At the time I am writing this, Christmas is past, and so is Boxing Day. New Year’s Eve is just around the corner. And I’m doing a cleanup on my reporting for our Q4 promotional activities, so that’s what my thoughts are centered on.

When it comes to running promotions for your dealers and their customers, there are a lot of different ways to structure them. But rather than write an (even more) boring column on what works and what doesn’t, because there are a lot of moving parts there, I’m going to focus on one thing:

What’s the one promotion dealers hate?

I’ll tell you: It’s sell-through credits!

What does that mean? At the risk of sounding like I’m spoon-feeding you, a sell-in promotion is where dealers receive the promotion for inventory they buy from their distributor during the promo period, either as an up-front discount off their standard cost, or a back-end credit on their account after the promotional period concludes. Conversely, a sell-through promotion is where dealers receive a back-end credit for every unit they sell to their customers during the period.

So why are sell-in credits more popular with dealers than sell-through? It’s simple: Sell-in promos are less work for dealers to manage. With sell-through, once the promotional period ends, dealers have to generate sales reports and submit them to their distributor’s representative (that’s me!), who reviews them and then forwards them to the finance department to issue the credits.

Dealers dislike sell-through promos because it’s more work for them. It’s not a lot of work, but it is work. And it’s normal human nature to dislike extra work. Especially since dealer principals and general managers already have plenty of tasks to occupy their time.

I’m sympathetic to that. I don’t like extra work, either. And I recognize that my dealer partners already have lots of internal reporting to do, especially if their company is large. Semantically sell-in and sell-through incent different dealer behaviors. With sell-in credits we, the distributor, are incentivizing the dealer to buy more from us. Whereas with sell-through credits we’re incentivizing dealers to sell more of our stuff.

I’m aware that is a thin, tenuous, semantic difference — but it’s there.

Another reason dealers dislike sell-through is that there’s less certainty. With Sell-In, dealers know that if they buy x quantity, they’ll get y discount and can easily calculate their margins. With sell-through, the total value of the promotion depends on how much of that product their stores sell during the promo period.

Ideally, their sales teams will sell it all! But what if they don’t?

This brings me to another reason they dislike it: Is this extra work worth it for them? Is the juice worth the squeeze?

It’s an extreme example, but years ago, we managed a brand that had regular sell-through promotions on long weekends, which was great. However, these were small, inexpensive consumer electronics and the sell-through credits were, I’m not kidding, like fifty cents per unit. More than one client has told me straight up that they’re not going to bother to send me a sales report to claim their sell-through credits when the total is a hundred dollars or less.

The whole point of running a sales promotion is to generate excitement, not annoyance. Those are lessons learned over the years, and as a brand or distributor, knowing that is essential to crafting promotions that aim to help your dealers sell more of your stuff.