How to Set up An Incentive Program – Research

Why Non-Monetary Sales Incentives Trump Cash [Q&A With Ken Thoreson]

  • When it comes to sales games or contests, monetary incentives are not the best options in my opinion. What is important is value and meaning. In building incentive programs or contests, you need to make non-monetary rewards meaningful. The reason cash is not the best incentive is it could be spent without inciting a feeling of satisfaction — paying bills or buying groceries, for instance. Non-monetary incentives should be chosen so that the salesperson is reminded of their success and achievement on a personal level, among their peers, and even with their customers.
  • Other non-monetary incentives I have seen work were special clubs where a Rolex watch was given to the sales manager that achieved a certain level of performance, weekend hotel or dinner packages, clothing gift certificates, PC tablets, items to improve their professionalism, and days off.
  • I am convinced that the yearly sales trip where all qualifying reps, team members, and their spouses spend time together at a resort or on a cruise is the best. It builds comradery, pushes people to “make the club,” and provides the ego bump. I have seen this work in both direct and indirect sales organizations, and the cost of the trip is paid for by incentive sales above the normal targets.
Set up An Incentive Program
  • When past contests pitted salespeople against each other, the team tends to look upon a new contest as another tool to manipulate them. Contests are also unsuccessful when programs are not promoted or sold to the sales teams effectively, or the rules change without warning.
  • Other non-monetary incentives I have seen work were special clubs where a Rolex watch was given to the sales manager that achieved a certain level of performance, weekend hotel or dinner packages, clothing gift certificates, PC tablets, items to improve their professionalism, and days off.
  • I am convinced that the yearly sales trip where all qualifying reps, team members, and their spouses spend time together at a resort or on a cruise is the best. It builds comradery, pushes people to “make the club,” and provides the ego bump. I have seen this work in both direct and indirect sales organizations, and the cost of the trip is paid for by incentive sales above the normal targets.
  • When past contests pitted salespeople against each other, the team tends to look upon a new contest as another tool to manipulate them. Contests are also unsuccessful when programs are not promoted or sold to the sales teams effectively, or the rules change without warning.

The Currency of Reciprocity – Gift-Exchange in the Workplace

  • When workers were given the choice between receiving a cash gift of e7 or a bottle of equivalent value, more than 80 percent chose the cash gift. The gift in-kind thus is unlikely to correspond to its recipient’s preferences.
  • Workers produced almost an equal output in treatments PriceTag and Bottle. In comparison with Baseline, treatment PriceTag resulted in a 21 percent increase in productivity. The uncertainty concerning the exact market price of the gift in-kind thus failed to account for the treatment effects.
  • In contrast to the pay raise, a gift in-kind of equivalent monetary value resulted in a statistically significant 25 percent productivity gain. This effect was larger than the relative increase in labor compensation.
Best-Reward-Incentives-for-Increasing-Motivation(v1)
  • Despite the fact that almost all workers opted for e7 in cash, workers’ output was substantially higher [when given a choice between cash or a bottle] than in [when they were given baseline compensation] and [when they received a monetary bonus].

Non-Cash Incentive: Best Practices to Optimize Sales Effectiveness

  • Best-in-Class companies are 12% more likely than All Others (57% vs. 51%) to indicate that internal recognition for positive performance results was a vital motivator for sales success.

Study Shows Dramatic Growth In Use of Incentives for Employees and Customers

  • A new study conducted by the Incentive Federation confirms that the non-cash incentives market is thriving with 74 percent of U.S. businesses spending $76.9 billion annually on incentive travel, merchandise and gift cards. The study also reveals that half of this market is driven by smaller businesses (between $1 million and $10 million in annual revenue), whose budgets may be tighter, but whose total volume generates $39 billion annually.
    • 98 percent of businesses running non-cash incentive programs include merchandise or gift cards, spending $54.3 billion each year.
    • 46 percent of businesses running non-cash programs include incentive travel, spending $22.6 billion per year.
SlideShare - Best-Reward-Incentives-for-Increasing-Motivation(v4)

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