The following five fundamental reasons explain why incentive programs, unlike other sales and marketing strategies, withstand economic downturns:

1. Low fixed costs, variable costs driven by performance, high potential return
2. Ability to effectively target audiences (no pay and spray)
3. Relative ease of measurement
4. Flexibility
5. Potential for both short-term and long-term results

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The long and short of it is that a well implemented incentive program can effectively measure you real ROI and is beneficial in increasing your business’s bottom line.

These are challenging times and the market is tough no question, but it is also an ideal time to increase market share and for companies to differentiate themselves from their competitors.

In today’s environment it is increasingly difficult to achieve cut through that incites an action or elicits a response that is directly trackable to the $’s spent on achieving it. While above the line advertising works in getting customers into stores, there is no way of tracking or measuring any ROI.

Now more than ever sales teams or distribution networks need to be more than order takers and for some this will be a significant change of behaviour.

The aim of any sales promotion, incentive or communication program is to incite a response.

So, whilst many out there are claiming no money in the budget to run incentives they are in fact a solution that can convert foot traffic and accurately measure your real ROI for every transaction made.

Currently most companies are looking for places to cut spending and an obvious place to do so is to start with employee perks and rewards. I can understand the principle of it, but in reality you are also cutting the morale, enthusiasm, confidence, loyalty, initiative and therefore productivity from your employees.

Your employees are your most important assets and keeping them enthused is crucial, especially during these challenging times. Yes! You may think, challenging times means you no longer have the budget to reward your employees, but there are creative and cost effective ways to do this.Surprise and delight your top performers with a small gift with a personal touch, such as a movie ticket or a massage session.

When you can’t give money, give time. Someone who has been under stress would very much like a day off that doesn’t come out of his leave. Make a little incentive memorable. Open a bottle of wine at work and give a thank you speech. Thank those employees who have demonstrated their commitment and thank everyone for the good work.

After speaking with numerous marketing, franchise and operations managers over the past month I’m picking up on a common thread and general attitude between companies. The idea that it isn’t exactly prime time to be ramping up incentive tactics.

 So why is it that these market leaders are hesitant towards new ideas and incentive solutions?

 Look at it this way. 

When times are tough, morale is low thus reflecting on poor work performance. The most important thing to keep your company afloat is your employees ideas, creativity, loyalty and drive to succeed. What better way to increase work performance than to implement some form of loyalty and recognition program. 

In addition to this, what are these companies doing to stimulate sales through their channel and retail markets? Whilst their above the line sales approach may well be bringing foot traffic through the door - what approach is being taken to convert this traffic into sales? 

This is a marketplace for incentives and the time is right to be implementing and ramping up incentive tactics. 

When people think of incentive programs the general consensus is that they are predominately there for the sales force. Educating organisations about the benefits of Incentive programs within all areas of the business is a necessary lesson in the current economic climate. 

A recent article written by Teresa Russell looks at how companies are using incentives in innovative but effective ways:

Simon James, CEO of Haematology and Oncology Clinics Australasia (HOCA), admits it is unusual to provide incentives to nurses, but says they have been generally well received by both its clinical and administrative staff. HOCA is the leading provider of cancer care day clinic services in Queensland, caring for 180 to 200 cancer outpatients every day. Given the exponential growth of the aged population in Queensland, HOCA has experienced an increased demand for its services and now employs about 160 staff.

 HOCA is new to incentive schemes and recently introduced its first for several reasons. “We needed to attract people to work as nurses in a specialist sector that does not have the tax benefits that public hospitals provide,” says James. “A reward and recognition scheme was also going to differentiate us from other private sector employers and respond to a need among current employees that was highlighted in climate surveys,” he says. 

“Operating in the area of clinical care is not like sales. You have to do your work properly. When it comes to patient care, there is no alternative,” explains James. However, HOCA was interested in recognising an individual or group that went the extra mile or did something a better way, creating a helpful and innovative culture. They wanted to recognise those people who did good work, built a cohesive team and supported one another. 

It’s great to see that businesses are adapting incentive programs to work effectively for them whether it be to stimulate sales throughout distribution channels, reduce costs, or change behaviours in anyway to meet business objectives.

I can’t believe the amount of companies out there that are experiencing difficulty in obtaining meaningful and timely sales performance data.

We all know that knowledge is power and to be armed with vital sales data will give companies the ability to adapt to market changes faster and take advantage over competitors. So why, in this age of data driven platforms that manage sophisticated CRM programs have we not been able to conquer this conundrum? I am sure there are companies out there that have solved this puzzle and reaping benefits right this minute, so what are they doing that is so right?

One would think that sales commission payment would be incentive enough for your internal sales teams to comply. That the investment a company makes on internal reporting systems would overcome any delays in verifying a sale from a channel partner by approving commission payments and reporting the same in double time. But obviously not!

I was recently talking with the HR Director of a leading Australian Insurance firm - you know, one of those which is currently either owned, part owned, about to be bought out or merged, and it was little wonder that she told me staff chats around the kitchen area have deferred to an hourly stock watch on their company’s performance and what it meant to their job.

A slip in staff morale and confidence in these tough economic times is starting to bite and will no doubt impact on an organisation’s productivity in the year ahead.

Managers and Executives have a corporate responsibility to strategically manage their staff through these times, ensuring that they are honoured and respected for the job they do. But this must be more than words. Leaders must embrace the culture of recognition from the top down.

Staff will sense a genuine effort by management to buy into a reward and recognition program and respond accordingly. They can also smell a false attempt a mile away!

I encourage organisations to formalise recognition awards, maintain staff training programs and create new and dynamic ways of communicating this so that staff morale remains high through these uncertain times and productivity does not waiver.

More can be read on this subject through an article I found online:

Incentive Magazine Newsletter – October 22. 2008
Recognition for the real world - By Jeanie Casison

Monday’s SMH article describes a typical scenario when business sectors are under extreme pressure – job losses lead to over-work and instability for those that are left – and worse still they wonder if they are next!

Rod Masson, the acting national secretary of the Financial Sector Union says “[Job losses are] starting. It is a concern,” Mr Masson said. “If [banks] take a short-term knee-jerk reaction, we will be left with lower morale and reduced productivity as we come through this major financial crisis.

The article goes on to say that there has been higher than normal attendance lately at the “beyondblue” in-house seminars held at Macquarie Bank!

It seems to me that too many years of living off the fat has made this sector’s HR practices a little lost for creative ideas on how to keep good staff motivated and rewarded.

My phone number is 1300 559 904, you need to know how to incentivise beyondcash!

Survivor syndrome kicks in as staff squeezed - SMH Jonathan Dart - October 20, 2008

Motive8 has been making a bit of a splash lately and we have been seeing lots of potential clients and one question that has been coming up regularly is ‘what else do we need to be aware of?’.

We have put together a check list on things that can overlooked once you have decided to implement a program:

1. Make criteria clear and fair. Participants need to know what is expected and that they are entering a level playing field.

2. Make terms and conditions prominent. Participants need to know what to expect.

3. Communication. Don’t make a song and dance in the first week and then neglect it as the incentive will lose its relevance. See our earlier posting on how communication can drive your programs success.

4. Participants Demographic. Understand what drives their motivation. See our earlier posting on customising your program for employees.

5. Include all employees not just front of house. Administration and support staff make the back end work so don’t forget to include them.

6. Track Log-ins. If your program is online know which participants have logged in and those who haven’t. It will help you access the general vibe and take up of the program.

7. Freight cost. Will rewards be sent to home or office and will someone be available to sign for them? Will freight be post or courier?

8. Redemptions. When your participants received their rewards, ensure they attached the reward to your company.

9. FBT Liability. - whose paying for it and where does it sit. Factor it into your costs.

10. Legal team. Have your criteria and terms & conditions checked by your legal team so there are no surprises.

We run a number of incentive programs for a client who has branches Australia wide. Standard terms and conditions for each program state that a branch may opt out of any incentive program. For the current program they decided to change this procedure and sent out a form to be returned only if they wish to opt out.

We were startled when lots of forms started coming in and thought the incentive was not appealing. On our investigation we discovered that the Branch Manager had assumed it was to opt in as they had never had a form to opt out before or for that matter to opt in.

If you are going to change procedures, be clear on what you are asking them to do and don’t hide it in the fine print.