Historically, sell-through allowances (STAs) have been very unpopular with retailers and have also presented some challenges for the brands that offer them.
The two main complaints that companies have with STA: Retailers end up unsure of what the final value of their inventory was at the time of sale. This challenge cannot be understated. Retailers who finance their inventory using a floor plan based on bad P&L data are in for trouble and, as such, have traditionally had a problem with sell-through programs. If your retailers are having troubles with your programs or, even worse, if your programs are causing problems for your retail partners – your programs are no longer effective.
Manufacturers often have little visibility into the claim and reimbursement process and therefore suffer from being out of touch when determining pricing in their marketplaces. This lack of visibility also makes it difficult to stay on budget and nearly impossible to accrue funds for paying out claims. But the problems haven’t ended there.
When dealers have to wait for months and months to be paid out for STAs, the so-called incentive program no longer feels like an incentive to them and therefore stops being effective. This leads to a situation where the retailers will typically express a preference for old-fashioned purchase volume discounts. This brings with it a host of other problems: Retailers may take on too much inventory in order to take advantage of buy-in programs. The monetary incentive becomes an inventory disaster. The brand loses control of their inventory: some parts of the channel are screaming for more product and some are neck deep in it. Combine all of these challenges with an increased HR drain at both ends to administer the programs, and you can see what has kept STA from earning what is perhaps its rightful place as an extremely valuable and win-win sales incentive.
Visbility And Accountability
Having a real time claims processing engine such as the 360insights Channel Success Platform makes STAs function well for everyone involved. The real time nature of this process provides a workaround for all the traditional challenges of STAs.
If a dealer or chain can upload a file exported from their POS system directly into your sales incentives software platform, many problems are solved right out of the gate, including the usual time burn by members of both the brand and the retailer’s staff. The resulting benefit for you is that a lot of your admin challenges are sorted out because there are fewer discrepancies associated with keystroke errors, non-compliant paperwork and loads of inbound inquiries. Your team, especially your territory managers, can spend less time sorting out issues with your programs and more time selling and building relationships in the field. Claims uploaded via POS file make for far fewer data discrepancies and therefore much superior, cleaner reporting.
Claims processed quickly via POS data upload or manual entry through a custom-branded, responsive web portal allow the brand to monitor program performance and sell-through as it happens. This means being able to see how the program is performing but it also means that the brand retains control of their inventory, as retailers are no longer being incented to overload. The brand can also stay on budget for the program while accruing the necessary funds to for paying out claims, avoiding big financial bombs at the end of a program.
Retailers are no longer tempted to overbuy in order to take advantage of up-front volume discounts, but more importantly they always know the true sale value of their goods and can get paid out quickly, keeping their finances healthy.