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Choice is Everything with Sales Incentives
August 24, 2007
Companies achieve better results when they offer salespeople reward options and tie the incentives to percent of improvement rather than a budget number
By Maureen Hrehocik
Even though it's been more than 30 years since Mark S. Biviano heard that adage from a college professor, he still remembers it today when trying to incentivize his sales force at Rubber City Radio Group in Akron, Ohio.
The senior vice president and executive sales director says some of his salespeople want money or goods, others recognition, and others want time off.
"I learned early on that to have a successful incentive program, you need to let people choose the reward as much as possible," Biviano says.
Louise Anderson, president and CEO of Anderson Performance Improvement, an incentives firm in Hastings, Minn., agrees. "Guilt-free recognition is what a lot of people are looking for," Anderson says. "We found most employees want a choice. "For one company we worked for, we had five black BMWs to give away," Anderson relates. "Not one of the recipients wanted the cars! One wanted a Harley-Davidson, one wanted new landscaping, and one chose a cruise. Choice is everything." (The Harley-Davidson winner didn't want his wife to know he chose the motorcycle instead of cash. He told Anderson his wife would've wanted him to invest the money rather than buy his dream hawg.)
Spread the Wealth
Anderson says incentive strategies have changed over the last five years. Instead of rewarding for sales, companies are now rewarding for improvement.
"Rewarding for improvement drives money to the bottom line," she says. "I have seen companies' sales quadruple when sales incentives were given for percent of improvement."
By incentivizing on improvement, the "80 percent club doesn't get left behind," Anderson says, referring to those salespeople who may not have large accounts and who can become demoralized by the 20 percent of superstars who always seem to claim the biggest rewards.
Many companies are moving toward a "token economy" to facilitate guilt-free rewards.
Instead of working toward winning a car or a trip, salespeople earn points that can be redeemed from an incentives catalog for everything from cars to cutlery. It's up to the employee at what point he or she redeems the points. "This gives the employee the power to choose his own goal," Anderson says.
Another factor that can influence how successful your incentive program may be is knowing the demographics of your employees.
According to Dana Slockbower, director of marketing for Rymax Marketing Services, Inc., Pinebrook, N.J., older employees and Generation-Xers are motivated by different things.
"We've found aging employees like the more traditional awards such as merchandise," Slockbower says. "Generation X wants more experiential awards such as snowboarding trips or high-end spas. They're very brand-savvy."
Adrienne Forest, assistant vice president of special marketing for New York-based Bulova, understands the lure of high-end brands. "Luxury brands are very popular," Forest says. "Watches aren't just used to tell time anymore. They are fashion accessories for both men and women." She says that Bulova's Swiss brands, Accutron and Wittnauer—especially those accented with diamonds—are the strongest of all as incentives.
Slockbower says her company's incentives are all offered online rather than in print, in keeping with the "instant communication" and constant updating that can be accomplished.
"The bottom line is that cash equals compensation for most employees," Slockbower says. "Companies no longer want to commit to a [monetary] number anymore because that number has to be increased from year to year. They are looking for aspirational rewards that are above and beyond the paycheck."
Slockbower says her company believes in an "out-of-box experience" for rewards. "If employees get a camera, they should also get the memory card, the case and anything else they need to start enjoying the award the day they get it," she says.
The proliferation and popularity of gift cards continues, with benefits to the salesperson as well as the company.
"There are some important differences, though, with incentive gift cards," says Bill Wehrman, director of marketing and corporate communications for American Express Incentive Sales in St. Louis. "Reloadability, where funding can be added to a card at any time, is very attractive. Also, with universal gift cards, a company can't control the spin."
American Express' Direct Spend program offers themed cards and custom cards offering brandability and "spin control" to focus the recipient's attention on a certain category of products, thus influencing behavior.
"Companies can design the card so every time the salesperson pulls the card out to use it, he's reminded of who gave it to him," Wehrman tells Sales & Marketing Management. "It becomes a small billboard in the salesperson's wallet."
Thanks for the Memories
To ensure incentives are being spent on something motivational and not a day-to-day expense like groceries, American Express has "theme" gift cards that allow the incentive-giving company to choose from groupings of stores—such as high-end electronics, home solutions, apparel, mall-type stores, a lifestyle card or travel—for their salespeople to choose from.
"Expeditions is a new gift card we're debuting at the Motivation Show (Sept. 25-27 in Chicago). The recipient can choose from more than 60 travel-related vendors, destinations, and hotels. We think this will be extremely popular."
For some companies, directing where a salesperson can shop can help drive business to stores that support the parent company's business or companies it does business with, according to Wehrman.
If you're looking for some simple, on-the-spot type incentives, Rubber City Radio Group's Biviano breaks out "Biv's Bag" when he wants to generate new business. Inside the bag are envelopes with various denominations of cash, from $5 to $100.
Anyone who brings in new business gets to choose an envelope, in front of the sales team, which also gives them peer recognition. "It's very simple but creates a lot of buzz, and the nice thing is you can do it anytime," Biviano says.
Another program is "Everyone Sells." This incentive rewards everyone in the department, including support staff, and drives home the idea that everyone is a salesperson for the radio station.
"We divide the radio station into four teams," Biviano explains. "Each team has two salespeople and a random mixture of five other employees in the office. The non-sales employees pass out business cards from the salespeople on their team when they visit their dry cleaner, attorney or any other business. They simply ask if the business would mind if that salesperson calls them. It's a great way to generate leads in my business."
The team with the most new business wins prizes ranging from trips to the Bahamas to televisions. One team brought in $110,000 in new business.
Incentive programs are as varied as the recipients who receive them. Experts agree that what incentivizes one employee may turn off another. Some people like goods and some like money, while others want time off. The important factors: know your salespeople, reward on improvement and whenever possible, give a choice of rewards. smm
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