Calling In the Experts

By Malcolm Fleschner

In an age where many companies’ focus is increasingly directed toward so-called core competencies, it’s almost quaint that so many sales organizations continue to run their own incentive contests. Much of that quaintness, however, is lost on the salespeople who have to deal with the resulting administrative mistakes, delayed prize delivery and communication breakdowns.

There is, of course, another way, and that is to hire an outside firm whose core competency is running incentive programs. To determine how an incentive-solutions provider can put more punch into sales organizations’ rewards programs Selling Power spoke with Barbara Hendrickson, president of the Michigan-based Design Incentives (www.designincentives.com).

Typically, she says, customers come to her having already identified their needs. If not, the process should begin with finding out what the organization is trying to accomplish and then building a program to help get them there. As an example, she mentions a current customer, a Midwestern home-products manufacturer, which asked Design Incentives for help in launching a new product line. Hendrickson says they had identified four key goals:

– Introduce the brand to the sales organization

– Reinforce/announce brand message/features and benefits

– Keep the brand top of mind among the sales staff

– Build sales of the new product line

An important part of the process is to build a workable budget. Hendrickson notes that because this was a new product line, the marketing department had a launch budget with which to work. “In that case, the challenge becomes fitting the program into the budget,” she says. “With a fixed budget, you run the risk of exceeding it if your participants perform better than expected. You want to make sure that selling more products (and therefore redeeming more awards) is not going to be perceived as a bad thing by management. A much easier scenario is an open-ended budget that is based on incremental sales volume. When you have a track record and can say, ‘we sold X last year; this year the goal is X+, and we will share a certain percent of the increase with the people who got us there,’ that’s how an award budget can be built that is most advantageous for the sponsoring company. They’re not spending any money until and unless they reach the targets.”

This company also wanted to compare the benefits of a traditional print program with a Web-based solution. Hendrickson says they ultimately went with a cost-effective online program that lasted six months and incorporated a basic paper backup for any participants without Web access. Points in the program, which is still ongoing, are assigned to individuals based on a product’s profitability, which helps manage the product mix sold.

One common problem with incentives Hendrickson identifies is that sales organizations often fail to ask themselves at the outset which factors will determine whether a program is successful.

“Some possibilities include: percent of sales force participating, average sale, increase over quota, product mix sold or on-time deliveries of product,” she says. “Anything that can be measured should be included. And as a rule, the more measurable you can make your goals, the better you can determine ROI. For example, it’s much harder to measure ‘top of mind’ than sales increase from the same period last year.”

Ultimately, Hendrickson says, most sales organizations have limited resources, and any extra time and effort spent working out the bugs of an incentive program inevitably take away from the more important job of selling. “We’ve got many examples of situations where a company thinks they know what they want to do, but once we hear what they’re trying to accomplish, we may know of a better way to get there,” she explains. “The marketing people that we deal with are completely overloaded – there is no such thing as ‘job training’ in the current work environment – they’re thrown in to the job and must rely on the way something was done last time, or whatever previous experience they have. Very few of our customers have time to attend the Motivation Show or Incentive seminars – they’re lucky if they have time to read a publication now and then. An incentive professional can bring the newest and latest program structures and execution strategies as well as discuss what’s hot in the award arena. The customer’s job should be to know what’s happening in their own industry – it’s our job to know what’s going on in the Incentive channel and share that knowledge with our customers.”