Question

Topic: Strategy

Incentive Program

Posted by Anonymous on 12/10/2009 at 2:58 AM ET 125 Points
I am an Entreprenuer and own a small business selling Homemade Liquid Sanitary Soap.

This year 2009 my Factory Price for 1 box (24 bottles) is 25 USD. Because of the higher cost of materials used, I want to increase my Factory Price to 30 USD in 2010.

My Question is:
1. What is the best strategy for Customer Incentive Program? (Like percentage or Free-of-Charge product and etc.)


2. What is the best Incentive Program for my Sales Man?
(Like how many percent they get if they sell 1 box)

I am new to this business in the Philippines and I need your HELP. Thanks.
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RESPONSES

  • Posted by CarolBlaha on 12/10/2009 at 7:03 AM Accepted
    You need to put this down on a spreadsheet.

    1st, your product is somewhat a commodity. So, you will have to be competitive in price with like products. And you have to make a profit.

    Your salespeople need to be incentised-- and you need to make a profit.

    The best incentive is one that pushes your clients to purchase more -- larger quantities in single orders. So you can do either a sliding scale on price based on quantity, or provide free product-- or what is very popular here, cash rebates. In my unrelated biz, manufacturers pay these rebates to the biz owner directly, they love their rebates and are loyal to the co's that provide them.

    Salespeople need to push their clients to go for the larger order. In my biz, I am paid commissions anywhere from 3 to 30%. You need to know what your industry standard is. Then i'd build in a bonus program for hitting volume milestones.
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