By: Wayne B. Hodges
Senior Vice President
Co-Founder World Incentives

You've come to this page wondering how to improve sales, increase margins, improve performance or morale... recognize and reward your employees, attract or retain customers or implement a sales incentive program.

Or perhaps your current Sales Incentive Program is not meeting your goals, or the Return On Investment of your current Sales Incentive Program has caused you to look elsewhere.

There are several important keys to creating and implementing a successful Sales Incentive program...

Designing your Sales Incentive Award Program - Key Point#1

Sales Incentive Program buy-in is important from your employees, but only after the basic program concepts have been determined by you. In other words, it is unlikely a Sales Incentive program based upon an employee survey will be successful in meeting your recognition program goals.

WHY???  Simple... everyone* prefers cash, but industry studies show that cash is a poor motivational tool and oftentimes a very problematic type of program to undertake and sustain. Also, as industry surveys show, top producers are not motivated by cash.

Peer and management recognition, using merchandise and travel are the primary motivation drivers, and most preferred and beneficial to companies, in terms of Residual Motivational Value.  

Cash is the least effective method of rewarding or recognizing employees within a Sales Incentive Program.  Specifics of an industry study which detail statistical disadvantages of cash-based Sales Incentive award programs are found here:  Incentive Industry Survey.

Here are a few highlights from the survey:

Question: Agree or Disagree? Most people think of cash as a part of their total remuneration package.


Nearly 3 of 5 respondents (57%) agree that a cash payment is perceived to be part of an employee’s total remuneration package.

Question: Think about your experience with cash awards, merchandise awards and travel awards.  Which is remembered the longest?  Which would be remembered next?  Which would be remembered for the shortest time?

Over half of the respondents perceive that travel is remembered longest (57% agree), merchandise is remembered next longest (52% agree), and cash is remembered for the shortest time (58% agree).

Question: Agree or Disagree?  People prefer merchandise or travel because it is something they would not get for themselves.

Three of 5 respondents (60%) agree that merchandise or travel is preferred because these are something that people do not get for themselves.

Question: Agree or Disagree? You can build a more exciting and memorable program around travel than you can cash.


About 3 of 5 respondents (61%) agree that they can build a more exciting, memorable program around travel than around cash.

Question: Agree or Disagree? You can build a more exciting and memorable program around merchandise than you can cash.


Slightly fewer respondents (48%) agree that that they can build a more exciting, memorable program around merchandise than around cash.
 

Question: Agree or Disagree? Bonus payments are often looked on by employees as something they are due.


Slightly more than half of the respondents (51%) agree that employees often look at bonus payments as something they are due.

Question: Agree or Disagree? Bonus payments can have a negative impact if they are not paid or are not large enough.


Nearly 7 of 10 participants (68%) agree that bonus payments can have a negative impact if they are not paid or are not large enough.

What is your title?

The bottom line: 50% of employees who receive cash sales incentive awards in the proceeding year either do not remember what they used it for, or used it to pay down credit card debt.  While everyone wants cash, it is seldom used, or remembered as an award.

Now, as an example, lets look at merchandise (specifically on-line merchandise award programs) or sales incentive programs utilizing travel awards. I often say to prospective clients, who usually have had some personal successful sales experience - think back...  remember the times you received cash?  Can you even remember what it was for?  Now think about merchandise awards...I'll bet you not only remember what you got it for, but have fond memories of receiving and using iit, hoping to earn similar awards in the future!

Key Point #2

The point is, there's a scientific reason for the success of Sales Incentive programs which utilize travel and merchandise:  It's the BRAIN, or more precisely, how the brain functions!

Research shows that the way the brain processes information is responsible for non-cash rewards having a greater impact on people than cash awards. Offers of non-cash rewards are visualized or imaged by the right hemisphere of the brain. Such images or mental pictures trigger emotional responses which can be quite powerful.

Conversely, offers of strictly monetary rewards are processed by the left hemisphere, which lacks the ability to create images. When a monetary offer is received, the brain's left hemisphere assesses the information and determines whether the offer is sufficient, relative to the time or effort required to earn it. The emotional response is what drives behavior, not rational thought. With cash, its reduced to one issue - simply how much.

Got it?  Here's the basic equation:
Cash = Left Brain: (Analytical Side)= How Much $$$?
Merchandise and Travel = Right Brain: (Emotional Side) = Fantasy

That's why Sales Incentive award programs utilizing merchandise and/or travel awards are 3X (Three Times) more effective than recognition programs using just cash rewards, as shown below in figure 1.

Key Point #3

"Take as much as you want, just clean your plate".  Did you get that as a kid?  I did... the key here is that from our youngest years, most of us are taught NOT TO BE WASTEFUL.  This translates to - "Hey, if you get a cash award, spend it wisely... constructively... don't waste it on toys or vacations when there are more pressing things that need attention... that new roof, or pay down some credit cards, for example. Figure 2 below, demonstrates that over 70% of respondents feel that purchasing a merchandise or travel award, such as those typically offered in Sales Incentive on-line award programs, would not be a justifiable expense, per figure 2 below.

Voila!  Using cash to reward??? Hello new roof, goodbye Incentive Motivation!

Key Point #4

Do not lightly undertake any Sales Incentive program.  Talk to experts first.  Once you start a cash or gift card program, it’s very hard to take it away - and nearly ALL companies who are giving cash awards - sooner or later - wish they hadn't gone down that road.

Many companies find out the hard way, once they've begun a cash-based Sales Incentive Program and realize it was a mistake, and employees perceive the change as a negative, take-away move, even if they're moving to a more exciting program with great award selections.  It takes time... and we can help.

If you choose to go it alone, our advice is to work to slowly wean off a cash program over a period of 3 years. Structuring the change carefully makes it easier to swallow for your employees.  Replace it with a meaningful merchandise and/or travel award program, including group or individual travel options.  One of the key points is, whatever you do, you need to communicate your appreciation.

For more info on structuring a successful employee recognition program, talk to us first: info@worldincentives.com, or request info online at http://worldincentives.com/quotes.htm

See also:

http://worldincentives.com/products.html
http://worldincentives.com/merchandise.html
http://worldincentives.com/luxury-escapes.html