Incentive - June 2008 - (Page 19)

rewards they expect because jobs are not plentiful. So, clients really don’t have to spend as much as they did in more progressive economic times to keep their employees loyal. N J K : I think employees that have been in a company for a long time are not going anywhere, but Millennials …you’ve got to do what you need to do if you want to keep them. One of the nuances of Millennials is that they like instant gratification. So, companies may still need to put together incentive programs. Maybe not spend as much money on them, but still do something to motivate and reward and recognize them so that when this is over, they think it’s a good company to stay with. M K : Instant gratification is something that we’re seeing in spot rewards, especially with gift cards. It’s easier to maintain gift cards than [merchandise] inventory. The electronic codes play into that because they can be issued via e-mail. D B : We’re being asked more and more to do employee referral [programs]. They’re looking to take unhappy high achievers from other companies and willing to put referral programs into place to do so. Is ROI more important in this economy? D B : Where we’re seeing most of the concern on ROI—and actually the fastest growing area of our business—is consumer promotions for customer loyalty and retention. S M : Travel is a very ambiguous thing to value. The perceived value is always higher than what companies [pay for the gift certificates]. We’ve seen a lot more companies asking, “What is the perceived value?” We’re getting a lot more of those requests. For example, we have one certificate for our Ritz-Carlton hotels with a price tag of $1,000. But when you start to look at where people are redeeming those certificates, you’re Q looking at places like New York that are running $1,400 a night or Vail in I N C E N T I V E: Damon, what Colorado, where it’s $1,500 a night, are you seeing with the pro$1,600 a night; Tokyo, at $1,400 a grams you run? night. We ask, “How are you using DA M O N R I D D L E : I run this information?” [The answer is], mostly debit-card programs. “Oh, we have to convince our clients Talking about the recession, of the value of this program.” N J K : On the merchandise side, we’ve noticed, obviously, that sales in the automobile induswe’ve been dealing with that for years. try have started to fall off a litWhen you have the Wal-Marts and tle bit. We have to focus in a big boxes, it’s very, very difficult to new direction. Do we focus it continue to show perceived value to more on ideas? Do we focus it the award winner who says, “I found more on consumers? Do we [that award item] at Lowe’s for less. focus it more on salespeople? It’s brutal out there when it comes to What’s going to drive the busiperceived value. D B : What we have started to do in a few cases is bundle the gift packages—say, a weekend certificate at a Marriott, a couple of beach towels, a couple pairs of Maui Jims—and make it far more difficult to do comparative pricing. BRIAN MART E N I S : [One company running a channel program for U.S. dealers] decided Damon Riddle, Suzuki that Europe was out of the question. I said to them, “We have ness for us? We’re still kind of customers that depend year after year playing with those models. on [that] European program.” [We We chose debit cards because replaced it with an existing Caribbean a few years ago we took a look program.] Bottom line is [they] lost a at merchandise and tried to figsubstantial amount of business when ure out what was going to be they decided that Europe was too the best incentive for our dealer expensive—which it wasn’t. I did a litbase, specifically our salespeotle study and showed them exactly how ple within those dealers. And it much money they lost in business, was instant gratification. It was because I can tell you there were certhe cash now. We had done tain customers—talk about loyalty— it…for quite a few years before whose business completely disapthrough checks, and we were peared. They were so not loyal to [the] trying to evolve the program. company. They just wanted that trip to Turns out that they became Rome, to London, to Paris. T H : You just mentioned this ROI dependent on that money, and obviously cutting them off from concept—this idea that we’ve followed that cash would have been up, we’ve done surveys, we’ve measdetrimental to us. So, we had to ured, we’re trying to be very conscious stick with it. and very thoughtful about what hapMICHAEL ARKES: So, pens. I believe that all of us here at you had a cash program that the table would benefit from looking Cash vs. Non-Cash changed cash to a debit card? D R : Yes. MA: There’s research to compare the effectiveness of cash versus non-cash, and they find often that the participant preferred cash, [but those programs are often forerunners of more successful non-cash programs]. D R : I actually followed up on some of those, and we’ve done extensive surveys with our audience. The hard part for us is making the transition. I would love to get it [away] from cash, but it’s the evil we created, and I have to stick with it now, unfortunately. We’re looking at ways to pepper the program with a little bit of merchandise—quarterly incentive programs. But right now, especially now with the recession, cash is the big seller. D E N N I S B O R S T: I’ve been involved with converting a number of companies away from cash to gift cards and merchandise, and the key thing if you survey the employees, they’ll always say they want cash, but the reality is they don’t work for cash. If you create a mix of other gift cards and merchandise that fits the demographic of the audience whose behavior you’re looking to drive, in every instance, after the initial complaining of, “You cut my pay by $60 a month,” they started converting. After a while participation is up, performance is up. Like you said, you get in trouble with entitlement. But the reality is if you bite the bullet and change, you’ll find that your program will be more successful without the cash. incentivemag.com | June 2008 | Incentive | 19 http://incentivemag.com

Table of Contents Feed for the Digital Edition of Incentive - June 2008

Incentive - June 2008 Contents Editor’s Note In The News Cover Story: Seventh Annual Industry Roundtable Incentive Interview Case Study Soft Incentives Empowerment and Engagement The Incentive Career Incentive Primer Travel News: Where To Go and What To Do The Cook Islands Field Report: Bermuda Potentials: Here and Now 50 Top Motivators: The Best of the Best Electronics: High-end Audio Equipment Gift Cards: Should One Be Enough? Advertiser Index Off The Cuff

Incentive - June 2008

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