Reference no: EM131317043

American Olean Tile Company: Motivating Independent Distributor Salespeople Getting the attention of distributor salespeople in the floor-covering business, as in many industries, can be a daunting challenge. For American Olean Tile Company, relatively new in distributor sales, the challenge yielded to a well-conceived sales incentive plan that brought major increases in volume and many new retail accounts. The firm's Bright Choices campaign to motivate distributor sales personnel earned an Incentive Showcase Award from National Premium Sales Executives. American Olean Tile Company of Lansdale, Pennsylvania, maker of ceramic wall and floor tiles, has relied heavily on distributors in recent years, according to Ron Autenrieth, marketing manager for glazed wall products. Although the company has been known in the trade primarily for wall tile products, the incentive program focused on the floor tile lines to increase awareness of and sales effort for them, and “to reposition our glazed floor offerings in the minds of the distributor salespeople,” he said. American Olean's six-month campaign offered tile distributor salespeople a variety of merchandise awards ranging in value from about $100 to $1,000. Awards were individually chosen to fit the target audience—overwhelmingly male, 25 to 34, college-educated, with income over $50,000. Items were hand-selected, Autenrieth points out, for appeal to the special audience and high quality. “A building materials manufacturer cannot just go to an incentive house and say, ‘I want to sell more; create a program for me.’” This was a custom program developed in a collaborative process by the manufacturer, the advertising agency (Dudnyk Company, Horsham, Pennsylvania), and Don Jagoda Associates, a consulting firm specializing in the development of incentive programs. Autenrieth wrote the rules, which tied the awards to sales of six brands of ceramic floor tile and colored grout. Incentives were priced in points and sales were credited in the same language. Fifty points were given for every 1,000 square feet increments of product sold to a ceramic tile contractor, floor-covering dealer, or other customer. Salespeople also earned 20, 30, or 50 points on the sale of display units to dealers, and 10 points for a product-panel carrying case used by tile contractors to present the floor tiles. Monthly reporting of each salesperson's sales was requested, using a specially designed Product Sales Sheet accompanied by copies of invoices showing shipping dates. An extra 10 points were given for reporting on a monthly basis to spread the administrative burden over the time period of the program. Low-end awards, from 100 to 300 points, could bring the participant such items as an espresso/cappuccino maker, cordless phone, or a food processor. Reaching 1,000 points was worth such items as a personal copier, roll-top desk, video camera, or computer. Salespeople were required to register for the program by returning a postcard with information including home address and Social Security number. This provided an element of control, and the opportunity for targeted follow-up promotion. “We spent some extra money,” Ron Autenrieth notes, “to create a monthly report that listed each rep by distributor, by sales region, and the points earned. This was crucial to the execution of the program by American Olean salespeople and instrumental in its success.” The sellers showed they were paying attention. Fifty percent of the target salespeople participated, all selling the priority floor tile and grout. In all, 264 awards were given, valued at more than $150,000. Distributors signed 244 new retail and contractor accounts during the promotion, Autenrieth reports. Moreover, major distributors delivered sharply improved performance: The five key accounts increased sales of the targeted products an average of 82 percent over the previous period, and two of them more than doubled their volume of American Olean floor tile. Overall, Autenrieth says, the program “achieved a level of selling effort significantly greater than we have ever had before.” The distributor salespeople recognized American Olean floor products as a viable line. American Olean had previously used incentives “from time to time,” but this was called “a step up from what we have done before. Our distributor network has grown to the extent that we could strategically think about focusing distributor support. We didn't depend on distributors so much till the last three years.

Discussion Question 1. The American Olean Tile Company's distributor incentive program was apparently very successful in motivating the distributors' field salespeople to push its ceramic floor tiles and grout, which had previously been neglected. Which element or elements of the incentive program do you think were most important in securing such a strong response from the distributors' salespeople?