Manufacturer rebate programs are a preferred growth strategy in 2025. Whether sellers rely on them for special discounts and services, they offer rebates to customers that incentivize more purchases and grab market share. 

Incentive programs are among the four leading financial strategies identified in the 2024-2025 Top Growth Drivers Report. There’s sound reasoning behind the decision to use them: they increase organizational revenue, according to 87% of North American and 77% of European manufacturers and distributors.

Incentives deliver significant benefits, but they’re also challenging to administer. Both distributors and manufacturers say their customers’ biggest complaint about their rebate program is that competitors offer better ones. Regardless of who the end customer is, this almost always means deeper discounts. 

How, then, can you make sure you’re getting and offering the best discounts? Following are some tips.

Compare rebates from manufacturing partners. Rebates reward buyers who agree to purchase a specific product volume at a particular price by giving back a percentage of the original purchase price. They have long been a B2B best practice because they deliver win-win benefits for buying and selling partners across the supply chain. Discounts are earned based on purchases by volume, growth, retention or mix. And the details matter.

Compare revenue against rebate checks. If one manufacturer offers “a better program” than another, one likely scenario is that the offering company is working at a lesser cost or has seen a reduction in what it must pay in commissions. There are various reasons for this. For example, adding a dealer network to the mix may increase broker fees, thereby lessening the rebate discount percentage. But the partnership may also increase market share, revenue and customer value. To better understand your actual discount, closely examine revenue against rebate checks.

Consider program longevity. Lower prices at one manufacturer could also mean the company recently changed its product line and is looking to close out the old inventory. In this case, the “better” discount is temporary. Taking advantage of these close-out deals is fine, but don’t define the long-term with these blowout prices.

Be aware of variable pricing. A company with high variable pricing may also seem to offer a “better” rebate program, but to know for sure, do your due diligence and examine the price closely. If you compare a 3% rebate check from one vendor to a 10% rebate check from another, it’s easy to assume the 10% deal is better. More likely, the starting price for the manufacturer offering the 10% deal is higher. To determine the program value and your bottom-line impact, assess the starting price every time. 

Offer good rebate programs. Rebate programs are great for incentivizing more purchases to drive growth and enforcing specific buying habits that help grab market share. Manufacturers and distributors offer them to maximize margin, encourage customer loyalty, influence customer behavior, and optimize purchasing and stocking activities. The problem is that rebate programs can also be complex and difficult to administer. While 86% say customers love rebate programs, nearly two-thirds (61%) say their program is a mess. 

Segment for a customized response. Customization is the key to offering rebate programs that outrank your competitors. As market trends come and go and global economic conditions evolve, so do customer behaviors and sentiments. Knowing these expectations and being able to respond quickly is the goal — there’s no such thing as an effective one-size-fits-all response to your customers anymore.

Offering good programs starts with segmenting your customers based on criteria like class of trade, channel, buying behavior, geography and product preferences. To identify patterns within these segments, analyze behaviors, preferences and past purchase histories. Then tailor your rebate structures to segmented groups with group-appropriate rebate levels.

Calculate willingness to pay. Key to customization is knowing your customers’ willingness to pay (WTP), or the maximum amount of money they’re willing to spend on your product or service. WTP data represents the value that your customer perceives in your offering, and is influenced by various factors like product features and quality, brand reputation, availability, alternatives available in the market, and service and support. 

Applying WTP insight to your rebate program allows for timely, data-driven decisions rooted in (ever-changing) customer expectations. This understanding also presents unique opportunities to differentiate your offerings from your competitors. 

Monitor for continuous improvement. Another way to ensure that you benefit from incentive programs — whether participating in a manufacturer’s program or offering one of your own — is through ongoing, accurate reporting. Payouts based on promises made by a salesperson on the back of a napkin are difficult to fulfill on time, potentially falling short of expectations and damaging relationships. They’re also impossible to measure. Without detailed tracking, you won’t know how well they work and what might need to change. You’ll be blindsided when someone says your competitor offers better programs.

Jason Bletz is a channel revenue strategist at Vendavo.