Do Incentive Programs Work?

Quite often, during both good and bad times, companies will look for promotional incentives that will hopefully bring in more business. Incentives come in many forms that apply to the customers and employees alike. Some larger companies will outsource incentive programs to the professionals that specialize in this area of expertise. However, there is still no guarantee for success because the success of a program depends on those from within the company’s work force and the buyer.

Sometimes it’s best to have an employee incentive brainstorm meeting with those who know the products, benefits, customer base and direction of the company. This meeting may well bring added excitement for those who are never asked for their opinion on how the company can become more successful with their own in-house incentive thoughts. Brainstorming works more often than we may think, let alone the cost savings for the company.

There are many types of incentives such as merchandise, cash, gift cards or point systems that translate into incentives. One that is very common is a trip plan. However, I would bet that those who have been regularly awarded these trips are getting bored because it usually is the same old structure and the same time every year.

What about the customer who never quite makes the purchasing level required for the trip. The trip might require $200,000 in annual purchases for a trip to Hawaii or cruise. But where is the incentive for the dedicated company that buys $150,000 dollars in merchandise annually? I think the companies that do not offer multilevel incentives are at risk of losing business.

Just think, suppose the $200,000 company that always gets the trip goes out of business versus three companies that purchase $150,000 of your products. Some might argue that if the $200,000 company fails, all is gone, but if one of the $150,000 buying companies fails, there are still two others that are still buying a combined $300,000 worth of products from your company.

There are many different types of these programs designed for different purposes, some for new products and to reduce excess inventory. But there is another type of incentive, and it’s the one used to promote sales performance. This can also be a trip, monetary or profit sharing plans. It has often been said, money rules, though.

With the existing financial stress we are experiencing, some company executives and managers think their employees just having a job is an incentive enough, but this will never work. This is a threat and a demoralizer. During these challenging times it is very important for employees to feel good about themselves and have confidence in the company they work for. So what better time to create an employee incentive.

Keep in mind that an incentive should never be used to overcome poor service, inferior products or weak performance. I also feel that the program should be structured to reach out to the middle 60 percent of the customer base and should be simple, straightforward and structured so the plan could be changed to extend beyond the term of the promotion.

Incentives should also be available to all employees and obtainable as well without attacking one’s nervous system. Stay away from offering a trip for only the top performer. Because, as we know, there is no second place winner for the trip, and everyone should have an opportunity to be a winner. These programs should be cost effective, multidimensional and evaluated often to determine if they really work.