Was Your Incentive Strategy Built for This Economy?

If your incentive strategy is more than 5-10 years old, it was probably built for a different economy.

Today’s markets are facing elevated inflation rates, tariffs, trade disputes, supply chain shifts, and slowed spending. The Federal Reserve predicts 2.2% GDP growth for 2026, less than half what it was in 2021 (5.8%). Not to mention the Iran conflict contributed to year-over-year energy prices rising 24% in May. The pressure affects the whole distribution channel: manufacturers face instability in getting the materials to make products, dealers/distributors pass along higher costs (or absorb them and lose margin), and end-customers are hyper-scrutinizing costs.

An incentive strategy of “sell more stuff, get more incentives” often works in a booming economy (anyone even remember what that is?). It’s much less effective in a volatile or down economy. To many people, that means incentives can’t work at all, because “sell more, get more” is the only strategy they’ve ever used.

Here’s the thing about a pure “sell more, get more” incentive strategy: it often means you spend more on rewards to get better results. Spend money to make money, right? That’s not necessarily true with incentive strategies. When the economy is uncertain, you can use a more precise, targeted methodology to run a more successful incentive program. That also means that, when the economy is stable, you have a foundation in place for a stronger incentive strategy— one that motivates productive behaviors like training and data sharing while you layer in promotions that drive sales.

What’s Wrong with a “Sell More, Get More” Incentive Strategy?

There’s nothing inherently wrong with it, in the right conditions. If it works, your salespeople or channel partners like it, and the economics make sense, don’t ditch it.

In an uncertain economy, though, it’s worth looking at each sale a little more closely, which means re-examining incentive strategies.

One product may have a huge margin where others barely cover their costs. Where one SKU has been impossible to manufacture for months, another may be sitting in a warehouse begging for its time to shine as a workable alternative. One partner may have an untapped customer base while another is selling at their ceiling. If your incentive strategy treats all these potential sales the same way, you’re using a hammer when you should be using a scalpel. Reassess things like:

• What your programs reward
• Who your programs target
• How marketing supports incentives
• How marketing and incentives support sales and operations strategies

That doesn’t mean over-complicating your incentive program to the point that your audience disengages. Balancing specificity and simplicity can be tricky, but if you do it well, you’ll have a massive advantage over competitors who either haven’t adjusted their incentive program or have given up on it altogether.

What Should You Do Differently?

You don’t have to abandon incentives based on sales volumes— just don’t treat volume like the only thing that matters.

In tighter and tougher markets, your incentive plan should help protect your margin, strategically move products, reach more customer segments, increase demand, and get more value out of each sale.

Don’t Treat All Sales Equally

Let’s say one of your products is reliant on steel and you’re feeling the pain of the 50% steel tariffs. Meanwhile, a comparable product made with different materials is readily available and can meet customers’ needs. You don’t want to offer the same incentive for selling both products.

Look at the economics behind a sale before determining which ones you want to incentivize. That could mean prioritizing:

• Profitability/margin
• Availability
• Strategic product categories
• Attachment and bundling opportunities
• Product adoption
• Customer and market priorities

An incentive strategy that serves you during economic uncertainty is one that helps steer channel partners toward the sales you need most.

Reward Productive Pre- and Post-Sale Behaviors

During high tides of demand, partners have plenty of customers raising their hands. Incentives just give partners a little extra reason to recommend your brand over another.

When buyers are scarce, the moments before the sale become a lot more important. That’s when your incentives should reward behaviors that create pipeline, nurture customer relationships, improve deal likelihood, and make future sales easier. You can reward partners for:

• Product training and certification
• Customer/lead follow-up
• Customer reactivation/re-engagement
• Quote activity
• Cross-selling and bundling/attachment
• New product awareness/education
• Campaign participation
• Sales data submission (warranty registrations, invoices, etc.)

Same idea applies to post-sale. If your channel partners are moving on without looking back the second a deal closes, you’re missing out on things that could maximize the sale value. Reward partners for:

• Sending referrals
• Product/service renewals
• Additional service or aftermarket revenue
• Seizing upsell or cross-sell opportunities

The sale is the finish line. But seeing the finish line isn’t what gets an Olympic runner across it first. It’s the months and years of training and preparation that get them there. Your incentive strategy should drive the behaviors that make each sale more valuable.

Avoid a One-Size-Fits-All Approach to Partners

Economic pressure doesn’t affect all channel partners the same way. A NAHB/Wells Fargo Housing Market Index survey, for example, found that “the median annual increase in [building] material prices declines with the size of the builder: from a high of 9.1% for builders who started 5 or fewer homes in 2025, down to only 1.8% for builders with 100 or more starts.”

Where one dealer has buying power, inventory flexibility, and a broad customer base to help them absorb the shock of increased costs, another may be fighting for their margin with every order. Inviting each to the same promotion is a recipe for disappointment.

Instead, segment partners according to what you’re trying to (and can) get out of the relationship. Start with the typical three-tier structure and go from there:

Not every partner needs a custom-built reward and promotion strategy. But how you reward partners should reflect your goals and the reality of their capabilities.

Help Partners Succeed

An incentive can temporarily get a partner’s attention, but it can’t fix a weak value proposition, a bad lead, or a lack of confidence and knowledge in customer conversations. That’s why the best incentive programs ask not what they can reward, but how they can make partners more successful. Your incentive program should be part of a partner enablement strategy that offers:

Training

Offer training that helps partners sell more efficiently, instead of just trying to turn them into experts on your product catalog. If they can repeat the specs but can’t answer when a customer asks “How does that make this product my best option?” then the training hasn’t done its job. Great training includes:

• Education on products and services
• Competitive positioning
• Objection handling
• Discovery and qualification skills
• Certification paths

Marketing Support

Providing through-channel marketing campaigns helps partners promote you while promoting themselves. Many partners have small marketing departments, if they have them at all, and are happy for the opportunity to connect with their customer base. Marketing support should include:

• Thought leadership and industry insights (not just product marketing)
• Multichannel content (emails, ebooks, infographics, videos, social media, etc.)
• Automated campaigns sent on a consistent basis
• Templates and guides

Sales Enablement and Resources

“Sales enablement” doesn’t just mean “give partners stuff to help them sell your products.” Product sheets and training are useful, but partners also need resources that help them with sales in general: how to identify new and existing opportunities, build business cases, handle objections, and show value to customers. Sales enablement and resources should include:

• A searchable asset library
• Buyer personas and ideal customer profiles
• Discovery and opportunity-identification guidelines
• Competitive battlecards
• ROI calculators
• Business-case/use-case templates
• Proposal, quote, and presentation templates
• Customer-facing comparison guides and case studies

Incentives are more effective when they’re paired with the support partners need to succeed. Help partners market, sell, learn, and win.

Measure Loyalty the Right Way

A key piece of a successful incentive strategy for a down economy is partner loyalty growth. A partner might log into your portal, open your emails, or offer positive feedback. Those things don’t prove partner loyalty.

In a study of B2B customers of a global manufacturer, respondents averaged 8.3 out of 10 for satisfaction and 8.74 for attitudinal loyalty, but the supplier captured only 60.4% of their share of wallet.

To determine whether your incentive strategy is impacting partner loyalty, measure outcomes, not just activity or sentiment:

• Share of wallet: How much of their total category spend are partners giving you?
• Economic value: Is the relationship profitable and/or growing?
• Full-funnel attribution: Which promotion and marketing activities can be traced to pipeline and closed sales?
• Retention: Are productive partners doing business with you year after year?
• Advocacy: Are partners referring you to other businesses?

It’s tempting to define incentive program success with vanity metrics. It feels good to report high participation, opens, and clicks. What’s important is whether the relationship is becoming measurably more valuable.

Conclusion

Not all sales and marketing efforts can be adapted to an economy that creates uncertainty and increases costs. Many get cut outright. But your incentive strategy can be reconfigured so you’re investing in a tool that improves your channel partner relationships, keeps your brand top of mind, bolsters your sales/marketing strategies, and builds long-term loyalty.

Bonus: this gives you a head start for when economic conditions improve. Your program will have built better data, more productive partner habits, and consistent engagement. When the tide rises to lift all vessels, yours will be a speedboat among sailboats.