Incentives That Make Cents

To generate big sales, you have to generate selling excitement. Here’s how Centennial Marketing, S&H Citadel and PHH/Caramanning helped their clients use the lure of valuable prizes to boost their salespeople’s motivation and take their sales to new heights.

Drink Up. – To increase shelf space for its soft drink customer, one incentive company developed a program that has paid big dividends to everyone involved.

Centennial Marketing, Teterboro, New Jersey, developed Action Auction, an incentive program that Cadbury Beverages (now Dr. Pepper/7 Up Co.) has used for the past two years as an incentive to bottlers who distribute its soft drinks. This regional program is held in more than 200 areas around the country and reaches more than 5,000 bottlers, who earn Cadbury or Dr. Pepper Cash for the soft drinks they distribute.

Once or twice a year, the bottlers redeem their cash at gala auction dinners, bidding on a variety of valuable prizes, including television sets, stereo equipment, camcorders and more. “The top bidder gets the best prize,” says Jacques Dickinson, Centennial’s president. While most of the bottlers get one of the prizes, they also enjoy the night out, which usually includes dinner and entertainment for the bottlers and their spouses.

The program has been a huge success for the soft drink firm, which must compete with Coca-Cola, Pepsi and other companies for supermarket shelf space. “The program added some sizzle, it was excellent for the sales force,” notes Betsy Sundin, the associate promotion manager for Cadbury Beverages when the program was launched.

There are a number of reasons for its success. It is a joint program between Cadbury and its bottlers, separate companies that work together to sell the beverages. Centennial Marketing created the program, but it is modified each time by Cadbury and the bottlers, who determine how they want to motivate the sales force.

“The program allows us to set up our own parameters,” says James Fox, marketing director for Detroit 7 Up, the bottler in the five-county Detroit market. Last year, the bottler ran Action Auction two times, once to push A&W Root Beer, a brand the company took over from Pepsi last May, and once to boost distribution for the entire line of products during the busy holiday season.

For the A&W program, which continued for a month after the brand was introduced, the salespeople received $100 in Cadbury Cash for every 25-case display they distributed. “They didn’t get anything for the other brands,” Fox says, explaining that sales of 7 Up, RC Cola, Canada Dry and Hawaiian Punch weren’t rewarded. Fox notes that the program was a success for the new brand, pointing to the more than 500 displays placed as evidence.

For the holiday program, which focused on all brands, salespeople received $100 for every 2-liter display, which is a popular holiday item, $50 for each Canada Dry mixer rack (mixers are also popular during the holidays) and a $500 bonus for hitting their total volume quota for the month. Each salesperson has a personal quota, based on past sales, Fox says. The holiday program was also a success, generating 30 percent more volume than the previous year, Fox notes.

Dickinson explains that bottlers may distribute soft drinks made by other companies, so it is one of the goals of Cadbury’s incentive program to increase the percentage of its product the bottlers distribute, “to gain a disproportionate value for their business.”

Apparently, with Action Auction Cadbury accomplished that goal and will continue the program this year.

Great Gifts. – By awarding salespeople points redeemable for prizes with every RV sold, Holiday Rambler jump-started sales by up to 30 percent.

“There is a disagreement in the incentive industry as to what motivates salespeople,” says Bill Shaw, former vice president of marketing for Holiday Rambler, the Wakarusa, Indiana, RV manufacturer. “Cash is a very expensive way to promote products, so we had a continuity program that worked very effectively.”

Instead of rewarding RV dealers with cash for selling Holiday Ramblers, the company offered them a catalog of prizes, which they earned by accruing points for every sale. The program, which ran for four years until the company was sold by Harley Davidson last year, was directed at 600 salespeople who work at dealerships around the country and sell other brands as well as Holiday Rambler.

It was aimed at getting “higher awareness and bigger market share for our brands,” Shaw says. At times, it generated sales increases of 20 to 30 percent, he notes.

The program was fairly simple, with points awarded for every sale. When the salespeople earned enough points, they could redeem them for prizes that ranged from computers to leather apparel and furnishings.

The company worked with PHH/Caramanning Inc., a Farmington Hills, Michigan, promotion agency, to develop the program and often “varied the points based on the profitability of the products or to increase the sale of different products,” Shaw says.

Sometimes, lower dollar volume unit sales received less points or new model sales received additional points. “We were also able to address seasonal issues,” says Sue Remy, an account manager at PHH/Caramanning. For instance, additional points could be awarded to models sold during the off-season. Consumer promotions were also reinforced, with additional points awarded for sales of models that were being promoted, Remy notes. There were many different ways the program could be used to influence Holiday Rambler sales. It gave us “a double bang for our buck,” Remy says.

Incentive programs for RV companies are essential because most customers coming into an RV dealer don’t have a particular brand in mind. “Salespeople influence as much as 50 percent of the actual selection by the customers coming in,” Shaw says. “They have the leverage.”

Shaw says there are five other major RV manufacturers, so Holiday Rambler has substantial competition. But many of its models are more expensive, so the salespeople are already motivated to sell them.

Of course, the gifts they could earn through the incentive program also helped. Remy says there were many repeat winners who “amassed a lot of points and were consistent year after year. They continued to work the program and make the most out of it. It was a contributing factor to high sales.”

Free Choice. – With S&H Citadel’s TravPass card, redeemable at more than 50 well-known national retailers, these earth-moving equipment salespeople hit paydirt.

When workers at an earth moving equipment business participated in an incentive program last year, they didn’t receive a catalog with preselected gifts, they got a TravPass card, a debit card they could use to purchase anything they wanted from more than 50 national retailers, including The Gap, Macy’s and Bennigan’s Steak and Ale restaurants.

“Competitors have similar products, but we were one of the first,” says Mark James, an account executive at S&H Citadel, the Chicago area promotion agency that has made the TravPass card the backbone of many of its incentive programs.

The company issues a personalized card with an account number to each participant in the program. The accounts are managed at a centralized database, where sales information is processed and dollar amounts are accumulated. At the end of the program, participants earn enough dollars to make purchases with their cards and can do so wherever they choose. The purchases aren’t limited to retail stores, but can include travel as well. United Airlines is one of the participating vendors in the TravPass program and S&H Citadel operates a travel agency that participants can use.

The debit card works like a Visa card, and S&H Citadel uses Visa to process TravPass transactions, James says.

Alan Jacoby, director of marketing services, says the debit card offers an advantage over traditional programs that use preselected gifts. “It expands the bounds of the awards a thousandfold,” he notes. “They can use it at their will at the location of their choice.”

Jacoby says there are other advantages, too. “The card conveys a high-tech imagery that reflects on the sponsoring company,” he explains. Also, “the card sits in the participant’s wallet and reinforces the program.”

If there is a downside to debit cards, it’s that companies that use them have to pay a slight surcharge for the merchandise participants purchase, which is how companies like S&H Citadel earn a profit and cover the costs of implementing and administrating the programs. “Debit cards depart from the norm by requiring a management administration fee,” says Jacques Dickinson, president of Centennial Marketing, a promotion agency that doesn’t use debit cards.

Debit card programs can also be tailored to a company’s goals, with more dollars awarded for the sale of products the company wants to push. “We sit down with clients and confirm what elements of their product line they want to increase share in and recommend the reward amounts we know will motivate people,” James says.

S&H Citadel also added a learning reinforcement segment to the earth moving equipment company’s incentive program. Participants earned more dollars by taking a test about the products they were selling. The test, which was conducted through a toll-free number, focused on the models the company was most interested in selling.

The test helped make the program even more successful for the company, helping it to increase its market share and sell more equipment, parts and service.