New Research: Rebates as a Strategic Growth Tool in a Shifting Market
In the HVAC industry, rebates are often treated as “backside dollars,” a necessary but largely passive part of the business. New research reframes HVAC rebate strategy as something far more consequential. When managed deliberately, rebates are no longer just an accounting exercise. They are a primary driver of profitability and growth.
Earlier this year, Channel Marketing Group conducted a survey of 153 HVAC manufacturers and distributors, sponsored by Enable, examining how rebate programs are structured, tracked, and executed. The findings challenge several long-held assumptions about how rebates function in today’s market.
Why HVAC Rebate Strategy Is Changing
Distributor financial reviews show that rebate income can represent between 40 percent and 70 percent of total net profit in many HVAC businesses. In some years, that contribution can climb even higher. More notably, rebate dependence tends to increase as core sales performance softens.
As margins tighten in a slower market, rebate effectiveness often becomes the difference between a manageable year and a painful one. While broad-based rebate programs are easy to negotiate and simple for accounting teams to administer, they frequently reinforce the status quo rather than drive meaningful change.
This “keep it simple” approach reduces planning, limits collaboration with sales and marketing, and minimizes the execution discipline required to influence customer behavior. Strategy, by contrast, begins when organizations ask how rebates can shape what gets sold, to whom, and in what mix.
What the Research Reveals About Distributor Profitability
The execution phase of a rebate strategy requires analysis of historical sales and purchasing patterns, a clear view of competitive dynamics, and a willingness to adjust behavior across sales, purchasing, and marketing teams. Organizations that approach rebates with this level of intent consistently outperform those that treat them as passive income.
The research makes one point clear. Rebates do not create value automatically. Value is created when incentives are designed to support specific commercial outcomes and actively managed throughout the year.
Key Takeaways for HVAC Distributors
- Protect your bottom line: Rebates are a core profit contributor, accounting for anywhere from 20 percent to 90 percent of distributor profitability depending on market conditions and performance.
- Audit your accuracy: While 57 percent of respondents reported that accruals are easy to manage, nearly 26 percent rated their reporting as unacceptable. That gap suggests meaningful profit leakage.
- Move beyond overall sales targets: Broad, revenue-only programs rarely influence behavior. Targeted initiatives tied to specific product categories or new SKUs consistently deliver stronger results.
- Demand better data: Larger manufacturers and buying group participants tend to provide stronger reporting. Poor visibility from smaller vendors limits a distributor’s ability to adjust strategy mid-year.
- Build a cross-functional team: Rebates cannot live solely in purchasing. Effective programs require executive sponsorship and alignment across sales and marketing to ensure growth objectives are realized.
Key Takeaways for HVAC Manufacturers
- Rebates are not a tax: They are a strategic investment that supports revenue attainment and builds share of mind with distributor sales teams.
- Protect market pricing: Unlike COGS reductions that often flow through to the end customer, rebates help preserve market-level pricing by staying off the invoice.
- Incentivize the mix: Programs aligned to shared goals, particularly around high-margin or new products, deliver better outcomes for both parties.
- Leverage digital portals: Strong rebate programs integrate performance data into manufacturer portals, enabling more productive reviews between regional managers and distributors.
- Balance retention and growth: The most effective structures reward baseline loyalty while layering in tiered incentives for incremental performance, similar to airline loyalty models.
Turning Rebates Into a Strategic Growth Tool
To fully realize the profit potential of rebates, organizations need precise tracking, transparent collaboration, and proactive management. Every rebate dollar should be measurable and aligned with clear commercial objectives.
Mark Gilham, Vice President and Head of Global Advisory at Enable, summarized the intent behind the research succinctly: “This is why Enable Advisory was created. We teach the channel how to create rebates that work for all sides. Collaborative, commercial, and effective.”
For manufacturers and distributors ready to move rebates from reactive negotiations to deliberate growth levers, the path forward is clear. Strategy, execution, and visibility determine whether rebates remain a passive line item or become a competitive advantage.
Want the full report?
Download the full HVAC rebate strategy research report or contact Channel Marketing Group to receive a complimentary copy of the research.
