Simply put, good incentives bring good results!
19 August 2012 06:30 pm
By Lionel Wijesiri
Money, which has always been considered great for buying stuff, is also useful for keeping score and might help people make better decisions. New studies have claimed that without any kind of incentive, people’s decisions may seem irrational and have little logical connection.
It simply means: If you offer incentives to people, it generates more economically rational decisions. The incentive doesn’t even have to be money. If it’s just a way to keep score, it still makes a difference.
Many years ago, a former boss of mine, who was a general manager, told me that you condition people by how you pay them. He had a simple philosophy regarding incentives schemes – for him, it was “all about the money”.
Some 20 years later and with many call experiences now under my belt, I would beg to differ. For me, incentive schemes that work are a combination of reward, recognition and real-time feedback.
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Then recognition is about staff knowing that they are doing a good job and feeling valued as a result;
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Yes, reward is about the financial element – but encompasses more than just cash;
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And finally, real-time feedback provides information to agents and teams so that they know how they are performing and what good things will happen to them if they raise their game – ‘right here, right now!’
So, for an incentive scheme to be successful, it needs to address all three factors.
Observations
Let’s look at them little deeper. The problem from the vendors’ point of view is that not all salespeople are motivated the same way. Consequently, not all incentive programmes work. Why is that? From my experience, I’ll make the following observations:
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The 80-20 rule: 20 percent of the salespeople make 80 percent of the sales and profits. Too often, sales incentives - perhaps in an effort to be fair - are geared to the entire sales force. The risk in a programme like this is that the glove that fits everyone, in the end, fits no one. Enlightened marketing strategists know that the top 20 percent is already motivated. Simply put, a strategy that’s geared to light a fire under the next 20 percent - the next logical group - doubles the business in a more cost efficient manner.
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The KISS theory: (Keep it short and Sweet) Salespeople by nature are like electricity. They naturally take the path of least resistance. That’s not to say they are lazy or untoward. In fact, it’s just the opposite. Good salespeople look to simplicity to make things happen. Often, incentive programmes fail miserably because of innate complexities either in their recording and reporting systems or in how rewards are won. If you put the salesperson in a position where he or she is forced to assess- “To get this, I first have to sell this, plus these and not these and they must include these,” you are creating a recipe for confusion, sales frustration and failure. In the end, the incentive programme becomes a disincentive!
The remedy? Top management must keep the incentive programme sweet and simple and attainable. There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task is to administer and account.
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Balancing effectiveness and efficiency
You have often heard about the carrot and the stick story. Well, in a sales environment, that is how you ensure that the right behaviours are reinforced. For example, be prepared to withdraw the incentive scheme payments from those that don’t achieve the minimum standards you expect.
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Think of alternatives to cash
There are many types of incentives that organisations administer. For example, there is a scheme where the sales personnel earn ‘points’ which then qualify them for prizes.
Remember that sales people have different motivations for wanting to work – for some younger members of the team it might be about having the latest technical gizmo – iPods and Exerciser machines, etc.
For other members, it may be to run a house and raise a family. Then the ability to use the scheme as gift vouchers for certain stores or even a discount off the weekly shopping bill could be important.
One company that I know is running a scheme that is all about the recognition of staff. Borrowing from the Cadbury’s Heroes theme they have branded a ‘Thank You’ board. Each month, anyone in the company can post on it a personal thank you to another member of staff – the nomination can be for anything, however large or small.
At the end of the month, a winner is drawn from those people nominated throughout the month. All winners are displayed on the wall next to the board in the rest room and – yes, you guessed it – they win a present each.
Sometimes it is the simple ideas that are the most effective. One sales team manager has young kids and saw the enjoyment that they got at a party playing ‘pass the parcel’. So the following week she introduced the scheme into the sales point! The idea was that every time an order was taken, a layer of the parcel could be removed by that specific sales person. But the incentive aspect was that the parcel was only available for four hours. After four hours, the parcel would be taken out and new one replaced. No one knew how many layers there were, so would enough sales be made in that period to get to the prize? Worked brilliantly at energising the whole sales team!
Another company, a leading outsource service provider, has focused its incentive programmes on making sure that sales people know exactly what their performance is. They have produced highly creative real-time wallboard displays. Their requirement is to analyse key targets by contract and to create innovative and visual media that drives motivation on the floor. The wallboard application displays real-time data and telephony statistics that allow the manager to performance manage without having to constantly browse through various reports to check agent status, lead totals or KPIs.
Success
What does a good incentive programme need to be successful?
Education: Incentive programmes don’t just sell themselves. Too often, expensive motivational programmes are overlooked in the field because sales people either don’t understand their value and/or are unsure how to sell them. Many times, good incentive programmes are written off as having missed the target, when in reality, they just weren’t rolled out and managed properly.
Competition: Everyone’s heard the expression, “Timing is everything!” This is particularly important sage advice for the successful incentive programme planner. Any successful salesperson will tell you, “Most sales are made as a result of due diligence on the front end.” Simply put, the better the preparation, the more likely the sale. The same can be said for incentive initiatives. Real incentive programmes, like new movie releases, are something to be anticipated. The right amount of promotion ensures greater acceptance and interest that often usurps focus on competing programmes.
Reward: Any reward-value can become an unmotivated, anticlimactic activity if the time span between winning and getting is too long. Successful incentive programmes reward immediately! As a rule, the faster the reward is delivered, the greater the enthusiasm for the incentive programme. Although on some levels, salespeople are a complex breed, when it comes to incentives, they are - for the most part - quite predictable. Their nature is to react to excitement or challenge faster than others and then move on.
Recognition: At the risk of making salespeople appear shallow or monolithic (they are not), recognition amongst their peers is still the classic motivator, whether there’s an incentive programme or not. The rule again is, there is no such thing as too much recognition! Salespeople by nature gravitate to the limelight much like other performers and so there should be no shortage of achievement and overachievement recognitions that find their way - in a timely manner - to the public’s eye.
Another fact that is frequently overlooked is that recognition, whether part of an incentive or not, is the least expensive means of motivation. In many cases, it’s free! Often, shaking the hand of the chairman in front of the company is all it takes to galvanize the need to overachieve.
(The writer is a corporate director with over 25 years’ senior managerial experience. He can be contacted at lionwije@live.com)