Incentive - April 2008 - (Page 48) THE INCENTIVE MERCHANDISE BUYER’S HANDBOOK CHAPTER 2 plan the strategy; set the budget nce the goals have been clearly determined, the next step is to orchestrate the program design and write the rules. First off, figure out which groups you need to motivate in order to achieve that goal. Look up and down your supply chain and ask who is involved with your product or service. What do they do? You may find that both salespeople and customer service reps are the most crucial to achieving the stated goal. It’s ok to motivate different audiences in the program, but the greater the reach, the greater the budget. Also, evaluate any legal or geographical restrictions relevant to the program. Start thinking about awards that will do the motivational job and still fit within your budget. Decide how you want to structure things: a larger reward for a few top performers or smaller rewards for a few tiered qualificaA majority of respondents, 63.9 percent, tion levels. Productivity ratios are say they are spending about the same often cited as an aid here. Many per recipient for merchandise awards as have relied on the 80/20 rule, they were last year. The average spend whereby 80 percent of your profit per recipient is $173.33. is said to come from 20 percent of your workforce, but the math will Under $50 . . . . . . . . . . . . . . . . . . . . . . . . . .36.9% vary depending on each company’s situation. $50 to $99 . . . . . . . . . . . . . . . . . . . . . . . . . .33.5% The program’s goals should translate into a fairly simple meas$100 to $199 . . . . . . . . . . . . . . . . . . . . . . . .12.3% urement formula. In other words, what behaviors are you encourag$200 to $499 . . . . . . . . . . . . . . . . . . . . . . . .11.8% ing? A few examples: New accounts opened, referrals made, $500 to $999 . . . . . . . . . . . . . . . . . . . . . . . . . .3% training courses completed, increased customer response times, $1,000 to $1,999 . . . . . . . . . . . . . . . . . . . . . .0.5% accidents averted. In addition, decide how often results will be $2,000 or more . . . . . . . . . . . . . . . . . . . . . . . . .2% reported. To maintain interest in Source: 2008 Incentive Merchandise IQ Survey O the program, participants will need to be aware of how they are doing. For a short-term program like a thirdquarter sales contest, reporting should be more frequent—weekly in this case. A year-long program can get away with monthly updates. PUTTING THE RULES IN WRITING The structure of an incentive program will depend on whether it’s open- or closed-ended (see the “Planning Wise” sidebar). A few basic guidelines do govern the wording no matter what the program type: Steady Spend 1. State them clearly. Articulate the program’s theme, goals, and rules as simply and straightforwardly as possible. Don’t use industry jargon or trite buzzwords. You don’t want to confuse or otherwise turn off the audience. 2. Prepare for the unexpected. Plan for contingencies. Write down what would happen in the case of a tie for the last of 20 winning slots. 3. Get feedback. Before you officially release the program rules, have some potential participants read them over to ensure that they are indeed fair and understandable. CLOSED-ENDED RULE STRUCTURES A few examples: • Only the Top Win—The top 50 achievers qualify for the merchandise award. • Make Your Own Odds—Earn a chance to win for every sale. • Unequal Thirds—Participants are divided into three groups, and the top 20 performers in each group qualify for the award • Lucky Squares—Make a sale and write your name in a square. Winning squares are picked at the end of the week for three months. SPECIAL SECTION 48 | April 2008
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