Incentive Building Blocks - Sales Analytics

Over the past five months, we have been looking at the basic components of a successful incentive program. The last (and often neglected) critical building block is sales analytics – a powerful set of tools that can help you better manage your sales and marketing efforts and investments.

Not long ago, we ran a series of incentive programs aimed at motivating a client’s distributor sales representatives. Initially, we helped them increase the effectiveness of their efforts by improving program creativity, communications, and rewards - and increased sales resulted. Soon after, we added sales analytics as a key program deliverable, to begin to gather end-user information that was typically being lost due to the multi-level nature of their sales channel.

For the first time, the client was able to uncover what companies were actually buying their products and segment them into target markets. The results were surprising, as completely new niche market opportunities were discovered. Today, each market is served by a unique set of specific relational marketing communications and tools that are driving continued sales growth. Sales analytics created new opportunities for expansion of sales opportunities.

A sales incentive program and platform, especially one created for non-employee sales channels, can be a powerful tool for gathering seller, reseller, and end-user sales data for a variety of marketing intelligence, targeting, and cross-selling opportunities.

The key to having solid analytics is to ask the right questions at program creation that will yield the data reporting and tracking needed throughout the program to make solid business decisions. Then, the incentive site can have functionality built in that will help you analyze and act on the sales information that you capture.

Incentive Building Blocks - Major Rewards!

Let’s take a look at major reward categories:

Group Travel – Still the premier reward choice, group travel drives performance because it engages potential winners with dreams of beautiful and exotic locales. Add to that the camaraderie and relationship-building inherent in group travel and it’s obvious why this reward solution is always a winner. The downsides to group travel are that you will typically be limited to rewarding only your very top performers due to the cost factor and that younger performers (Generation X and Millenials) appear to value personal travel opportunities over hobnobbing with management.

Individual Travel – One of the fastest-growing reward categories, individual travel includes hotels nights, cruises, experiential rewards and sporting destinations (skiing, golfing, fishing). Individual travel options can be seamlessly included as choices in merchandise collections. We have seen incentive travel rise to 20% of reward redemptions in the past year.

Sports Travel – Really a category in itself, a variety of providers bundle individual or small group packages of airfare, hotel and meals around top sporting events, including the World Series, Super Bowl, NASCAR races, PGA golf tournaments, and more.

Experiential Rewards – In the same way that Orbitz changed the travel industry, new technologies are making available on incentive web platformas an ever-expanding number of experiential rewards. These can include extreme sports (kayaking, mountain biking, white-water rafting, scuba diving), movies, theater, concerts and museums visits. Other creative vendors offer the chance to relax at the spa, in a hot-air balloon or at a cooking school. Even shark chasing and jet fighter battles are among today’s edgier experiential rewards.

Merchandise Collections – Carefully warehoused and ready to instantly ship for maximum participant satisfaction, merchandise reward collections (typically ranging from $20 to $10,000+) are the backbone of the incentive industry because they offer a wide range of awards to meet the needs of a diverse audience. Today’s collections, from companies like industry stalwart Hinda Incentives, include thousands of rewards of tangible items plus expanded individual travel and experiential rewards. Other providers tap into vast databases of retail items (such as Amazon or national travel services) to offer award collections with millions of rewards that are handled on a drop-ship basis. Ask your incentive vendor to explain the pros and cons of each approach.

Plateau Rewards – When participants are offered a choice of 15 - 20 very high-perceived value items at 5 – 7 plateau levels, they are able to quickly and strongly attach to a handful of choices that provide a powerful and emotional motivating force. The plateaus also serve to drive performance up the ladder as top performers strive for the next step. Make sure that you specify only the highest perceived value rewards, and include electronics, which will always be the leading redemption category.

Gift Cards – Gift card offerings have grown significantly during the past five years and most national retailers offer gift cards. Some incentive companies have bundled gift card solutions and online shopping at a variety of bricks-and-mortar and online retailers. Due to their similarities to cash, gift cards are not an ideal choice for sales incentive programs. That being said, gift cards are an excellent solution for program promotion and recognition in amounts under $100.

Socially Conscious Rewards – The newest reward category is led by Chicago’s Helping Hands Rewards, which “serves as a conduit and a catalyst between social purpose businesses that produce merchandise and incentive companies.” From gourmet brownies to spa gift sets, utilizing products that are manufactured by social purpose businesses creates added value for the sponsoring company and the recipient, while giving back to the community.

One final thought on tangible rewards. The luxury products market is in a down cycle as individuals and families try to conserve financial resources. In this economic environment, I would suggest that salespeople will use cash for basic necessities, and not luxuries and that is not a motivational scenario. So while it may be counterintuitive, now is the time to offer tangible rewards, experiences and luxuries that salespeople can get excited about and work hard to earn without having to feel guilty.

Now, more than ever, think hard about your rewards offering and offer new choices to grab your sales channel’s attention and focus their efforts on earning fantastic, tangible and travel rewards that can enhance their lifestyles.

Incentive Building Blocks - More Rewards

While the nature of your sales channel and budget will be the biggest factors in your decision as to what rewards to offer, there are several things to remember when choosing your rewards:
o Know your audience – Age, gender and channel demographics will play a role in reward selection.
o Don’t cheap-out – Salespeople are smart. . .they know when a rewards budget is too low; rewards should be commensurate with the performance.
o Understand perceived value – Include items such as large plasma HDTVs, luxury individual travel and laptop computers which will give your program a positive glow.
o More isn’t always better – Sometimes a focused group of 15-20 high perceived value rewards is better than 200 lower value awards.
o Mix it up - To keep your salespeople’s interest, change the rewards offering every few years, though be sure to keep the budget consistent.

It is not a cliché to note that there are more reward choices available today then ever before. One of the reasons is that new web-based technologies have dramatically expanded the award categories available for incentive programs, adding new levels of personal travel and experiential rewards. Another is that new and different retail products manufacturers have jumped into the incentive products business to expand their sales. So more then ever, the range of electronics, optics, timepieces, jewelry, computers, and lifestyle merchandise is broadly expansive. Next time we'll take a look at major reward categories.

Incentive Building Blocks - Rewards

If there is one thing I’ve learned over the years in the incentive business, it is this – rewards matter. They matter because a big piece of the motivation puzzle is the need to emotionally engage participants, and rewards are arguably the single most important tool to capture the hearts and imaginations of salespeople at all performance levels. Rewards are a key Incentive Building Block, and it is critical that sales managers think carefully when choosing incentive program rewards.

Many studies have shown that tangible rewards and trips are better motivators than cash. A University of Chicago study found that salespeople working towards a non-cash incentive had a 38.6% performance uplift (versus no incentive), nearly double the performance of salespeople working towards a cash incentive.

According to Scott Jeffry, PhD, the reason for the extra effort has more to do with psychological theory than economic theory. Incentive program participants ask themselves “How hard will I work for this particular award?” Especially if a reward is considered a luxury or a “splurge,” salespeople will work harder to earn the item of their choice “guilt-free.” If we take that a step further, salespeople will work even harder for the right rewards.