically are the ones you set up in January, then send out a status report in December. By then, everyone has forgotten about it.” To increase the odds of success, reps should be updated regularly on where they stand in relation to the goal.

The subtleties
If there is an elephant in the room, it is the back-and-forth that can develop between the manufacturer and the distributor around incentive programs. The manufacturer wants the distributor sales reps to increase sales of its products, but the distributor’s sales manager might want his or her reps to focus on other, more profitable product lines.

“The best programs are those that meet the manufacturer’s and the distributor’s goals,” says Zeide. “If there’s divergence, it’s no good.” Distributors can exert some control by tying individual incentives to the rep’s overall goals. “If [the reps] don’t hit their goal, they don’t get the incentive from that manufacturer,” he says.

Manufacturers on the national level seldom design customized incentive programs for individual distributors, particularly smaller ones, adds Zeide. That said, their regional managers can work with distributors to create special regional programs that can add a little zing to the selling process. Zeide recalls one springtime program, rolled out to coincide with the Easter season, in which the manufacturer gave PCI some eggs, each one containing a different (but undisclosed) amount of money. As sales reps achieved certain goals throughout the day, they got an egg.

“Every manufacturer wants two things,” he says. “First, to grow market share, and second, to develop new products. [If I were to design an incentive program], I would develop one that would develop market share vs. my competition, and that would also enhance the value or perception of a new product I might have.”