The Scenario

An industrial buyer asks a distributor CEO a question.

BUYER: “Can you beat my last year spend on 20 MRO SKUs? The grand total was $35K.”

CEO: “Well, it depends upon the average dollar size of your orders. We can do simulations with my OptiQuote calculator. The general rule is that prices drop with fewer, bigger orders. We pass the reduction in our line and order fulfillment activity costs on to you. And, on any given order prices will drop at both the line-item level and order-total level as the dollar totals increase. As a best-theoretical case, we could enter the annual SKU totals on one big order.” Continue reading 101. Case Study: Customer Names Price, OptiQuote Calculator Sets Terms →

Channel partner incentives, collectively and imprecisely known as rebates, are huge, addictive, and problematic programs for distributors. One 2012 survey estimated total channel incentives in the U.S. to be $55B. That’s 80% of the reported $69B in total channel management budgets. A Silicon Valley survey reported that the typical factory respondent ran an average of 21 incentive programs annually with an estimated overpayment of 6%.

Twenty-one incentives programs annually? Sure! Cash bribes get fast attention. Competitors understand indirect price cuts and can quickly follow, tweak and escalate with their own programs. But, without effective plans for disciplining, tracking—and in some cases exiting—these initiatives, what happens? Factory list prices generally keep rising as backend channel incentive checks multiply. Continue reading 96. How to Be Strategic on Channel Rebate Management →