Cost of Terms + Incentives
Terms and Incentives Analytics

The terms and conditions offered to customers should drive top line growth and contribute to bottom line. Most companies end up with policies that achieve the first objective at the expense of the second, meaning their revenue gains are offset or exceeded by a loss in profitability. This result happens when the terms and conditions designed as sales incentives have little or no regard for their cost or the inefficient customer behavior they incentivize. Avoiding this scenario requires companies to identify the customer behaviors that drive cost and then develop terms and conditions that incentivize efficiency to lower costs. Yield benefits from terms and incentives cost management by establishing conditions that customers expect while simultaneously attaching them to specific behaviors that drive cost efficiency and bottom-line performance.

Get clarity on how terms and incentives affect your profits

  • Evaluate effects of order size: Identify the fixed and variable costs associated with handling customer orders to establish the minimum order value required to achieve net profit targets.
  • Measure the costs associated with volume incentives: Use handling capacity and cost insights to design volume incentive plans that minimize period end spikes in demand.
  • Improve returns policies: Measure the cost of returns by customer and product to identify outliers and design return policies that minimize abuse.
  • Enable effective tiered pricing programs: Offer quantity based tiered pricing for products that optimizes handling and transportation costs by understanding the cost differential between split case, case, layer, and full pallet order quantities.


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