Schemes and incentives play a vital role in a company’s channel strategy. With fierce competition and a crowded market with a variety of products, it is essential for principal companies to engage with their partners on a continuous basis. According to Su-Kam Power System’s founder and CEO, Kunwar Sachdev, it is worth spending on channel partners as it is they who push products off the shelves. “Planning schemes and incentives for the channel partners is as good as advertising your products,” he adds.
Saturday, February 12, 2011: Electronics vendors are gearing up their channel partners with new and innovative schemes during this summer season. Not only for the channel partners, but summer seems to be the best time even for end customers—to walk into retail showrooms and avail heavy discounts and gifts with every purchase of electronics and electrical goods.
Schemes to motivate channel partners
Schemes not only boost the sales of channel partners, they are also excellent motivational tools. The final objective of channel schemes and incentives, is therefore, to promote end products and help partners sell more. Considering this objective, vendors and distributors design and implement schemes based on products and locations. These schemes involve cash incentives, freebies or even foreign trips.
According to Neelesh Saxena, proprietor, Hi Tech Systems, schemes are very important to create partner excitement and offer avenues for improving sales. While such schemes impact the overall volume positively, there is a need to support them with timely reimbursement. Also, products and solutions around which the schemes have been built need to have a strong value proposition.
Channel schemes do motivate partners to increase business volumes, but it does not work on all products. “Partners do push the products of vendors whose schemes are attractive and when there is a good return on their efforts. But schemes and incentives alone are not enough to boost sales. The product has to be efficient, competitive and innovative. Schemes, however, help in liquidating stocks that might have been stocked up with the principal,” says Mitesh Mody, CEO, Bhavana Electronics.
While schemes are valid for fast selling or box moving products, they do not play any role in the electronics components sector. “We do not get any monthly incentives and schemes for selling the components of our principal companies. In fact, schemes and incentives are more suitable in the IT and consumers electronics sectors. However, we get an annual bonus from our principals when we achieve the targeted volumes, says Nimish Doshi, director, Spectra Connectronics Pvt Ltd.
Schemes boost bottom lines
However, vendors believe that schemes can work wonders in all cases; they just need to be more innovative and attractive. Schemes and incentives should also be supported by training the channel partners, enabling them to sell better so that they can pull up their bottom lines, says Venkat Rajaraman, CEO, Su-Kam Power Systems.
Mohit Anand, managing director, Belkin India, says, “Belkin has always been channel focused and such schemes have always aided us in motivating our channel partners and ensuring an improved bottom line for their business.”
Ankesh Kumar, senior product manager, Emerson Network Power (India) Pvt Ltd, says, “The purpose behind schemes is to motivate our channel partners to plan a profitable purchase cycle for Emerson’s UPS systems and drive them to reach out to as many end users as they can. Moreover, schemes are an extension of our constant endeavour to delight, satisfy and encourage our partners to achieve more than their targets.”
Some innovative schemes
During the summer season, power electronics products like inverters, UPS systems and consumer electronics products need a real push to sell faster. Companies like Su-Kam, Emerson, Luminous, Creative, APC and Belkin India have floated new channel partner schemes this season.
Till last month, Su-Kam had floated a unique year long scheme called ‘Su-Kam Life’. “We had invited 12,000 dealers to take part in this scheme. Points can be earned by partners when selling almost all Su-Kam products,” informs Rajaraman.
“While channel partners have the flexibility to redeem their points against goodies any time during the year, we also give them the option to carry forward their points to the next year and earn some bonus points on the total earned. Under the scheme, we offer a wide range of gifts to be redeemed. This scheme stands out from the clutter,” adds Rajaraman.
Similarly, Emerson Network Power had rolled out a month long scheme in March 2010. The scheme—Dus ka Dum—was applicable for the sale of Emerson products like the ITON series, the Liebert GXT MT series, the Super 400 D series and Powerbank UPS systems. In this scheme, channel partners can earn as many as 40 points on the sale of 1 unit of the MT 6 kVA with a maximum of 200 points for the Super 400D 20 kVA.
“The scheme aimed at driving partners to push sales of UPS systems and create a profitable proposition for themselves with a well planned purchase pattern for Emerson products,” says Kumar.
As part of this scheme, channel partners can buy Emerson UPS systems and earn points. The partners can then exchange the points against prizes like Fast Track watches, Philips DVDs, Jabra Bluetooth headsets, LG DVD players and Sony digital photo frames.
Belkin India has announced a channel scheme called ‘Go for Gold’ to ensure faster penetration of Belkin products in the markets across India. The value based scheme provides channel partners the opportunity to win up to 100 gm of gold. This scheme is exclusively designed to bootstrap aggressive channel engagement. It offers silver and 24 carat gold coins for the sale of each product including structured cabling solutions sold by resellers. The scheme is open till June 30, 2010.
Creative Technology, a manufacturer of digital entertainment products, has announced the launch of the ‘Summer Hungama 2010’ for its dealers across India. This programme is applicable till June 30, 2010. It is linked to the sale of a range of Creative products across India. The rewards include gifts such as notebooks and LCD TVs. However, the highlight of the promotion is a trip to Thailand, along with a cash prize of about Rs 32,000.
APC India has also started a reward programme for resellers and partners called ‘APC Surt’. The scheme is applicable for the sale of APC products like the smart UPS 140 kVA, the Symmetra LX series, racks and APC battery packs. Under this scheme, prizes worth 0.3-5 million can be won across five categories. Each slab offers a different reward like Samsung LED TVs, LA-Z-Boy recliner chairs, a trip to Bangkok, air conditioners and mini refrigerators.
Luminous has also concluded a scheme called Khul-Ja Sim Sim. As part of the scheme, all partners who sold five Luminous batteries won over 60,000 amazing prizes including LCD TVs, microwave ovens, window ACs, laptops, etc.
Issues related to schemes
While channel partners are happy with the schemes, they point out that schemes are plagued with problems. Says Suresh Gera, proprietor, Universal Batteries, “Schemes are full of risk as a lot of hidden charges and deductions crop up during and after the scheme period. Generally, distributors do not communicate hidden clauses, and in disputes, decisions always go in favour of the vendor.”
“At times, payments are delayed for about six months. In many cases, vendors float schemes to compensate for the high value of the product without reducing the price,” says Saxena.
“The major challenge in any such scheme is settling the claims. However, at Su-Kam, we do it in a very speedy manner. We have an internal turnaround time defined for settling the matters once the claim is received at our end,” signs off Rajaraman.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine