Enable, the rebate management platform, today released its annual reports: 2024 State of Volume Rebates Report for Manufacturers and State of Volume Rebates Report for Distributors. Enable created the two reports to show how rebates drive financial performance while shaping the strategic landscape of supply chain operations. The results are based on a survey of over 100+ manufacturers and distributors across 13 industries including electrical, building materials, food service, plumbing, industrial machinery and equipment.
As the supply chain faces mounting challenges, effective rebate management is a must for manufacturers and distributors – it allows a collaborative approach to maximize revenue streams, avoid revenue leakage, maintain healthy profits, reduce disputes and ensure that both parties fully benefit from their agreements. Enable’s reports uncover new gaps and areas of friction with how manufacturers and distributors are using volume rebates and how they’re the key to supply chain success.
The 2024 State of Volume Rebates Report for Manufacturers found that rebates are a powerful strategy for manufacturers to use to drive behaviors from customers, increase revenue and drive additional sales and loyalty. Over the coming year, the report found that manufacturers have the opportunity to improve analytics and communication with trading partners while uncovering ways to reduce administrative burdens on finance team members.
Key insights:
Opportunities Exist for Manufacturers to Expand Rebate Programs
- 62% of manufacturers offer a volume rebate program, the most common type of rebate program offered—about the same as last year.
- The majority of manufacturers reported that they support fewer than 25 distributors, contractors or retailers with their volume rebate programs.
Rebate Strategies Lack Synergy with Company Goals
- Only 4% of manufacturers say managing their rebate program is easy, citing difficulties with monthly tracking, internal and external reporting and analytics.
- Many manufacturers believe they must offer volume rebate programs. As a result, only 36% of manufacturers use their rebate programs to drive sales growth.
- Manufacturers are unsure of the effectiveness of their rebate programs. 32% don’t believe their strategy is effective, and 18% report they don’t know how effective their strategy is at all.
Improved Analytics and Communication will Drive More Effective Rebate Programs
- 64% of manufacturers believe that better analytics will make their rebate programs more effective, compared to 42% in our previous report.
- 41% of manufacturers believe their sales team only periodically discusses rebate programs with customers.
- Manufacturers believe that better awareness of programs within trading partners organizations (55%) and improved communication (50%) will make their programs more effective.
Administrative Burdens Prevent Strategic Use of Rebates
- One-third of manufacturers administer rebate programs through Excel, while another third use ERPs, and 31% overall describe the process as labor-intensive.
- More than half (55%) of manufacturers don’t have a full-time rebate manager.
- Most manufacturers (46%) spend one month or more on reconciliation for year-end reporting.
The 2024 State of Volume Rebates Report for Distributors proved that rebates are critical for the success of distributors throughout the supply chain as they protect margins and drive sales while helping maintain better trading relationships with manufacturers.
It also showed that distributors will need to work on improving communications, internally and externally with trading partners, as they gain visibility into the impact of rebate programs on their bottom line. To accomplish this, they will need to seek out better analytical insights and continual visibility into performance against goals.
Key insights:
Rebates Remain Critical to Distributors
- 87% of distributors report that rebates are critical to profitability.
- The availability of a rebate program with a supplier matters to 79% of distributors, up a few points from last year.
- While rebates are critical to profitability, only 43% of distributors know the rebate amount earned from each manufacturer they purchase from.
Distributors View Rebates as a Relationship Builder
- Most distributors (72%) believe manufacturers offer rebates to become a preferred vendor.
- However, only 47% believe that a rebate program is an expectation—and only 18% view a rebate program as a requirement.
Better Tools are Needed to Track Rebate Performance
- Over half (58%) of distributors track performance against supplier goals.
- While 28% of distributors use Excel and 19% use an ERP to track the performance of their rebates, 26% of distributors don’t know how they track performance.
- Distributors have concerns over accuracy in claiming all they’re owed: 52% don’t believe they receive all the rebates they earn.
Communication Remains a Key Concern, both Internally and Externally
- An increased number of distributors (48%) report that only purchasing and senior management are aware of supplier volume rebate programs.
- For one-third of distributors, teams only know there’s a rebate program because vendors are marked as “preferred.”
- When it comes to communication between manufacturers and distributors, 33% of distributors report they only hear from manufacturers when they reach out first.
- One in four distributors report poor communication between themselves and their manufacturers.
*Manufacturers report available to download here.
*Distributors report available to download here
Enable will host a live on-demand webinar to discuss the findings on December 14, 2023 – click here to register.
ABOUT ENABLE
Enable helps manufacturers, distributors, and retailers take control of their rebate programs and turn them into an engine for growth. Starting with finance and commercial teams, Enable helps companies to better manage rebate complexity with automated real-time data and insights, accurate forecasting, and stronger cross-functional alignment. This lets companies — and everyone in their business — know exactly where they are with rebates. Then they can extend Enable externally to suppliers and customers, setting them up with one collaborative place to author, agree, execute, and track the progress of their trading relationships.
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