How to optimize ag dealer network incentives to yield maximum profitability

By most industry standards, 2023 was a profitable year for agricultural equipment manufacturers, predominantly due to increased efforts to provide incentives to dealer networks to offset elevated interest rates. In 2024, softer demand, economic uncertainty and the cost of capital are just a few of the issues being watched on the horizon. Ag OEMs are likely to continue the trend of higher incentives to contend with these challenges, but is there more that can be done to reduce costs until the market picks back up? One approach would be to review your dealer incentive operations and ensure that they’re not sitting in a theoretical flood plain, waiting for disaster to strike. You might be surprised at what you find.

It’s time to till for that bumper crop

It’s no secret to you that dealer sales incentives are critical to meeting your overall demand and revenue targets. In many ways, agricultural sales incentives are like automotive incentives, only larger. For example, a typical manufacturer like you might offer up to 15-20% off MSRP -- that will cover the cost of doing business in today’s market. While the value of auto incentives isn’t nearly that much, there are quite a few other similarities between the two:

• Both auto and ag OEMs depend on consumer incentives to move their products
• Even though incentives take a large share of the overall revenue for both, administration of these tends to be undermanaged utilizing disparate, cumbersome systems and manual-based processes
• Unnecessary complexity increases the risk of errors, such as improperly paid incentives or lower than expected margins, that can result in significant revenue leakage

Most importantly, we’ve seen the impressive results that come when auto and ag dealer incentives are transparent and automated to help minimize chargeback discrepancies. The time is right to audit and implement ways to improve your incentive operations too.

Planting the seeds for tomorrow’s success

If your organization is looking to increase incentives to spur growth amidst the current economic headwinds, you should take an in-depth look at your equipment sales incentive system now. The more complex the incentives are, the greater the likelihood of overall revenue leakage. As you assess the efficiency and accuracy of your current processes, ask yourself these questions:

• Is your data centralized, organized and accessible in one location?
• Are the various regions in your company using different incentive systems? Do you lack a standardized global structure for managing incentives?
• What about your relationships with dealers? Are you making it easy for them to increase sales or is the process too complicated?
• Can you quickly turn incentives on or off and automatically validate them against external data sources?

If you find areas for improvement with any of these, you’ll want to consider a solution that specifically streamlines your essential incentive management processes.

Harvest the benefits

The greater and more accurate your sales incentive accruals are, the greater the potential benefits. When you optimize and automate the management of your dealer sales incentives, it not only helps your business become more agile, but it also helps your dealer’s and customers’ businesses move faster as well. How? It results in the ability to make faster and more reliable decisions, speeds up transaction rates and reduces time-consuming errors. In addition, dealers will receive accurate, consistent and real-time information on current incentive programs that lead to faster claims payments and improved dealer satisfaction. Your customers will experience greater transparency into available deals, increased personalization and frictionless buying.

That’s what we call a bountiful harvest any time of the year!