How Midstream Works
Understanding the Fundamentals of Shifting Incentives to a CFS Dealer/Distributor
EEPS have included CFS equipment in standard offer, prescriptive, and other “downstream” incentive programs for years, but in spite of the large energy saving potential, most programs fell short on results (see the savings table in the next section). In response, some programs have begun focusing efforts and related incentives on midstream supply chain actors such as CFS dealers and distributors. Midstream programs can have larger market effects than prescriptive incentives because dealers and distributors can ensure that energy efficient products are stocked and promoted to customers. Like many other appliances, CFS equipment is often replaced on failure, so ensuring efficient options are available and in stock for immediate delivery is essential to closing the sale. Similarly, dealers and distributors can influence purchasing decisions by offering expert advice on the latest products. By targeting this point in the supply chain, midstream programs can increase the availability of energy-efficient products to end users and influence the sale of more efficient equipment.
Moreover, most midstream programs result in a discounted sales price for the buyer (i.e., point-of-sale discounts), helping—instantly—to overcome the first-cost barrier endemic especially to the restaurant sector. These frequently small businesses operate with slim profit margins and limited capital to invest in efficient equipment, making them prime candidates for the education and incentives offered by midstream energy efficiency programs.
Midstream program sponsors often use a mix of incentives to encourage dealers/distributors to stock and promote efficient equipment while also reducing the price for the end-user.
Support for dealers/distributors may include:
- administrative cost support,
- training,
- marketing assistance,
- bonuses for reaching certain sales levels,
- or salesperson incentives.
In most cases, EEPS enter into an agreement with dealers and distributors whereby the dealer/distributor agrees to provide sales and other data (in some cases verified customer data) in exchange for program incentives. In contrast to the downstream model, the midstream model does not require purchasers to submit rebate forms. Instead, the incentives go directly to the dealers and distributors and all or a portion of the incentive is passed on to the consumer through competitive pricing or an instant point-of-sale discount or rebate to help address the first cost barrier.