A strong distribution channel is critical for the PVC pipes and fittings industry. Manufacturers in the industry mostly rely on a multi-tier distribution system. They sell their products to distributors, who in turn sell to dealers, sub-dealers, or wholesalers. The wholesalers sell the products to retailers, who sell to plumbers or end-users.
To ensure the smooth transition of plumbing products, many PVC makers leverage different types of channel loyalty programs, which help them enter untapped markets and give them a competitive advantage.
At LoyaltyXpert, we not only help different sizes of PVC manufacturers in running a wide array of highly-effective channel loyalty programs but also brand loyalty programs and influencer loyalty programs. In this blog post, we have listed seven types of popular channel programs that work like magic in the PVC pipes and fittings sector. Read on to gain valuable insights.
1.Channel financing
Even though it is not a channel incentive program in the truest sense, channel financing is one of the most attractive and effective mechanisms that can create solid loyalty among channel partners. Under this program, a select group of channel partners and key distributors get access to working capital at attractive rates, which allows them to undertake bigger projects. Many PVC makers provide channel financing to support their channel partners and encourage them to buy more.
In its recently released report, Prince Pipes revealed that about one-fifth to one-fourth of its total sales happen through channel finance. The channel financing scheme, which supports its major channel partners using, has a recourse option. The company’s outstanding channel financing amount stood at Rs. 730 million as on March 2021. The PVC maker is extremely selective in providing this financing option to a select group of dealers.
2. Inventory-based incentives
To make sure the flow of products into the market is smooth, distribution channels in the PVC pipes and fittings industry must maintain a specific level of inventory. To boost volume growth and incentivize channel partners to stock adequate volumes of inventory, PVC pipe manufacturers provide various inventory-based incentives to improve channel partners’ inventories.
Some of the most popular inventory-based channel incentives are channel rebates and discounts. Many leading PVC brands such as Astral Pipes, Finolex, Oriplast, and others provide rebates and discounts to their channel partners to enhance orders’ size and frequency. Dealers and distributors who order in bulk quantities are eligible for these incentives.
3. Value-added incentives
Many PVC makers, such as Prince Pipes, provide value-added incentives to channel partners who provide value-added products and fittings, thereby becoming one-stop solution providers for plumbing fixtures and applications. In the report, Prince Pipes discussed channel partners that deal with value-added products such as UPVC, CPVC, HDPE, PPR, solvents, and valves are one-stop solution providers in the plumbing and fittings industry.
The channel partners, who work on the ground, have deep insights into the market and the end-users. By adding value to the existing PVC products and fittings, they can delight plumbers and end-users. To enhance your influence in a certain market, provide value-added incentives to the channel partners who add value to your products.
4. Sales incentives and SPIFs
Sales incentives are among the most widely used channel reward programs in the PVC pipes and fittings industry. Using these, PVC makers reward channel partners when they achieve or surpass specific sales targets. Leading PVC makers such as Chemplast Sanmar Ltd, DCM Shriram Ltd, DCW Ltd, Finolex Industries Limited, Formosa Plastics Group, and Reliance Industries, use sales incentives to drive short-term revenue targets as well as to build long-term loyalty.
Likewise, SPIFs (sales performance incentive funds) are channel incentive programs that motivate channel partners to achieve a specific objective, which can range from selling particular products in a specific amount of time, cross-selling or up-selling, or entering new markets. Many PVC manufacturers including Prince Pipes provide their channel partners with attractive SPIFs to cross-sell and up-sell their entire product range.
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5. Marketing Incentives
Marketing incentives can range from market development funds (MDFs), cooperative funding, and incentives for Above the Line (ATL) or Below the Line (BTL) marketing activities. Many PVC companies use a mix of marketing incentives to enhance awareness about their products through their channel partners. Companies such as Apollo Pipes, Astral Poly Technik, Prince Pipes, and Supreme Industries are investing heavily not only in MDFs and co-op funds but also BTL and ATL marketing activities.
When it comes to the risks associated with the different types of marketing activities, co-ops are less risky than MDFs as they are given after the target sales and revenue are achieved. Also, by investing in ATL and BTL activities, manufacturers are not only enhancing the awareness of channel partners but also of plumbers and end-users.
6. Dealer meets and loyalty programs
Prince Pipe is running a dealer loyalty program named ‘Prince Udaan,’ which allows the company to engage and reward its distributors, dealers, stockists, and wholesalers across 46,171 touch points across the country.
The loyalty program is designed to reinforce the bond with channel partners and motivate them with reward points, using which they can redeem gifts. The company also organizes Parivaar Meet, which is one of the most successful dealers meets in the PVC piping and fitting industry.
7. Referral incentives
Usually, manufacturers want to partner with those distribution channels that provide a wide array of piping and plumbing products under one roof. Channel partners in the PVC pipes and fittings industry want to partner with companies that have a wide-ranging product portfolio, supply the products on time, and help them during a crisis. Referral incentives help manufacturers in finding the right channel partners and help the referring parties to win attractive rewards.
Referral incentives play a key role in enhancing market penetration and increasing the strength of channel partners. In this, PVC manufacturers reward their channel partners when they make high-quality referrals and bring in more channel partners or marketing agents. High-quality referrals also help PVC companies to register more sales and witness increased credibility.
Taking everything into account
A majority of PVC pipes and fittings products make their way into the market through distributors, dealers, and wholesalers. As the industry largely relies on various B2B channels, running a mix of channel incentives for various channel partners makes perfect sense.
At LoyaltyXpert, we have a proven track record of creating effective channel loyalty programs for all sizes of PVC businesses. As PVC pipes and fittings maker, if you’re in the intending to make your channel partners stick with your brand for a long time, contact us today.