Incentive - April 2008 - (Page 67) THE INCENTIVE MERCHANDISE BUYER’S HANDBOOK CHAPTER 7 Evaluating the Program CASE STUDY Why Not? Companies resist using merchandise incentives for various reasons. Most cite lack of interest, but others aren’t sure how to sell them to management or prove their value, according to the 2007 Incentive Federation Marketplace Study. Nothing, the company is not interested . . . . . . . . . . . . . . . . . . . . . . . .49% Receiving information on how to measure the costs and benefits . . . . . . . . . . . .22% Receiving information about how to apply programs fairly for all employees . . . . . . . . . .19% Receiving information that would help management become more open to their use .18% Receiving additional information about programs and how to administer them . . . . . .16% Understanding how to mitigate liability or legal concerns . . . . . . . . . . . . . . . . .12% Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14% Value-Added For Kevin Schwartz, creating an incentive program that didn’t break the bank but still provided value meant coming up with something of value to members of his distributor’s sales force. Schwartz wanted them to keep his two companies’ products, PetLabs 360 and Healthy Home Products, top of mind as they visited retailers. In the past, his team had done everything from rewarding a big-ticket item to the top producer to parceling out cash for every product sold. However, a conversation with giftback.com founder Ken Schiliro last fall sparked a program that synthesized cost effectiveness and charity. The two men designed a team-based incentive program for the distributors built around the heart of what giftback.com is all about. The Centerport, New Yorkbased corporate gift company donates 10 percent of the price of each item a company purchases to the charity of the individual’s choice. “People worked collaboratively instead of competing, which they were excited to do, because it was viewed as supporting a cause,” says Schwartz, whose own burgeoning companies are based in Oceanside, New York. “And we were able to set achievable sales hurdles, because we weren’t giving away a huge prize. From a cost perspective, we weren’t taking a huge risk, but we were getting the same motivation from people.” Along with a basket of either gourmet chocolates or organic fruit, the winner received a certificate of donation from giftback.com. For PetLabs 360 natural pet products, the money went to animal charities; for Healthy Home’s baby friendly home cleaning products, charities related to children’s health issues like the March of Dimes benefited. “Our sales reps who visited the winners recently have noticed the certificates of donation displayed,” says Schwartz. “They are more proud of that than when they win money.” With an ROI comparable to programs offering a bigger prize, Schwartz marvels that “we got the same results with a basket of chocolates, where 10 percent of the cost went to charity.” He attributes the success to the combination of the winner receiving something tangible and the “giveback” component. “Neither would work alone,” he says. “But the combination was so successful for us that we are going to implement a similar program very shortly.” • Quality of your product/service— Honestly assess how good your offerings are, especially in comparison with any competitors. A highly motivated sales force may have a hard time moving subpar product. Likewise, brand reputation will influence even the most open-minded of consumers. KEEPING RECORDS Organize the final numbers, results, and comments in an easy-to-access computer file. You will undoubtedly be called upon to provide results and all relevant program information to upper management. Having the data at the ready will also help fellow colleagues interested in setting up an incentive program of their own in another division. If you used an online incentive program management system application, or partnered with an incentive SPECIAL SECTION company, ROI reporting should be easily attained. An online system can make surveying participants less onerous with electronic distribution and tabulation. Accurate recordkeeping will affect any tax obligations pursuant to the program and the awards involved. You’re required to report participants’ additional earnings to the IRS with a 1099 form. Bear in mind, it’s common for companies to reimburse winners for the taxes due on any incentive awards. I April 2008 | 67 http://giftback.com http://giftback.com http://giftback.com
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