Direct Incentive Payout

As the fight for limited shelf space increases and every single company attempts to make a difference among its top stores that matter to them.... nomenclatures like Perfect Stores, Vision Stores, Badshah stores etc. have become quite common. Retailers are incentivised for the shelf space they give for display, for share gain and for meeting targets. Unfortunately, the objective of the Retailer Payout Program falls through as organisations fail in managing the fulfillment of the program. As a result, most of the retail loyalty programs do not end up meeting the stated objective...that of bringing a smile on the retailer's face.

Where the company ends up missing the plot completely is when the feet-on-street (FOS) sales person starts using the payout as a sales tool as against a retention tool. In fact, more often than not, the sales reps use it to negotiate higher orders from the stores. This leads to lower sales when the incentive is withdrawn. Also, many a time, the retailer is unaware of the exact amount paid by the company as disburser of the amount and negotiator for the scheme is same. Money also gets misused deliberately to meet local sales targets. As a result, dummy stores are born in the distribution system and the company, more often than not, has very little visibility at a centralised level to identify, let alone correcting such anomalies. The Retailer Payment System in India is flawed. Companies know it but life goes on, as long as sales numbers reflect in the system, be it from actual store or dummy store.

At Retail Scan, we realised these systemic flaws long back and have been trying to get the CPG companies to admit this and start making direct bank transfer (DBT) not only to retailers' bank accounts, but also direct bank payout to sub-stockists and even distributor salesmen (DBSR), resulting in complete transparency in every rupee spent in incentivising various stakeholders in the sales system.