So when some months back Kyocera put together a promo that would see its most talented, dedicated and, dare we say obsessive sales rep actually score a Porsche, most people predicted that raising of the bar would get the white board markers squeaking in its rivals’ boardrooms.
"We’re slowly seeing the level of incentives increasing -- the ante is going up," says Epson marketing and communications director Mike Pleasants.
Although this may increase the levels of fun and excitement in the industry, many suggest that the growing trend of promotions is having an adverse effect on both vendors and the channel, encouraging a more cut-throat, less customer-focused sales culture.
While sharing some of these concerns himself, Pleasants believes that aggressive marketing and promotional activities are virtually unavoidable in such a competitive market. "We can’t get away from the fact that everyone is going to use incentives to attract attention first of all to their product," he says.
"It’s one of those things where everyone is trying to find the perfect one [promotion] for their end users or the channel."
Epson has been running its fairly simple Epson Stylus Club promo for several years and feels that it has probably got the model about as right as it is ever going to. "You have to accept they’re not necessarily the ultimate incentive in terms of prize and rewards unless it’s sheer cash. It’s one of those things we prefer to look at."
The way the club works is that sales reps accumulate rewards points that can then be redeemed for goods, holidays and so on. Epson feels that people are generally more attracted to promotions whereby they can have maximum choice as to what they receive. "It’s what he or she wishes to redeem rather than pushing any particular product," Pleasants says.
"The vehicle [not a Porsche] is there all the time -- which we believe is probably one of the better ways of running a channel incentive."
As a software company, ScanSoft’s promotional programs are somewhat lower key than in the hardware space. However, as corporate sales manager Derek Austin jokes, "I almost became a Kyocera dealer myself when I saw that one".
He points out though, that there are definitely pros and cons when looking at vendor promotions and their ultimate impact on the channel. "It’s an indication that the industry as a whole is moving to commodity status -- that’s both good and bad for resellers I guess."
This is especially pronounced given the current emphasis on a more servicesoriented approach to printer sales, which demands that resellers have greater depth of understanding not only of the products they are selling but how they relate to customers’ specific needs.
Glenn Gibson, general manager at WPT, the Australian distributor for TallyGenicom, believes that promotions like Kyocera’s undoubtedly have a detrimental effect on the channel: ‘Throwing cars at them or anything like that distracts the channel from how to sell the product’.
Fuji Xerox Printers claims that it was the first vendor to offer individual credit cards for sales teams – no doubt one of the most successful and enduring offerings in the market – and has been running its promotion for about two years now.
‘All staff get a MasterCard debit card and for every sale they get a portion of cash on their card to use whenever they like ... This has been very exciting for us,’ says operations manager Paul Harman.
Driving its success, he believes, is the emphasis on having promotions that can potentially impact on people’s lives. He cites a recent example where a sales rep in Western Australia took him out into the car park to show off four new tires he was able to buy for his car.
"From my perspective you want to do something that influences someone’s home life as well as work life." Getting it right, he adds, is all the more important these days, given that changing market conditions have made it harder for companies to achieve 'breakthrough or penetration'.
"Convergence or consolidation has emphasised attempts to buy loyalty," Harman says. This has led Fuji Xerox to focus more on developing consistent, rather than ‘exciting’ programs.
"We’ve tended to go for very consistent rewards over time rather than the big hit trying to dazzle the market," Harman says.
Fuji Xerox reports that its more blockbuster promos in the past have provided only a small snapshot of participants, while usually tapering off quite quickly. The company used to offer trips as incentives, but is now almost entirely focused on gifts and prizes, which sales reps can acquire by accumulating cash rewards.
"Win a Porsche? -- I don’t know if I want to accept a liability," Harman says.
As far as Kyocera is concerned, though, its high-dazzle-factor Porsche deal has been one of its most successful promotions ever, and reports that it has received double the responses that it expected.
"We’ve had quite a large number of entries," says Anthony Toope, marketing manager Kyocera Mita Australia.
"Very simply the person who gets the highest amount of dollars paid to their card gets to drive the Porsche for a month." It runs until March next year. But the major carrot, or catch, depending on how you look at it is that the person who manages to keep that up for 24 months gets to keep it.
Toope says that not only has the Porsche promotion been very effective in pushing sales, but that it has also served to encourage more resellers to look at taking on the brand. "We want to establish more authorised resellers and we’re in the process of sending authorised reseller packages to the channel."
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| Kyocera MD David Finn touting the company's Porsche giveaway |
In addition to the Porsche deal, Kyocera is looking at as many as 10 other programs over the next few months.
Included among these are the standard card, cash rewards schemes that mirror those offered by many other vendors whereby sales reps are presented, usually with a debit card, which then has money transferred over in line with their achievements.
"We laugh about the Porsche," says Lexmark A/NZ channel business manager Tim Champion. "If you’re the lucky person good on you."
Funnily enough, Lexmark views its tradition of dragging its best partners along to the Gold Coast Indy to party hard with bikini-clad babes and petrol heads as being on the more conservative side of the promotions spectrum. Lexmark has been a major sponsor of the event for the past few years.
Each month the top 15 Lexmark salespeople score a ticket, with the best-of-the-best scoring deluxe packages involving box seats and stays at either the Mirage or Versace hotels on the Gold Coast.
"The events have been absolutely sensational," Champion says. Besides, some people might think it’s more fun to watch fast cars than drive them, especially if you fancy the odd drink.
Lexmark now boasts over 60 percent participation in the program across 50 different dealers, which it says has led to a 50 percent spike in revenues to more than $1 million last year alone.
"We think it’s getting traction," Champion says, no pun intended. Like other vendors, Lexmark has been especially wary of not running programs that would encourage sales staff to overly discount products to gain rewards. Instead it has stuck with a model that records revenue as opposed to units sold.
"The thing I’d say about these programs is what we’re careful not to is incent behaviour that impacts dealer margin. There’s concern that sales people discount the hell out of the product to get the sale so we register revenue as opposed to units sold," he says. "You get to the point where there’s so many of these things going on they lose impact."
Lexmark also runs a number of incentive programs specifi cally targeting the dealerships themselves, believing that doing so can often help to engender wider cultural support of vendor’s products throughout the channel.
Hewlett-Packard is another vendor exploring the fast car route. From 2 May this year to the end of October it is running a promotion awarding channel sales reps with $70 for every printer sold with the top performer winning a BMW Z4 convertible.
According to Rebekah O’Flaherty, Hewlett-Packard’s VP/GM Imaging & Printing Group South Pacific, it is essential to drive both push and pull marketing in order to grow market share.
"That is pull from customers and push from the channel. On the pull marketing front we drive demand to the channel through innovative products and cost leadership," she says, citing examples such as the WebJet Admin, toner and ink alerts, instant-on fuser with no warm-up time, and the first print in 20 seconds offers.
"Our colour LaserJet products also use in-line technology, which allows faster, quieter, better quality and more reliable colour printing. We also use tactical tools like attractive bundles and value adds like rebates, cash backs, trial and trade-in programs."
On the push channel marketing front, HP has invested heavily in education, training and demo programs designed to support HP sales reps in the channel.
The company claims, for instance, that its annual business new product introductions are attended by an average of 1500 reps, and HP’s Education Department trains on average 1500 channel sales people per annum. The channel also has ongoing access to the online HP Partner Academy for product updates and training.
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| ScanSoft's Austin: Industry as a whole moving to commodity status |
But as any marketing person will tell you, finding the right promotion for the right time is ultimately very difficult and can mean exhaustive meetings and hours in front of the whiteboard. And so the only way that vendors really have to control the process is to ensure they collect as much information about the promo while it is running.
"The most important thing is measuring the effectiveness of promos," Pleasants says.
HP’s O’Flaherty agrees that it can be difficult to design the best promotions all the time in such a dynamic market, and what works one week may not work the next, while a program that works well in one category may not work well in another.
"Put simply, we have to stay flexible and adapt to the market."
"Incentives are part of the business, always have been and always will be," Pleasants says. "The key is respecting the integrity of the sale made by the reseller."
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