Designing sales incentive programs for the motor retail industry – whether for your own sales force or a channel partner – presents several unique challenges due to the complexity and variability of the market. It’s a task requiring specialised skills and expertise in incentive and technology design that few businesses have in-house for either the development or ongoing management thereof.
In fact, in a 2022 survey by Channel Marketer Report and Demand Gen Report, fewer than 20% of B2B executives said their channel partner programs were “very effective”, while another research survey by Forrester done in 2020 covering 10,000 business leaders showed that 58% of the incentive programs had failed miserably, only 5% achieved set objectives, while the remaining 37% could only achieve the objectives partly.
Sales incentives
In South Africa, the motor industry alone spends over R250 million annually on dealer sales incentives, while the broader sales incentive sector exceeds R2 billion across various B2B industries. Globally, the sales incentive industry is valued at an astounding $90 billion.
Given the Forrester research stats, it’s clear that almost 60% of the investment into sales incentive programs is lost – ultimately not moving the needle on sales performance, losing revenue, not to mention racking up huge opportunity costs.
One of the industries that relies heavily on sales incentives to motivate and reward sales forces is the motor retail industry – but the industry dynamics present significant challenges in the design, implementation and ongoing management of such custom programs.
Here’s why:
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Technology integration
Integrating a sales incentive program with existing sales, CRM, and ERP systems can be complex and time-consuming. Rapidly evolving technology and incentive design trends often see bespoke programs becoming obsolete long before achieving a return on the cost of the custom development.
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User adoption
Getting sales teams to adopt and consistently use a new tech-driven incentive program can be difficult, requiring training, intuitive user interfaces, and ongoing support and communication to ensure high adoption rates. Reward and gamification elements must be thoughtfully designed to sustain long-term interest and engagement across a very diverse demographic and generational mix of salespeople.
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Convenience and accessibility
A Sales Incentive Mobile App is a non-negotiable in the motor retail industry where sales forces are typically a much younger generation of digital nomads, highly familiar with mobile technology and using mobile apps for various tasks, including work-related activities. They expect intuitive, user-friendly mobile experiences for their work-related apps too.
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Customisation and flexibility
Different sales teams, individuals, dealership sizes and motor manufacturer brands will have varying needs and preferences. Developing a sales incentive program that is customisable and flexible enough to cater to a diversity of requirements and metrics, while maintaining consistency and transparency can be hugely challenging.
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Real-time tracking and reporting
Implementing real-time tracking of sales activities, sprint campaigns and performance can be technically challenging. Ensuring the accuracy and reliability of this data is crucial for maintaining trust in the program. Sales teams need real-time notifications about their performance, new incentives, or changes in sales targets, ensuring they are always informed and motivated.
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Behavioural insights
Leveraging data analytics to gain insights into sales behaviour and adjusting the incentive program accordingly requires advanced analytics capabilities and a deep understanding of what drives sales performance to make data-driven decisions to enhance sales incentive strategies.
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Cost and ROI
Developing and maintaining a custom program comes with hefty investment costs, both in financial and human resources, and the ongoing costs of maintenance, communication and support.
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High ticket items
Motor vehicles are high-ticket value items with marked variability on models and pricing. Incentives need to be designed to cater for the entry level vehicle sale right through to the luxury, top-end vehicle, with sales incentives that are substantial enough to be motivating, but also sustainable and justifiable for the dealership.
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Market fluctuations and economic cycles
The automotive market is highly sensitive to economic conditions. Incentive programs must be adaptable to economic downturns and booms, and even seasonal sales patterns which impact the effectiveness of certain sales incentives at different times.
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Product complexity and diversity
The motor retail industry offers a broad range of vehicles, from budget cars to luxury models to trucks and commercial vehicles, each requiring different sales strategies and incentives. Incentive programs must account for these differences, ensuring fairness and motivation across all product lines.
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High competition
The motor retail industry is highly competitive, with numerous brands and dealerships vying for market share. This requires innovative and attractive incentive programs to stand out.
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Brand loyalty versus volume
Incentives must balance between building long-term brand loyalty and achieving short-term sales targets. While incentives can boost sales, they must be designed to ensure they do not erode profit margins excessively.
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Sales staff motivation
Incentive programs must be perceived as fair and achievable by sales staff to effectively motivate them. Good incentive programs can help retain top talent, but poorly designed ones can lead to dissatisfaction, low morale and high staff turnover.
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Performance tracking
Clear metrics and regular analysis are essential. Programs need to be flexible enough to be adjusted based on performance data and market changes and be updated and deployed in real-time.
Addressing the unique challenges of the motor industry
It was solving these challenges and complexities for vehicle manufacturers that spurred the development of performXP, a mobile app-first designed to transform dealer sales incentives and B2B loyalty programs.
Designing, implementing, communicating, managing, measuring and refining an incentive program hinges on an ocean of depth, strategy and technology that sits behind all the behavioural science that underpins any successful incentive program.
Successful incentive programs bring a transparent, customisable and highly scalable approach to channel-partner sales incentives that addresses the unique challenges of the motor industry, while overcoming the challenges associated with legacy systems, disparate data sources and in-house solutions.
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Jean Claude Latter | Director | Channel & Workforce Solutions | mail me | |
Gordon Wilson | Director | Business Development | mail me | |
Related FAQs: Motor industry sales incentives
Q: What are the main challenges of designing sales incentives in the automotive industry?
A: The main challenges of designing sales incentives in the automotive industry include aligning incentives with the organisation’s goals, ensuring they are attractive to the sales team and adapting to changes in the automotive market. Additionally, it can be difficult to balance cash incentives with long-term growth strategies.
Q: How can automotive investment schemes support vehicle sales?
A: Automotive investment schemes can support vehicle sales by providing financial incentives to dealerships and consumers, which can stimulate demand. These schemes can also strengthen the automotive value chain by encouraging investments in new technologies and training for the sales team.
Q: What role do dealer incentives play in the automotive sector?
A: Dealer incentives play a crucial role in motivating dealerships to sell more vehicles, thereby driving sales growth in the automotive sector. They can take various forms, including cash incentives, bonuses for meeting targets and promotional support from manufacturers.
Q: How does the department of trade contribute to the automotive industry?
A: The department of trade contributes to the automotive industry by creating policies and regulations that support the growth and development of the sector. This includes overseeing automotive investment schemes and ensuring fair competition within the market.
Q: What are cash incentives, and how do they impact sales teams in the automotive industry?
A: Cash incentives are monetary rewards provided to sales teams for achieving specific sales targets. In the automotive industry, these incentives can significantly motivate sales teams to increase their performance and meet the sales goals set by their organisation.
Q: How can businesses self-manage their incentives in the automotive market?
A: Businesses can ‘self-manage’ their incentives by developing customized incentive programs that align with their specific goals and the needs of their sales teams. This approach allows for flexibility and adaptability to changing market conditions.
Q: What is the importance of aligning incentive designs with an organisation’s goals in the automotive sector?
A: Aligning incentive designs with an organisation’s goals is essential in the automotive sector as it ensures that sales teams are motivated to drive sales in a manner that supports the overall strategy of the business. This alignment helps in achieving long-term growth and sustainability in the market.
Q: How can incentive schemes help grow and develop the automotive sector?
A: Incentive schemes can help grow and develop the automotive sector by encouraging investments in new technologies, increasing sales volume and fostering innovation. These schemes can also attract new players into the market by enhancing competition and improving overall industry performance.
Q: What are the implications of the automotive incentive scheme interpretation on sales strategies?
A: The interpretation of automotive incentive schemes can significantly impact sales strategies. Clear understanding and communication of these schemes can ensure that the sales team is effectively motivated, while misinterpretation can lead to confusion and underperformance.
