Year-over-year growth is always on the list of goals for business owners. It’s definitely a priority with our clients. In a strong market, simple demand for a product does part of the growth work for you:
- More homes get built
- More owners remodel
- More equipment reaches replacement
- Dealers and contractors have more business to place
Just by holding your share you grow.
Our current economic cycle is not helping to feed that kind of growth, however. The economic softness has lasted long enough now that waiting for a turn of events is not a wise plan.
The Economic Forecast Is Not Looking Better
The latest Census data shows single-family construction is essentially flat, and permits issued are decreasing. Remodeling growth is projected to slow to just 0.5% by the middle of 2027, and that does not account for inflation. With inflation running around 3%, 0.5% nominal growth is really a decline.
Distributors are seeing it too. HARDI’s trailing 12-month sales growth masks the current trend. The HVACR distribution association reported member revenue down 4.8% in May. U.S. flooring manufacturer volume fell 5% in dollars and 6% in square feet in the second quarter of 2026, after declines of 7% and 10% in the first.
Some markets are booming. The U.S. now spends more building private data centers than it spends on every public airport, transit system and marine terminal combined, and that’s before the servers even go in.
The pie may not grow next year, and in some categories it will inevitably contract. If you want your numbers to go up, a competitor’s share will have to go down. You need to secure more business from dealers and contractors. You need to engage the people who recommend, quote and sell your products so they choose you more often than your competitor.
Adjust Your Focus to Drive Bigger ROI
A lot of small gains can (and often do) beat one big win. We see it regularly. Most growth plans focus on the largest accounts. They matter, of course, as a dependable staple and foundation to the bottom line, but they could be at their capacity with no room to grow their account with you.
A successful strategy we employ in our strategic incentive programs is to target the large tier of dealers beneath your top customers. Your time could be better spent engaging and motivating this group of the channel rather than going after a new whale; You don’t need one dealer to move all its business to you. You need a large group to move a little more.
Say you have 600 mid-sized dealers averaging $75,000 in annual purchases. That’s $45 million in revenue. A 10% lift across that group produces $4.5 million. This can happen in a variety of ways and is baked into a well-designed incentive program that rewards for:
- Incremental adjustments in orders
- Adding a new category of purchases
- Switching specific products from a competitor
Many of these accounts can be bigger than they look. Your sales file shows what they buy from you, but maybe not what they spend in the category, or what their potential is to move business to you. The share you do not have yet is invisible in your own reporting. But, it’s available to grab with the right tools.
Target the Point-of-Sale Influencers, Too
Sometimes the opportunity for growth is within what the account spends. Other times it sits with the person who decides what gets recommended or quoted first. Targeting both opportunities is a great way to transfer share from a competitor to you.
A distributor salesperson chooses which line to present. A counter team decides what to put in front of a contractor. A dealer salesperson influences the brand that reaches the homeowner. In many channels, the recommendation matters as much as the invoice.
The relationship map is changing too. Building products distribution continues to consolidate. Independent owners are retiring. New leadership can change vendor priorities, sales goals and compensation plans.
Those changes create openings. When compensation becomes harder to earn, a supplier-funded reward carries more weight. The same is true when new leadership reconsiders which suppliers get attention.
Give the account a reason to buy more, and give the people around it a reason to recommend, quote and sell you more often. Our B2B sales incentives strategically do both.
Why A Simple Price Cut Costs More Than You Think
We see the same response in most planning conversations; If we need to be more competitive, get more aggressive on price.
Before anyone approves that move, run the math.
Say you run a 25% gross margin and you give up five points to win a bid. You now keep twenty cents on the dollar instead of twenty-five. Nothing about your costs changed though. To earn the same gross profit dollars you earned before, you have to sell 25% more.
The shortcut is worth remembering: divide the discount by the margin you have left. Five points off a 20% margin leaves you fifteen, so you need a third more volume. Ten points off a 20% margin leaves you ten, and you have to sell twice as much just to break even on gross profit. That is before any added freight, inventory or service cost.
A blanket discount also applies to the business you already had. More importantly, it teaches the channel how to buy from you. The reduced number becomes the expected number. Customers learn to wait for the next deal.
A Discount and a Reward Lead to Different Results
In the programs we’ve built, incentive funding commonly lands around 1% to 3% of sales revenue. It is not a rule, but it is a useful planning range. The investment can be tied to growth above a baseline, a new category or a first order.
A dealer might pass a price reduction through to win the next job. The discount travels with the product. An earned reward stays with the dealer. It reminds them of an added value of working with you. It makes the same dollars more visible when discretionary spending is tight.
Incentive programs use rewards that build stronger relationships, thus increasing loyalty and longevity of a partnership. A competitor can match a discount before lunch. It cannot, however, instantly recreate progress a dealer, contractor or salesperson has already made toward something they want, nor can it replace trust placed with a distributor who values a partnership.
Here’s an important note: an incentive becomes expected, too, if it never changes. The difference is you can easily adjust an incentive program so it’s not stale without putting a lower unit price on every invoice.
2027 Planning Starts Now
A soft market does not eliminate the opportunity to grow. It changes what growth requires.
If you already run an incentive program, decide whether it’s built to take share in 2027 or just repeat last year’s activity. If you do not have one, planning starts with these questions:
- Where is share available?
- Who can influence it?
- What behavior change needs to be targeted?
- How much incremental gross margin is needed to fund the investment?
Motivation Excellence is building 2027 programs right now for companies that want to increase share from current accounts, win new ones and shape what gets recommended through the channel.
Before you lock in a 2027 budget, spend an hour with us. We’ll review your current strategy, work through your channel data to find where share is available, and show you what is working for other manufacturers and distributors right now. That session is on us. Contact us today.
