The Advantages of Collaborating on Your Rebate Strategy: Key Takeaways
Normally when we think of rebates we're talking about numbers and strategies. But a critical piece of the puzzle is collaboration. Rebates used in their best form are a reward. They are the glue that financially incentivizes and firmly holds relationships together for the benefit of everybody.
Cambridge dictionary defines collaboration as “the situation of two or more people working together to create or achieve the same thing”. This means understanding what the end goal is when collaborating on your rebate strategy. You need to share where you want to be, and the other party needs to do the same. Let's look at the advantages of trading partners working together.
Establish Common Objectives
Rebates are B2B incentives and a tool to help us achieve a common objective. For all parties to be clear on this, everyone needs to be aligned and know what they are trying to achieve. If more people understand the details of the rebate program are, who are the decision makers and what they need to do to earn more rebates, efficacy will improve. Without clear understanding, achieving goals becomes impossible.
For example, before you pay out a rebate, you need to know how much of a product a customer has purchased. Without that information, you won’t understand the true value of either the product or the rebate itself. And if your rebates aren’t structured properly to match that value, you’ll end up driving the wrong behaviors. It only takes one link in that relationship to be focused on something different and the whole rebate strategy is going to suffer.
This is why it pays dividends to be aligned with your partners on strategy. When both you and your trading partner are working to same goals, rebate management becomes much easier!
Greater Rewards and Loyalty
Collaborative relationships are more loyal relationships – you can’t have one without the other. If you practice good collaboration with your trading partners, you're going to receive greater loyalty. With your rebate programs, one of your goals can be to drive more customer loyalty. You’ll need to create specific rebate programs to achieve this.
For example, rebates should be mutually rewarding. Even though one trading partner is paying dollars out, the other business is going to be getting something in return. You don't just pay out rebates for the sake of paying them out. You're getting something in return, whether that is just the customer's business or loyalty. You need to be very specific about what you are getting in return and make sure that aligns with the purpose of your trading partner relationship.
Choose the Right Rebate Incentive Together
Rebates if used well, encourage collaborative behaviors. When setting up a rebate program think about what you’re trying to achieve. The first step is to agree what incentive program fits best. The second step, make sure everybody's incentivized and in the know.
Sometimes people have had a bad experience with certain types of rebate programs. The ones that are unnecessarily hard work, not rewarding or they're just deemed too expensive to be paid out. (Are you thinking about SPAs? Because we’re thinking about SPAs.) If you are having those experiences with rebates, it's time to pause and reassess. Determine what you’re trying trying to get from your rebates. If a rebate program isn’t sustainable, it won't drive the right results. Collaborative relationships must be built on sustainable rebates. This is not about you winning and somebody else losing. This is all about winning together.
Be More Adaptable to Each Other
Being collaborative means being more adaptable because things are changing all the time. Competition and market forces keep rewriting the rule book. When things happen outside of your control, it's important to keep your trading partner motivated at all times and not disengaged.
For example, if their business takes a downturn, consider renegotiating the contract so you don’t lose out on a valued trading partner. Think about what value your trading partner has added already and what they're going to spend with you in the future. Likewise, if they have a great strategy in mind, they will see the value of doing business with you. Collaboration is always ongoing, always changing, it's always working out. How do we get over the next obstacle and do it together.
Single Source of Truth
If you have your version of the truth, especially in rebates, and the other party has their own version and you're not sharing, you're not really collaborating. This is why shared data is so important. When you share data, both you and your trading partner can validate each other’s findings much more quickly. This saves you from spending too much time on calculations, freeing you up to collaborate and discuss what you need to do to be more successful together.
Ultimately all that's going to happen is if there is a difference on day one, by the time you get to day 365 and the money needs to exchange hands, if there's a gap on day one, it's going to have increased. By the time you get to date 365, that money is not going to magically appear. If you need to claim more money from your supplier and they haven't accrued it, they owe it to you. Then you have got a problem.
Collaborating all through the year, but especially on day one, is about having clarity and visibility, asking enough questions so that you are clear about what your numbers mean, what the contract means, and is that going to be interpreted the same way by all parties? Find a collaborative rebate solution where you can work together on your rebate strategy and be proactive at tracking all rebates accordingly. That means if you see a problem, you don't need to wait until day 365 to raise it. This is about working collaboratively together and tackling every kind of obstacle.
Encourage Trust and Transparency
A lot of businesses have trading partners and then treat them like competition. If you are going to have an effective rebate strategy you need to not only be collaborative, but also have trust. If your trading partner isn't forthcoming with you and you feel they're holding things back or they're not really working in tune with you, you are a lot less likely to trust them. Ask yourself, if you don't trust them, are you going to be as committed to working as hard as possible with them? Probably not.
If we were dealing with many trading partners and we had our choice of where to put more business, we’d pick the partner that we can trust, who shows transparency and that we can be confident in, to accelerate our rebate strategy.
Want to recap the “Advantages of Collaborating on Your Rebate Strategy” webinar? Watch on-demand here.