Archive for the 'sales incentive programs' Category

tug of war

Over the years we have seen companies ascribe many different objectives to employee recognition or incentive programs.  Programs that don’t work well or produce results have at least one thing in common… when the participants don’t perceive the objectives are attainable, they were doomed to fail from the beginning.

When you are in your planning phase here are some things to keep in mind that incentive or recognition programs can’t address.  Avoid them if at all possible:

  • Don’t be lulled into the comfort level that every participant can achieve results.  The 80/20 rule is alive and well in any incentive program.  You’ll have the top 10% of winners just like you’ve always had, and you’ll have the bottom 10% that fail like you’ve always had.  But the middle 80% can be moved to improve performance. 
  • Periodic incentives are not a substitute for good feedback to your participants.  Regular feedback should be ongoing.  The more you measure and report performance, the better performance you will have.  Believe in the adage that “What gets measured gets done and what gets rewarded gets repeated.  
  • You can’t use incentives as a replacement for enforcing policy, although you can make the enforcement a qualifier for participation. 
  • Incentives or recognition won’t resolve the design of a bad job description or staffing decisions.  When you have issues in staffing or work responsibilities that stand in the way of good performance, an award for better performance can’t be achieved. 
  • You can’t fix broken organizational structures or processes.  Even if you dangled a new car for everyone in the program for achieving results, you’re better off investing the money on the real problem.  If not, your participants are likely to develop their own “workarounds” that can cause further damage. 

Incentive and recognition programs can and will backfire when you aren’t honest about your current situation, business climate or culture.  When you implement your program, objectives that make upper management warm and fuzzy won’t produce results unless your participants know that they are realistic and achievable.  Without that, you won’t have a program, so save the money, and the headache.

If you’re interested in learning about a high value, low cost gift card recognition system that is easy to implement please contact us above.

This concept didn’t come from the mouths of all the pundits in and around the employee award industry, but from the hallowed halls of Wharton, one of the country’s most prestigious business schools.  “Treat your employees well.”  Not a very novel approach to say the least, but in our experience something an amazing number of companies still don’t do.   

In this article from Knowledge@Wharton, it mentions that… 

“Customer service standouts tend to have extensive employee training and talent management programs. They also tend to treat workers well by giving them incentives, robust career development paths and other benefits.” 

Certainly this concept is not something new; the idea has been around for years, and companies who understand it have long been using employee awards to recognize customer satisfaction.  Companies intuitively understand this principle, but what we find compelling is… 

“the national level of customer satisfaction has not budged since the mid 1990s”.  According to the American Customer Satisfaction Index (ACSI), consumer contentment stands at 75.8 on a scale of 100.  In 1994, when the index was created, consumer satisfaction stood at 74.8.” 

So even with all the attention and money spent on employee awards, it would seem that there is lot of room for improvement.  As this index rating is an average, there are undoubtedly a number of firms far ahead of the curve, but as such there will also be as many companies who haven’t heeded the concept.   

Employee recognition programs for customer satisfaction are relatively easy to implement.  They can be as simple as a small reward for customer “orchid” letters to a more substantial award for positively handling an issue that might have been costly if left unattended.   

We all instantly realize those companies we do business with on a daily basis that pay attention to keeping their customers satisfied.  Conversely we all stop doing business with companies at the drop of a hat when we don’t receive the customer service we want.   

According to Peter Fador, professor of marketing at Wharton and co-director of the Wharton Customer Analytics Initiative, 

 “We have a ‘customer is king’ mentality, and we have come to expect world-class treatment. We want everything to be easy: simple customer returns, constant telephone access to the company and perfect products in every color. We’re just spoiled, plain and simple.” 

An interesting dichotomy exists when economic downturns reduce the money that companies have available to invest in the programs that train and motivate employees how to provide great customer service.   Yet lack of these programs can also breed a decrease in customer satisfaction and the resultant loss in business.  It’s a two edged sword.  When companies load up with incremental fees for services previously provided for free, (ex: bag fees on airlines) the entire customer service equation can shift.   

Like it or not, we are at a time when companies are tracking the usage of their products or services in order to segment their customer base.  In this model, the larger customer get the service, and the smaller less important ones get the twenty minute “on hold” call that goes into the black hole.

 Bottom line is that if you treat your employees better, they will treat your customers better.  A $25 gift card for a job well done can return tenfold in customer satisfaction and bottom line dollars.  Customer service budgets may be a natural area to cut costs in lean economic times, and gain in the short term, but that can cause a loss of customers and profits in the long term. 

This is the kind of article that is written by those who think they understand incentive programs, but is what he says correct?  Unfortunately much of it is correct all too often, but it is not the norm, nor is it what happens when the incentive program is designed and implemented by professionals in the industry.  While the author offers a list of disadvantages of sales incentives, they are not disadvantages of using sales incentives them; they are disadvantages of how they are used.  Let us review the points mentioned in the post and how they differ from ours.

Rewards for Top Performers

“Most sales incentives tend to reward only the top performers …some of these representatives may already be selling at a high level. They do just enough to collect their bonuses or trips”

Most top salespeople will be the top salespeople regardless and will always work to be the top.  For them it is intrinsic.  If historically only the top salespeople earn, the objectives and rules structures were not set properly to include 80% of the universe, not just the top 20%.  A properly designed system will motivate the majority to better their own performance.  In essence, they should compete with themselves.

Narrowly Focused

“Many sales incentives are also narrowly focused on just sales. This causes sales representatives to focus only on revenue-generating activities.”

Absolutely!  That is as it should be.  If you want them to focus on something else then incent that objective as well, but good salespeople are success driven. And that’s where you want them to be.  The best programs will be those that are narrowly focused with qualifications to avoid other issues.


“Sales incentives also have high associated costs. Small companies which fail to tie incentives to the right performance variables may needlessly be paying tens of thousands of extra dollars per year for bonuses, trips and impromptu rewards.”

This should never really happen.  Before you implement any sales program, enough time and due diligence should be spent so your measurements and objectives are tested against historical averages, taking all current marketing conditions into consideration.  Any client who spent tens of thousands of dollars needlessly did a poor job of planning.

The best sales incentives should be equally tied to increases in new business and sales of specific products and services. Some products or services may be ignored for higher-priced products or higher volume sales. “

Not necessarily.  You can’t solve all problems with one program, but there are ways to tie them all together with one program using combinations of these other objectives as qualifiers or bonus earning opportunities when the main goal is achieved.

A professional incentive salesperson has the experience to turn these perceived disadvantages into advantages that will make your program the best it can be.   One of the best incentive consultants in the business is Paul Hebert of I2I Incentive Intelligence.  Drop him a line if you want that well developed and successful sales incentive program.

07 5th, 2011

Award giving can be a difficult business. Tastes change, trends fade and what someone may have wanted a couple of weeks ago isn’t what they want today. We all face the same situation when it comes to selecting awards for incentive programs, and for many of  us  the best conclusion in these fast moving times – let them get what they want! 

The gift card has been a godsend for anyone who can’t pick out the perfect thing that someone wants. And they’ve grown in popularity faster than anything else in the retail world. In 2004 we spent $20 billion in gift cards. Last year we spent over 4 times that. Gift cards have gone from being considered impersonal gifts to being the most thoughtful gift of all. The gift card is a sign of the times – tastes change quickly, options should remain open, and you never know what you’ll spot something you just can’t live without! 

Why the huge increase in demand for gift cards? Simple. Not only does it let someone buy what they really wanted (but were maybe too polite to say), it also lets them get it at the best price possible. They can wait until the sales, they can take advantage of special offers and maximize that gift. But there’s still a problem – what gift card to give?

 You can try and pick the specific store they want to go to, but more often than not they might want to go somewhere else or they don’t get the chance to visit for some time. And those gift cards sit on dressers, or in the back of wallets until they’re forgotten. There is the universal Visa or American Express card, but with those you have hidden fees, fine print and expiration dates. Not the mention the many problems some purchasers have had with these types of cards. 

That’s where we come in. The Award of Choice is the ultimate in flexibility when it comes to award programs. It can be redeemed when the time is right, for cards from hundreds of your favorite retailers, hotels, theatres and restaurants. And best of all the certificate will never, ever, expire, so they can take as long as they like to choose where to spend their gift. All this choice, and you can create it right from your computer, customized for your special someone. 

We think this is the ultimate award, we know it’s something we’d like to get for every occasion and we hope you feel the same way.

I had a phone call the other day from a very pleasant woman who was selling business lists for email blasts or direct mail.  While she knew we were in the “incentive business” (as our company name is Incentives, inc. it wasn’t too tough to figure out) it was clear to me that she didn’t have a good understanding of what this business really is. Actually she didn’t have a clue.  She thought that if her lists worked for one “incentive” company it would for work all of them.  What she didn’t know is that our industry is quite divergent and depending on what we are selling, to whom and to achieve what result, what we do and how we do it can be light years apart!  

I’m sorry to say that many prospective client companies don’t really have a good understanding of our business either.  They see us through the lens of their own needs.  A meeting planner will see us as a travel company, for an HR specialist we will be a company that sells corporate recognition or years of service programs, for a sales executive we might be a merchandise or gift card company to provide the awards for a sales contest, for a marketing director a premium company for a consumer promotion.  All too often, companies will see us through the persuasive selling ability of incentive suppliers calling on them.  You can put some incentive companies in a neat and tidy little box; others may have to go into two or three boxes and still others put themselves into as many boxes as it takes to make a sale.  Read the rest of this entry »