Trade promotions: scheme design that does not train dealers to wait for discounts

A dealer rings in the last week of every scheme and never in the weeks before it. You can guess why: the dealer has learned that waiting is free, and that the list price is a number you print for the price list. A scheme becomes the price when dealers can predict its dates and most of what they buy lands inside the window. Changing that takes a different design, not a smaller discount.

Read your own order book before designing anything

Pull the last three schemes and look at them in three ways, using nothing more than your invoices.

First, the calendar. Mark each dealer's orders by week. If orders bunch inside the scheme and thin out in the fortnight before it, those dealers are waiting. Second, the winners. If the same four dealers took the top slab each time, the slab was paying them for volume they would have bought anyway. Third, the weeks after. A scheme that worked leaves your sales higher than before it. If sales fell back to where they were, you bought a spike.

Imagine the order book of one dealer, with illustrative numbers: a quiet fortnight, then a burst equal to six weeks of normal buying, then a quiet fortnight again. Monthly totals look healthy. The shape tells you the dealer is running stock off your calendar, not the market's.

Stopping all schemes at once will hurt for a quarter, because dealers have planned around them. Change what a scheme pays for first, and its size later.

What a scheme can pay for, other than volume

Paying a flat percentage for buying more is a price cut with a better name, and it is the version dealers learn to wait for. Four things are worth paying for instead.

Growth over the dealer's own previous period is the first. Set each slab against the dealer's own past billing, so a small shop and a large one each have a step to reach. The base must come from your invoices, not from a number the dealer proposes.

Range sold is the second. Reward a minimum count of your lines moving to shops. Count lines sold, not lines stored, or the dealer can stock them in the back and call it done.

Presence is the third: a fixed amount for a board, shelf or counter display that is up and in good order. Photograph it with a date, and pay after you have seen it. The reward carries no end date, so it keeps paying for the display in the quiet weeks.

Prompt payment is the fourth. A small, visible credit for clearing dues inside the agreed days. Be careful not to reward the dealer who never buys on credit at all.

Keeping the dates unpredictable without being unfair

You cannot hide a scheme from a dealer, and you should not try. You can stop it from being a calendar event.

Tie each scheme to something that actually moves: a new product, the opening of a season, a rival's launch in one town. Vary the length and the mechanism from one scheme to the next. Tell the dealers who qualify, not everybody. It reads as earned. Leave a quiet gap between schemes in which the dealer buys at standing terms.

Some trades have a real season that you cannot move, such as school stationery or pre-monsoon goods. Move the slab instead. Reward the dealer who buys early and sells through, not the one who waits for the last week.

One sheet for every scheme

Write each scheme on one page before it is released. If it will not fit, a dealer will not follow it.

Purpose in one line:
Who qualifies (named dealers or a rule):
Pays for: growth / range / display / prompt payment
How each dealer's base is set:
Step 1 target and reward:
Step 2 target and reward:
Start, end, and last date for claims:
How we check: invoice / photo / visit:
Returns and cancelled orders:
What I expect to see two periods after it ends:

The last line keeps you honest. If you cannot say what you expect after the scheme ends, you are buying activity.

An invented example: a wall-putty maker in Gwalior

Take an invented wall-putty and primer maker in Gwalior, selling through paint dealers in Jhansi and Sagar. For two years it had run "buy ten bags, get one free" before each festival. The sales manager noticed that the best Sagar dealer stopped ordering altogether for a fortnight before every offer, then took twice the usual quantity inside it.

The mistake was not generosity. It was that the offer was the only reason to order. Rebuilding it, the maker set each dealer's target against each one's own last-period billing. It added a fixed amount for a primer display kept on the counter, checked by the field staff on their rounds with a dated photograph. It tied the next festival scheme to a new primer pack in place of the old date. Dealers who cleared dues inside terms earned a credit on their next bill.

Over two cycles the Sagar dealer's orders began to land in the quiet weeks, because the display money paid then and the range bonus had no deadline.

The limit of the story is that one dealer is one dealer. Others took the new scheme and still bought in bursts, and the maker treated that as information about their cash, not their loyalty.

When a scheme is the wrong tool

If a dealer sells you slowly because the margin is thinner than a rival's, the dealer may take your scheme, bank it and carry on. Fix standing margin first. Our note on creating dealer incentives without damaging margins goes through the arithmetic. Skip a scheme also when stock is short or delivery is unreliable, since discounts do not repair trust.

Rewrite the next scheme on the page

Take the scheme you were about to announce and fill the sheet above. If the base or the check is missing, you are not ready. Trade promotion planning is the service that builds schemes on each dealer's own base, and the rest of our sales work sits under sales. If your dealers have learned to wait for you, tell us what you need.