Article Number : 4539 |
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| Date | 6/3/2009 6:23:39 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4539 |
| Abstract | What’s that old expression? “When the going gets tough, the tough get going?” True enough. But what about a slightly different take on that adage? When the going gets tough, the tough get incentives. In a tough market, sales reps need the... |
| Article | What’s that old expression? “When the going gets tough, the tough get going?” True enough. But what about a slightly different take on that adage? When the going gets tough, the tough get incentives. In a tough market, sales reps need the inspiration—the extra push—to achieve company goals. Recent research backs up what salespeople have always known: Incentives are necessary for the best performance in any sales organization. Researchers at the International Society of Performance Improvement (ISPI) reviewed 45 studies of incentive programs and surveyed 145 U.S. organizations that use incentive systems. The research made clear that incentive programs, including cash and non-cash rewards, were highly effective. Incentives dramatically improve performance and attract quality employees. The researchers found that, properly structured, long-term incentive programs outperform short-term programs. Quota-based incentive measures work best. Programs that reward performance based on meeting or exceeding goals generate the most positive results. The least effective incentives are closed-ended programs that reward a preselected number of winners. The ISPI researchers also noted that incentives are most effective when employees are emotionally engaged in the program. Most sales managers have found that offering exciting products or choices of products can engage salespeople emotionally in a way that cash alone cannot. Generations collide Many sales teams are composed of an extraordinary variety of people—young, old and in-between— with different tastes and preferences that are often unknown to those who choose incentive programs. Thus, it’s not easy to select incentives for large groups. Before designing any incentive program, organizers need to take into account the target audience. Baby boomers (late 40s to 60 years of age) are idealists who accept rules. Busters (early to mid 40s) are pessimists who dislike rules. Gen-Xers (mid 20s to late 30s) are cynics who reject rules. Gen-Yers (mid teens to early 20s) are realists who believe rules are to be rewritten. These core generational differences need to be taken into account when devising incentives. In this era of ever-tightening budgets, companies looking to offer a little something extra to motivate valued employees find their options severely restricted. For a fraction of what it might cost to give your workers a 5% raise, you can give employees some great incentives and recognition, and keep everybody feeling more motivated and focused on their goals. Holistic approach Today’s more forward-thinking organizations are giving a little more thought to what genuinely drives long-term success and are developing incentive programs accordingly. Instead of giving rewards and recognition to only the really hard workers or just the smartest and brightest, some companies take an all-inclusive approach. After all, the top 20% of an organization’s sales force will perform no matter what. But what about the other 80%? Some companies give everyone a chance to win by offering merchandise, gift cards and individual trips, not just the big travel award that spurs the brightest stars to go the extra mile. Incentive consultant Bob Nelson’s surveys indicate that top reps often feel well compensated but under-recognized for contributions to the company. Some companies are moving aggressively to give non-selling employees incentives based on the sales of individual reps. This technique works best when there is a direct connection between the rep and his team of supporters, or the rep and the company’s installers. What’s tops in incentives? It all depends. The demographics and desires of your reps come first. What do they want? What do they talk about at the water cooler or while waiting for a weekly sales meeting to get started? Usually, the hot items for sales reps will be the same as for other consumers of similar age, income and interests. But you need to motivate your best people, so aim a little higher than average. That means choosing top-of-the-line brands famous for coolness or quality. And the whole purpose of giving gifts or gift cards, rather than cash, is to give your winners what they would like to have but might not buy for themselves; that’s one reason why gift cards have become increasingly popular as sales incentives. Gift cards also come in many denominations. They can be used for the many small rewards that are part of a regular employee- recognition program or up-sized for the biggest prizes. Some cards can even be reloaded so they become the platform for a continuing program that will have many repeated prizes. Is cash king? Your incentive program’s success depends on how well you pick the rewards. Cash may often win out. However, while it provides the instant gratification salespeople often savor, cash falls short of meeting the all-important incentive objectives: obtaining mindshare (the association of the reward with the sales effort and company) and building relationships and loyalty. Of course, people like cash. It’s easy, it’s simple, and they can use it for whatever they want. That doesn’t necessarily mean in every instance cash is king. While money talks, merchandise provides mindshare, and as many incentive sponsors see it, mindshare turns up the sales volume more than cash. With such prizes as collectibles or fine jewelry, mindshare lasts as long as the item and reminds salespeople why they won the merchandise, who rewarded their performance, and why they should keep up the good work. Careful assessment of your salespeople’s wants and needs helps make your team and your incentive program a perfect match. The right program depends on whether you want to raise revenue, boost morale or increase teamwork. Even among the most generously compensated salespeople, rewards have the power to make a serious difference in sales. Your original intention may be to raise profits or move product, but a carefully chosen incentive program does so much more. Incentives can help bring your team members together, make them feel appreciated and serve as a reminder of the satisfaction selling can bring. And no one can put a price on that. |