How Do HVAC Supplier Rebate Programs Work?
The HVAC industry relies on the weather more than most consumers may realize. When the weather is at either end of extreme – whether it be a blazing summer or a bitter winter – demand for HVAC units and supplies goes way up. This leads to intense competition during the high-demand months as HVAC suppliers fight for a limited market share, while sales during the milder months – the dreaded “slow season” – typically lag behind.
Growth during busy seasons can take HVAC suppliers far, but with declining sales across the board, most are quick to seek more reliable ways of securing revenue year-round. To mitigate the industry’s seasonality, many suppliers offer incentive programs and other deals during the seasons of spring and fall. As seasons shift and demand rises once again, many promotions come to an end, but they can be a vital technique for boosting margins and sales even during the slowest months of the year.
If you aren’t already using supplier rebate programs, you may be wondering where to start. Today, we’ll be starting at the beginning: what are supplier rebates, and how are they used to promote growth in the HVAC industry?
What Are HVAC Supplier Rebate Programs?
Supplier rebates are incentive programs used by suppliers or manufacturers in the HVAC industry to reward their channel partners – typically distributors and retailers – for hitting specific purchasing targets. Rebates come in many shapes and sizes, each with its own unique purpose, but the most common involves rewarding distributors with a portion of their money back for purchasing specific volumes or ratios of products.
Rebates differ from coupons, discounts and other incentives in a few key characteristics. With rebates, it is only after a purchase is made at full price that customers can claim a percentage of their purchase price back. Rebates also avoid many of the negative associations of price cuts, with the price up front remaining unchanged.
How Are HVAC Rebates Used?
HVAC suppliers employ rebate programs to aid in accomplishing any number of goals, from increasing profit margins, building stronger strategic relationships, boost certain product ranges or SKUs.
Imagine that you’re an HVAC supplier looking to increase sales of a certain type of filter. To accomplish this goal, you can create a tiered rebate program offering distributors a $1 rebate for any purchase over 10,000 units and a $2.50 rebate for any purchase 20,000 units, with the rate increasing at each successive tier.
Here’s another example: perhaps your high-margin fan blades are slow to sell, but your low-margin coils are flying off the shelves. To give your fan blades a boost, you can create a mix incentive program wherein distributors earn a rebate for purchasing specific mixes of fan blades and coils, usually at a preset volume or ratio. This gives distributors a better deal on the products they’re already buying and those they may be buying elsewhere.
Case Study: R.E. Michel
The R.E. Michel Company, LLC is one of the USA’s leading distributors of HVACR supplies, with more than 270 locations across the nation.
As they took on more rebates, the company found themselves attempting to manage hundreds of deals with hundreds of suppliers manually, with most information stored in spreadsheets. When spreadsheets became unfeasible, they switched to custom Access databases, but still found themselves struggling to track and share their rebate data, ensure the accuracy of their payments and identify opportunities to maximize rebate earnings.
After employing Enable’s automated rebate management platform, they were able to scale back their hiring needs and free up a significant amount of time to return to their core tasks. The intuitive, easy-to-use system meant that R.E. Michel was no longer reliant on “rebate gatekeepers” to run accurate reports, allowing the team to start managing their deals with minimal training.
Click here to read the full case study.
Managing HVAC Supplier Rebate Programs
With the mountains of data that HVAC suppliers must keep track of on a daily basis, supplier rebate programs may seem like an additional strain on your data management capabilities that aren’t worth the trouble. However, as in the case of R.E. Michel, utilizing the right tools allows you to leverage these powerful incentives while reducing the time and manpower you expend on managing your deals.
HVAC suppliers using a dedicated rebate management platform to manage their rebate programs can cut the time spent on month-end activities by 40%, giving your team room to breathe and plenty of time to return to their core tasks. When managed effectively, rebate programs can be a valuable part of an HVAC supplier’s strategic toolkit.
Ready to get a handle on your supplier rebates? Schedule a demo today!