Channel Incentivization Trends in the Manufacturing Industry

Hello everybody, just wanted to let you know the webinar is about to start in about 2 minutes. We're just giving some more people some time to log in. Alright everybody, let's get started with the webinar. Hello and welcome to today's event. My name is Dan Roach and I'm the head of demand generation here at Fielo. Today's event is one of the first ones in our new series that'll be more educational based. Our next event will be the week of June 25th and we're gonna cover incentive automation in a native Salesforce architecture. Our webinar today is titled Channel Incentivization Trends in the Manufacturing Industry. And our host is Tim Harman, industry analyst from Nuvoce. And his guest is Adrian Van Haften, Chief Marketing Officer from Fielo. In the interest of time, please submit any questions you have via the player controls and we'll get back to you with answers. I hope you enjoy today's discussion. And with that, I will turn it over to Tim.

Thank you, Dan, and hello everybody. Typically, as an industry analyst, the webinar spotlight is on me, but I'm going to turn the tables this time. And pose some of the telling questions to Adrian, given that Pielo is willing to share its learnings from its many manufacturing customers. Hi, Adrian. How are you?

Hey, Tim. I'm well. How are you? Thanks for setting this up.

And thank you to you and the Pielo folks for inviting me to put you on the hot seat, so to speak. So to start, Adrian, a little context. Tell the audience a little bit about Pielo.

Yeah, you know, Fielo is a loyalty and incentive software platform, and it's really driven and designed to improve product engagement, brand loyalty, and sales performance from both B2B and consumer channels. At the core of it, Fielo lets organizations run loyalty programs and incentivization programs. Our platform and our product allows you to incentivize almost any action, whether it's sales, whether it's orders, whether it's training, and then with the ability to provide rewards and recognition to maximize the impact of those programs. The other important thing is that we're Force.com native on Salesforce.com and thereby fully integrated on Salesforce Clouds, so that brings a ton of scalability and automation to companies that are also integrated with Salesforce.

Thanks, Adrian. You know, I want to start off by talking with you today about how manufacturers are thinking about incentivization. In other words, how they employ incentive and loyalty programs strategically for their— both their channels and their customers, and what they're doing to put those strategies into action. But before we get into specifics, I'd like to drill down on the manufacturing industry, or perhaps I should say manufacturing industries, Because as you know, manufacturing cuts a pretty broad swath from automobiles to furniture to metals to clothes to computers and beyond. Can you give a couple of examples of the manufacturing industries that are thinking seriously about how to incentivize their channels and their customers?

Yeah, sure. You know, as you can see here from this slide, first of all, to your point, you know, Fjellow has done— has customers globally that have implemented our platform to do exactly what you're describing. And if you think about industries, manufacturing, it really does cut across the whole spectrum, building materials, industrial and commercial equipment, office equipment. But what they all have in common are these tend to be well-established industries and even brands that have long-term channel sales networks and relationships, and where channels are just really important. You know, they drive 60, 70%, if not all of their revenues. And really what we've seen these last few years is that virtually all of them are either already or beginning to deploy more sophisticated incentivization programs to really get the most out of these channels.

Great. Thanks, Adrian. Okay. So let's focus on the building materials industry. I think you mentioned that as one example. Yeah. Can you describe for the audience how building materials manufacturers map their routes to market, i.e., their channels?

Yeah, I mean, here's the simplified view of this. The reality is just because of ability and capacity, most manufacturers tend to focus, of course, on their biggest distribution channels, right? So that the one-step distributor and then these kind of handful of big box retailers that are just critical enough to your company to make sure that you have designated, dedicated representation for. The challenge is, as you look farther down the line of distribution, whether it's the smaller dealers, contractors, subcontractors, general contractors, all the folks that have a really important influence on the product sale before it actually gets to the end customer. Whether that is a retail consumer or commercial customer. Um, you know, the challenge is, especially now with the internet, the, that end buyer of products is increasingly way better educated and is in a position to choose and compare products both at brick and mortar and online, you know, beyond the big, big box retailers. Um, and this has really shifted the power to the consumer and to that end buyer and to many of those last mile retailers, whether they're physical or virtual. And so that means managing relationships and driving performance from more and more channels becomes very valuable, fun, is really critical, important. So forward-thinking manufacturers are looking to expand these direct engagements beyond the large distributors and big box retailers to those channel entities that are more customer-facing, contractors, dealers, and the smaller retailers, given how important they've become in influencing the sale of the product.

You know, that nears something exactly, Adrian. What I hear from manufacturers all the time is that they tend to focus on that, that first touchpoint in the channel and depend on the touchpoints in the channel to touch the other, you know, channel entities downstream and ultimately the customer. But in the tech industry and increasingly in the manufacturing industry, I'm finding that manufacturers are wanting to take more control of the relationships of their entire channel ecosystem. So I think that's, I think that's pretty telling. Thank you. So describe, if you will, some of the market dynamics that impact building materials manufacturers.

Yeah. I mean, I just kind of laid out a little bit in terms of what traditionally the focus has been. And really, it hasn't changed a great deal, certainly not at a scalable level in the last decade or so, where still most of the channel support is happening at the large, at that kind of those first boxes. And that's where the power used to rest. And they're still critically important, of course, your main channels to business, whether it's retailers or distributors. But even those channels now are seeing end buyers that are much more sophisticated and educated. And what that means then is that even if you're paying attention to these large channels, the need to keep them educated on your product through training is becoming critically important. And that's something that is sometimes tough to pull off, you know, because if manufacturers aren't careful, products start to fall into this commoditization trap that we see, where the end buyer starts buying on price in the absence of clear product differentiation or training. And that can be hard to pull off. So it's really difficult to encourage product education through this entire channel. Now, how do you encourage your partners to be trained on your products so that the end buyer ultimately ends up being educated and chooses your product over somebody else's? That's not something that you can accomplish purely by putting some training materials out there. There's an incentivization strategy required, and, and, um, and that's, you know, part of the market dynamic is, is this changing role of the end buyer as being more sophisticated, wanting more education, and therefore those folks that are influencing sale further down into this graph, um, really need to understand the product better to differentiate it and not to default, you know, into pricing and discounting to get their product to market.

That's great. Thanks, Adrian. So what about any challenges that the building materials manufacturers face with respect to their channels?

Yeah, I mean, it's, it's the same that I'm sure many of you on the call that I see frequently and have seen for, for a long time is, you know, there is a certain lack of channel loyalty when it comes to the distributor channel. You know, as I mentioned earlier, this kind of move toward productization or commoditization, excuse me, means that distributors are representing lots of product out there and loyalty is harder to come by when it comes to pushing your product forward versus somebody else's. And that can lead to some stagnation or kind of, you know, not kind of stopping this rapid growth that you may have seen in the early days of a new distributor or channel. You know, the same thing applies, what I referenced earlier, is this lack of education in the channel where these distributors and even big box retailers really start to, given the number of SKUs out there, are just not as educated about the product as they used to be. And considering what, you know, some folks call a version of a professional ADD, like where you have channel partners repping multiple products and constantly jumping from promoting one versus the other, it's really difficult to stay relevant. And what that all meets and leads to is a lack of control of outcome. As a manufacturer, you really don't know what the final message and how your product is being positioned farther down into the channel for the actual end buyer. And up until now, it's been difficult to create a mechanism to influence that outcome. You know, how do you drive the right behavior. I mean, yes, you can put incentives in place for your distributors and retailers, but they're not the only ones involved in this process. So really understanding how to create drivers for, for successful kind of channel incentive program really becomes critically important, not just for your top 2 or 3, but for everybody within your, within your ecosystem. As a matter of fact, you know, at the end of this session, we'll, we'll we'll furnish a link to a white paper around the 6 drivers for investing in strategic channel incentive programs, which you'll download, and they'll go a little bit deeper into what I just described.

I love your reference to professional ADD, I think professional attention deficit disorder, right? Yes. Yeah, I find that I suffer from that too, and I think everyone does. So much information coming at you every day, and in the case of manufacturers coming at their channel partners and their customers, that they've got to do something to, to be that attention grabber. And I know that I've talked with manufacturers who are employing incentive programs strategically just as that sort of attention getter, which ultimately, of course, leads to some of the other things you talked about, ultimately long-term loyalty. And more control over the outcome. So Cielo has an incentive automation solution designed specifically for manufacturers, right?

Yes, correct.

Why is incentive automation important in the context of building and managing a strategic incentive program?

Yeah, I mean, I think that's a really valid question. And, you know, I put this slide up here to kind of demonstrate that what many companies and people think about incentivization and what to incentivize is not as straightforward as I think is perceived. And what I mean by that is, you know, back in the day, incentivization was a simple formula that says if you sell more product Y or buy more product X, we'll pay you an additional spiff of some kind. Now, that still exists. But incentive programs, they're not a one-program shot to be effective. You know, savvy and proactive manufacturers employ incentive programs plurally. That means programs to get people to register for a loyalty program you may be— that you may have, to enroll and complete e-training, to provide surveys and feedback in terms of what your you know, you know, in terms of how your product is performing in the market, all the way through to the sales stuff, which is really around if folks sell or buy your product, uploading invoices and getting incentivized for that, certain— reaching certain sales volumes, etc. The point I'm making here is that incentive automation becomes important because if you look at this slide here, trying to manage something like this manually or with homegrown technology becomes very difficult. And they're all equally important in many ways, you know, it's not just about sales in order to drive growth. You know, not only that, but manufacturers really want to reach a broader swath of the channel and customer population with these programs, and they need to be able to scale. So a purpose-designed system like Fjällräds Incentive Automation Platform enables channel marketing and sales teams to be more targeted and more innovative and more effective with their incentive programs.

You know, purpose-built, I will second that notion because I have heard many, many channel program marketers tell me that their spreadsheet approaches are constantly on the verge of blowing up and they just can't do the things in the spreadsheet that they need to do today in terms of, like you said, Adrian, incentivizing not just the result, but all the various activities and behaviors that could potentially lead to a more positive result, i.e., increased productivity or increased purchases. You know, what do you— you said more innovative. What do you mean by being more innovative? Can you give some examples?

Well, you know, listen, one thing that incentive programs don't lack is creativity, right? I mean, Many of you are constantly coming up with interesting promotions and ways to structure programs to capture more attention and get more participation from channel partners. So, you know, for instance, things like accelerators where a partner can accumulate points faster when they reach certain thresholds or when they complete some kind of unique training certification. You can double the incentive value for a deal. They may target a program specifically to their, you know, to their next tier partners with the goal of moving them up to the top tier. The list of great program ideas is endless, and really what that really tells you is that the need for a flexible rules engine is just critical. And because ultimately if you want to have the flexibility to be able to design not only a broad selection but also a personalized incentivization strategy, it really requires a flexible rules engine, a flexible product.

Yeah, that's great. Thanks, Adrian. Can you describe then some of the specific features and capabilities of PLO's incentive automation solution?

Yeah, absolutely. Just keeping it at a high level for this conversation, if you think about our platform in the following way. You know, at the bottom is that is ultimately the data that obviously our platform needs to connect to. In this case, it's Salesforce, where a lot of the customer and partner data sits. But above that really are the layers that really Fiala brings to the table. The incentive, the ability to set up incentive programs through promotions and gamification, where obviously there's interaction between the audience to start driving points and all that kind of stuff. On that side, and of course the ability to reward behavior as well, both through a catalog and redemption vehicle. And then above all that is the member management piece that those of you managing these programs really need to have, which is the ability to invite members, allow them to view how they're doing with their points, to be able to level and graduate them to different, to different areas, to kind of different tiers, Segmentation. So as I mentioned earlier, you can have a personalized program based on the audience, whether it's geographic or whether it's size. And of course, also some agreements as well around sales performance that you can track. So it's at this kind of high level, it just gives you a sense of what are the true building blocks for having a scalable incentive program.

Thanks, Adrian. You know, in preparation for this webinar, I did a little research, and one of the interesting incentivization trends I found out— I got this from the Incentive Research Foundation's 2017 trend study— is that the number of businesses using non-cash rewards has risen from, in 1996, only 26% of companies to 84% of companies in 2016. Again, from 26% all the way up to 84%. That's a huge, huge increase. Why do you think there's been such a strong push to employ non-cash reward incentive programs?

Yeah, you know, it's, um, I think there's a number of, there's several different factors going on here. First of all, the, the explosion clearly of e-commerce has led to the rise of fulfillment houses that make the idea— make the ability to drive non-cash rewards, merchandise redemption, or even travel much simpler for the manufacturer. It's very easy now to partner with a fulfillment house like our partner GRS to be able to fulfill and provide products. Now granted, you want to be able to do it through a platform like ours to make it simple, But first of all, so there's the ability to offer that is much simpler than it used to be. But the other piece which is really critical here is if you start thinking about the end-user audience, and millennials, obviously that category is a very popular topic these days. But it's a really sobering statistic here I'm going to share, that there's a recent study by Eventbrite that really said that 60% of millennials want experiences versus purchases. And what that also tended to suggest, that it's not so much about cash anymore, it's about things like travel, like sports events and other things that incentivizes that audience to perform and to stay loyal much more so than the traditional, you know, give me $10, $20, $30. And so it's a trend that has to— that you really have to be thinking about where as millennials start making up more and more of the buying audience. that you start making sure that your incentive and loyalty program and redemption and rewards aligns with how that audience wants to be incentivized and is best incentivized.

Yeah, it's just so interesting, the millennial generation, and I don't know what they're calling the generation following that, but are expecting new ways to participate in the economy today. So I think that's a very astute insight on your part. You know, in the same study, Adrian, the Incentive Research Foundation found that almost 90% of large businesses report having technology to support their incentives and reward programs. Do you find this being the case in the manufacturing industry in particular?

Yeah, I think— Absolutely. You know, it's obviously the, the large manufacturers tend to, um, tend to have some very dominant industries like automotive, medical technology, et cetera. Uh, and yes, some of these large manufacturers, uh, or many of them are employing technology to design and manage their incentive programs. Um, but even those companies that are more sophisticated and have rolled out incentive programs tend to tend to lack a single solution. There's a lot of homegrown stuff going on there, or marrying multiple solutions together. And the challenge with that is, yes, you're able to manage your incentive loyalty programs, but you really lack the ability to have a single view and a true end-to-end way to have consolidated analytics to really measure the effectiveness and the ROI of a program. So yes, large manufacturers are doing this, but it has tended to grow over time and it sometimes becomes a bit cumbersome. On the mid-sized companies, which is really the majority of the industry out there, our experience so far has been that the technology has been very much driven by something as simple as the spreadsheet, Microsoft Excel, which yes, technically is technology, but it lacks the robustness to scale and obviously doesn't have the ability to manage multiple programs or personalize and manage thousands or tens of thousands of partners and customers, and let alone the ability to measure and evaluate and assess outcomes. So yes, the Excel spreadsheet is something that smaller manufacturers, midsize, tend to use, but as you can imagine, you know, some of the things we've talked about earlier in terms of what's required nowadays to run an effective incentive program, It's really tough to pull that off with, you know, with a spreadsheet jockey.

Yeah, the— I hear that too, Adrian. So, you know, whether it's homegrown tech at big companies or spreadsheets at mid-sized companies, I hear again and again from incentive marketing professionals, incentive program marketing professionals, that they feel like their systems are either too restrictive in terms of what they feel they need to do today, or they're just about ready to blow up in terms of their capacity to scale.

Yeah.

What does Fielo offer each, you know, big companies and mid-sized companies?

Yeah, the beauty about Fielo's platform is not only is it flexible for the user, but it's also flexible for the company. And for mid-sized companies, we have an out-of-the-box solution that can be deployed, you know, in a very short period of time that really lets you incentivize some of the key behaviors, whether it's sales, order fulfillment, or training. You know, gets up to speed very quickly, and you really are, especially if you're a Salesforce customer, you can incentivize a specific behavior or an object and really get going very quickly. And the beauty is you end up with an incentive program that not only is flexible and scalable, but also provides the kind of ROI and analytics that you're going to want as a mid-sized company to make sure you're getting the most bang for your buck. Now, if you're a large company, our platform allows you to do almost an infinite number of things when it comes to incentivization loyalty. And what I mean by that is, especially for those large manufacturers that are Salesforce clients and users, we natively integrate with most, if not all, of their clouds, specifically, you know, Sales Cloud or Service Cloud and Community Cloud. And what that means is that the data can flow back and forth between the cloud and Fielo, and again, you're able to incentivize almost any field or any object within those clouds and drive a lot more sophisticated and multifaceted incentive programs where you can have a personalized incentive program for one audience, like contractors, and another one for retailers or small distributors with different rules, obviously different redemptions, and most importantly, at the end of the day, you end up with a dashboard where you, as the channel marketer or channel sales professional, can really see how it's performing and how it's working and where you need to pull some levers to drive more behavior. And so really, it's the beauty about Fialo is that we have the ability to deliver a fast solution to a mid-sized company that wants to get up and going quickly, as well as a more sophisticated solution for larger organizations that have other tech that needs to integrate with the incentive automation platform.

Thanks, Adrian. So my hat is off to Cielo because it sounds to me, uh, from some of the very astute points that you've made, that you've been listening very closely to your customers. I know that your what you're saying reflects very closely to what manufacturers tell me in terms of what they are needing and what they are doing today. So good for you. What would you most like your listeners to take away today?

Yeah, I think the important thing to be thinking about when it comes to incentivization is that It's critical nowadays to the success of the business, right? It's no longer something that is nice to have, given the breadth of product offering, the commoditization of products, incentivizing multiple channels is critically important. And so the progressive manufacturers are broadening their view of the channel and how to motivate and keep them. You know, one rule does not apply to all of your channel partners. You need to have programs that can be flexible and scalable, you know, and part of that is incentive automation, which is where Fielo plays, has come a long way. What I described earlier, the ability to provide very personalized and flexible incentive programs, but at the same time making it very simple to implement, you know, incentivize any behavior or incentivize any any field that you have in your CRM, has really made incentive automation implementation a whole lot easier. This is not a, you know, 3-year ginormous project here. We can get you up and running in weeks, if not, or larger programs, maybe a month or so. But at the end of the day, incentive automation really allows you to have that flexibility and drive the ROI that you need from your channels. And then as I referenced earlier, one thing I would encourage any of you to do, and we'll share this also in our post-webinar follow-up, is just to get more context around the importance of investing in a channel and center program, is to download our paper. And there's a link right here, very simple, tlr.com/paper. Download that and you'll get a better feel for why it's so critically important start driving incentivization using a platform like ours.

Great. Well, thank you, Adrian. I think that that wraps up. You want to give the listeners some contact info if they want to get in touch with you?

Absolutely. And yes, and Tim, thank you so much for the interview. I didn't feel like I was under attack too badly. So I appreciate that. At the same time, for any of you that want to learn more about Fielo, you can either email me directly, very simple, adrian@fielo.com. To learn more about what we do, visit our website, contactmarketing@fielo.com, and feel free to stay in touch with us as we continue our journey of really creating and building on this category of incentive automation. So really appreciate your time and enjoy the rest of your day.