Growth does not disappear in a soft market. It just moves to the companies that create demand instead of waiting for it. A well-structured channel incentive program is one of the most effective ways to protect margins and strengthen loyalty. It shifts the buying experience from a transaction to a relationship.
And in a tightening economy, that shift matters. Incentives give channel partners something to earn and keep, and they answer the question that drives almost every commercial decision: What’s in it for me?
Here’s a case study that demonstrates the power of an evergreen incentive structure paired with motivational rewards that helped an electrical supply client grow revenue consistently over more than 20 years in a variety of economic conditions
In today’s market, protecting margin and holding onto customers matters more than ever. Channel incentive programs support both. They bring in new business and prevent existing customers from moving to a competitor to save a few cents per unit.
Price cuts are temporary. Loyalty has staying power.
Uneven Ground Ahead
The construction markets are shifting. Growth isn’t gone, but it’s uneven. Across the U.S., distributors are facing a slower and more unpredictable market, one defined by higher interest rates, new tariffs, labor shortages, lagging permit processes, and tighter project budgets.
According to the Dodge Construction Network, total construction starts rose 3% in September, with much of that growth driven by data centers and infrastructure. As Dodge noted, “a 3% growth rate is just keeping up with inflation, and we need fourth quarter growth of 25% to match annual growth of 2024.” The American Institute of Architects projects further weakness in 2026, particularly in office and retail construction. Meanwhile, HARDI reports that HVACR distributor sales are hovering around single-digit gains—still below post-pandemic highs.
The Problem with Competing Price
Price is easy to match. You lower yours; competitors follow, and no one wins. While a temporary discount might help secure an order or project, it rarely builds loyalty or market share.
Most contractors don’t buy primarily on price. Research continues to show that relationships, reliability, and service outweigh small cost differences. Many contractors will pass material costs through to their customers.
What contractors truly value is partnership, trust, local availability, dependable delivery, and recognition for their business. When distributors compete only with cost, they erode margin and train customers to shop on price rather than value.
The Growth Gap: Why Creating Demand Matters
Demand doesn’t appear on its own; it’s created. Incentives such as SPIFFs, reward point programs, and group travel are among the most effective tools for shaping behavior and earning incremental share.
However, most distributors still treat demand creation as optional. The 2025 Distributor Report by ProKeep found that only 22% of distributors have their inside sales or marketing teams consistently engaged in outbound sales activity. That gap highlights a deeper issue, namely that distributors know they need to be proactive but lack a repeatable playbook for doing so. Incentive programs can be a part of that playbook because they close that gap by aligning motivation with action.
Unlike rebates or discounts that end when the invoice clears, incentives sustain engagement. They often reward behaviors that drive profitable growth, such as selling full systems, increasing average order value, or moving new product categories. They also can activate internal sales teams, giving them a tool in the form of a motivating story to take to customers.
Why Incentives Work
In today’s economic environment, with consumers cutting back on discretionary spending, “free rewards” can go even further than during boom times. Consider the power of a free television, a new iPad or even a family vacation — the kinds of rewards customers would rather keep for themselves.
Research from Electrical Trends shows that 80% of contractors would sign up for a rewards program if offered, and over 70% say they would consider shifting business if all else was equal. So, if your price, product, and service match your competitors’, the incentive might be the thing that tips the scale. Even in B2B, people make decisions emotionally first and justify them with logic later. Channel partners want to work with people they trust and like, who appreciate their business, and who bring value beyond the product. Loyalty is emotional. Price is just the rationale.
Whether you employ a reward point program, or group travel, or a combo of both, incentive programs build relationships better than discounted goods on an invoice does. Add in the value of changing behaviors for the long haul, rather than a discount for a single moment in time, and a B2B incentive program is a great path to get on and stay on.
Play Offense, Not Defense
No incentive program runs on autopilot. It requires commitment, communication, and visibility. Sales teams must use it and embrace it as a sales tool, not a side project. Marketing must support it through steady messaging, digital touchpoints, and recognition moments that keep it front of mind. Those are great reasons to align with a strategic partner with expertise in incentives and the rules that make them work like our team here at Motivation Excellence.
Don’t Just Tread Water
When the market slows, many organizations retreat. They cut back on outreach, marketing, and investment, waiting for the market to return. That’s the opportunity. The companies that lean in while others pull back set the tone for recovery and own the relationships that matter most.
Now is the time to play offense. Build loyalty before competitors go quiet. Reward performance when others pause. Create demand when the market hesitates. Growth doesn’t just happen due to the market; it’s built by those who stay active, visible, and intentional.
Incentives aren’t an expense; they’re a signal to your customers. They show your customers you’re investing in them, even when others aren’t.
We’d love to tell you more in a one-on-one free consultation. Reach out to us to get started!
