Rebate programs play a crucial role in fostering strong trading relationships and driving desired behaviors. However, the true effectiveness of these programs hinges on one critical aspect: analytics. After all, if you aren’t able to track your deal’s performance and evaluate your progress, how do you know if your strategy is working?

Our 2024 State of Volume Rebates Reports for Manufacturers and Distributors underscore some significant shifts in perspective on both sides of the supply chain, emphasizing the growing importance of advanced analytics in managing and optimizing these critical incentives.

In this blog, we’ll explore several key insights we’ve gleamed from these reports to show you just how important analytics are to manufacturers and distributors:.

Manufacturers Believe Better Analytics Will Drive Better Rebates

Manufacturers are increasingly recognizing the need for improved analytics, with 64% holding the belief that better analytics will make their rebate programs more effective. Compared to last year’s 42%, this is a significant uptick in the number of manufacturers who believe that superior analytics can unlock the full potential of their rebate programs. This evolving perspective stems from the limitations of traditional tools like spreadsheets and ERPs. These platforms, while foundational, fail to provide the depth of reporting required to fully understand and optimize program utilization and success.

Spreadsheets, while flexible, are labor-intensive and prone to errors. They require continuous manual updates and lack the capability for auto-generated reports. ERPs, on the other hand, often offer limited support for rebate-specific functionalities, with rigid structures and workflows that do not align with the nuanced needs of rebate programs.

As a result, many manufacturers are now investing time and resources into developing custom analytics tools and reporting dashboards. These advanced systems facilitate a deeper analysis of data, uncovering patterns, trends and customer behaviors that were previously obscured. With such insights, manufacturers can fine-tune their rebate structures, align incentives with customer preferences and enhance the overall effectiveness of their programs.

The shift towards more sophisticated analytical tools is not just about access to data, but about the ability to draw meaningful insights from it. Advanced analytics allow manufacturers to identify patterns, trends and customer behaviors that might otherwise remain hidden. This information is pivotal in refining rebate structures, aligning incentives with customer preferences and, ultimately, enhancing the effectiveness and efficiency of rebate programs.

Distributors Need Better Analytics to Track Rebate Performance

On the other side of the spectrum, distributors also acknowledge the importance of robust tools for tracking rebate performance. Our research indicates that just over half (58%) of distributors actively track their performance against supplier goals. This number, though a majority, is surprisingly low. The reasons for this vary: some distributors are part of buying groups that manage goal tracking, while others may lack clarity on the goals set by manufacturers or lack the technology to facilitate effective tracking. Additionally, the tools currently in use, predominantly spreadsheets and ERPs, are deemed insufficient.

Currently, nearly half of the distributors still rely on spreadsheets (28%) or ERPs (19%) for tracking their performance against goals. The drawbacks of these tools mirror those experienced by manufacturers: labor-intensive processes, error-proneness, lack of flexibility and inadequate support for rebate-specific needs. These challenges underscore the necessity for more sophisticated platforms that can streamline the tracking process and provide valuable insights.

Even more concerning than the half of distributors using outmoded systems to track and analyze performance are the 26% who don’t know how they track performance at all. With no analytics or tracking to evaluate your rebates’ performance, distributors are left entirely in the dark regarding the efficacy of their rebate programs, never knowing when or how to adjust their strategy. It’s never a good idea to fly blind with your rebate programs; this is why it’s so important for distributors to embrace a rebate management platform with advanced analytics and performance tracking capabilities to ensure that your deals continue to drive desired results.

Embracing Advanced Analytics with New Platforms

The path forward for both manufacturers and distributors lies in embracing advanced analytics. This means moving beyond traditional tools and investing in systems that offer deeper insights and more efficient data handling. As the role of rebates across the supply chain grows, the technological hurdles and shortcomings of the most common tools used for rebate management and analytics are becoming harder and harder to overlook. Modern rebate management platforms like Enable not only address the specific needs of rebate programs but can also be much more user-friendly and efficient than traditional tools.

By adopting advanced analytics solutions, manufacturers and distributors can gain deeper insights into their operations, leading to more tailored and effective rebate strategies. This not only enhances the effectiveness of rebate programs but also fosters a more data-driven and collaborative approach between both parties.

The insights gathered from our reports point towards a future where advanced analytics play a pivotal role in the success of rebate programs. The shift from traditional tools to more specialized rebate management platforms is not just a trend but a necessity for those looking to maximize the effectiveness of their rebate strategies. As the industry evolves, so must the tools and approaches used to manage these critical programs, ensuring that both manufacturers and distributors can thrive in an increasingly competitive marketplace.

Ready to take a deep dive into the State of Volume Rebates? Download the full reports for manufacturers and distributors.