What Can Incentives Do For You?

A&E Magazine, May 2011
By: Amy Trueblood

As an award and engraving specialist, you probably have heard about incentive programs but may not be very familiar with their expanding capabilities and applications. American corporations spend forty-six billion dollars annually on incentives and demand for incentive programs grows year after year. Although awards and engraved items were often grouped together with incentive programs as motivational tools, in the past few years, merchandise incentives have developed their own niche. As a manager who develops and administers incentive programs, in addition to researching and writing for the Awards Network Blog, I would like to explain incentive programs and how they could be integrated into your business model.

Understanding Incentive Programs

An incentive program takes place on an ongoing basis and gives participants rewards as they reach pre-defined goals. Incentive programs are point-based and allow people to accrue or spend points via an online point bank program. Instead of reaching a goal and then receiving an award, participants are enticed to participate by the motivational rewards that can be earned for reaching objectives.

The incentive industry has gained acceptance as a motivational tool based on research conducted in the twentieth century by behavioral psychologists and scientific management theorists. There are many applications for incentive programs and recent research shows these programs can provide a return on investment of at least three dollars per one dollar invested. Incentives can increase employee performance, improve customer loyalty and referral activity and even raise safety awareness and compliance. They can mitigate the effect a poor economy plays on company profits and help turn employees into immutable assets that give an organization a competitive edge.

Incentive programs have become more popular as this research is being published and as more managers talk about their successes with incentive programs in online forums and social media networks. The demand for merchandise based incentive programs also rises as employees and customers ask for brand name incentives instead of imprinted items or promotional products. For incentive programs targeted towards a diverse group of people achieving safety goals or performance improvement objectives, there is no such thing as a one size fits all gift anymore.

People enjoy receiving gifts that recognize an achievement while de-emphasizing the company brand. A few weeks ago, I received an email from a service award recipient who ordered a Norelco® razor for his third year anniversary award. He mentioned that he thought the selection of items available were “much more useful than a commemorative pin, watch, pen set, or other trinket—which tend to celebrate the company more than the employee.”

In addition to this sentiment, changes to the modern workplace have also affected people’s tastes for the gifts they want to include in incentive programs. Many workplaces have a business casual dress code and thus, people do not wear jackets to attach their service pins to. Newer buildings often use an open design concept where workers do not have an office by themselves so there is no solid wall or shelf to put an engraved award upon.

Different people are going to find different items more or less rewarding. The key with an incentive program is to offer a wide variety of tangible merchandise, which has been a proven motivator compared to cash or gift cards. For example, the Awards Network catalog contains kitchen and household appliances, the latest in electronics, tools, jewelry and much more. The catalog is put together so that there are items that appeal to people of any demographics with different tastes and lifestyles. With the right reward mix, a company can design an incentive program based on psychological and scientific management principles that will help achieve goals.

Providing Incentive Programs

Now that you have an idea of what incentive programs do and why there is such an increase in demand, you might be asking yourself how you can break into the incentive industry and start offering incentive programs to your customers. As an expert in the incentive arena, I would like to share my experiences with you so you can do just that.

There is a lot of competition within the incentive industry; the company I work for has seen a significant increase in competition since the recession of 2008. Breaking into this industry can be very difficult as you need to overcome the competition, offer a wide variety of merchandise and form relationships with current and potential clients. Instead of trying to become an incentive program provider overnight, your company should consider partnering with an existing provider to offer your customers merchandise options in addition to your traditional award offerings. When evaluating potential companies to partner with, there are five main considerations.

What kinds of rewards do you want to offer?

Incentive programs are only as good as the reward options you include. Some companies form groups to purchase items in bulk but are then unable to add or remove merchandise. Other incentive program providers go directly to manufacturers and large distributors to develop their own reward catalog. If you have an idea for what types of brands you want to offer customers, use this criterion to find a list of companies you can potentially partner with.

At Awards Network, we work directly with manufacturers and large distributors to put merchandise and travel options into our reward catalog. Because of the size of our company, we are able to use our purchasing power to pass along great values to our clients. It can take years to establish relationships with suppliers and secure lines of credit needed to purchase brand name merchandise.

How does the company consult with customers?

Incentive programs require a lot of time initially to go from the conceptual stages to planning and implementation. When looking for a partner, you will want to find out who will be responsible for getting your customers’ programs up and running. Also, you will want to be able to consult with your existing customers and find out what they are currently doing to recognize employees, how they celebrate company milestones and how you might be able to assist them in reaching their goals. After you have asked these questions, you will need a partner who will be able to make the incentive program happen.

How is the program designed or structured?

Most of the incentive programs I run are completely online with some printed supplements to communicate the program. Online incentive programs can include newsletters, quizzes and a variety of additional content to support the program. You will want to work with the incentive program provider to learn what their print and web-based capabilities are so that you can sell the incentive program to your customers.

How are orders fulfilled?

When an incentive program participant reaches a goal and redeems points for a reward, you will want to find out what happens next. Sometimes the process is different depending on how the order was placed (by mail, fax or online). For some providers, it will take weeks for an item to arrive once it is ordered. Since Awards Network deals directly, most of our items ship within seventy-two hours and arrive within fourteen business days. Make sure the provider you partner with discloses their shipping statistics. It is important to set realistic expectations with your customers of how soon orders can be filled and shipped.

What kinds of reports are available to clients?

Although incentive programs have the potential of having a minimum or three to one return on investment, without any reporting, you cannot provide an accurate picture to your customers. For my incentive programs, I run weekly or monthly reports detailing user, order and award activity. This way clients can see what goals are being met, how points are being spent and how often users are accessing the program. Some of the contacts I have with clients run all of their own reports online via an analytical dashboard. While trying to find a partner in the incentive industry, be sure to ask about analytics packages and who will have access to reports.

In conclusion, incentive programs can be an opportunity for you to expand your business and really become an invested partner in your customer’s success. Those who develop relationships with promotional products distributors now will gain the experience needed to offer their own incentive programs in the future. By offering a variety of awards, engraved items, and merchandise options, you will have a wide variety of rewards for your customers and be able to grow your business in the future. That’s what incentives can do for you.

About the author

Amy Trueblood is an Account Manager and PR Manager for Award Network, based out of La Porte, Indiana. She works with current and prospective clients to help design properly implemented and well designed incentive programs. In addition, she is the author for the Awards Network Blog and is always on the lookout for information relevant to incentives, engagement, recognition and awards. Outside of work, she is an avid reader, pet lover, enjoys cooking and computer games. To read other articles by Amy, visit www.awardsnetwork.com/blog or email her your inquiries at amyt@awardsnetwork.com.