Incentive - February 2009 - (Page 20) COVER STORY incentive programs to succeed. How to run that incentive program successfully now is another story. An internal sales incentive is different from a dealer channel program, both are unlike a nonsales employee engagement program, and all three require different solutions than a consumer promotion. In the next pages we’ll look at the challenges facing each of these four incentive industry segments, and the solutions a well-planned, well-executed incentive program can provide. Sales “Until six months ago, the average person selling a product was taking calls,” says Barry LaBov, president and CEO of Fort Wayne, Ind.–based incentive house LaBov & Beyond. “Now there are a whole lot less orders coming in. That salesperson is going to make a whole lot less money if nothing changes.” And so is the company he works for. Recently, LaBov talked to a long-time client that has a 3 percent market share in an industry in which sales were down 40 percent across the board. “He said to me, ‘No one’s buying,’” go after clients, that time is now,” he says. “Two-thirds of their competitors are laying low or not behaving in a smart manner. But you have to motivate your salespeople to make the decision that now is the time.” Maritz’s Spellecy adds: “What you need to do is go after your competitors’ business. Do a better job of training your people, or incentivize them against different objectives, or adjust your overall partner offering to something that puts you in a positive light vis-à-vis your competitors. What’s required here is, you take a deep breath and you regain your overall optimism: There will be a recovery from this economic event, and those companies that are wise enough to aggressively pursue growth while in the midst of this kind of selfdefeating negativity are going to be those that really do best going forward.” But before you can change that sales incentive program to make it more effective, you have to make sure you have the money to run it. And with CEOs doing everything from slashing the workforce to selling the corporate jet (think Ford, Chrysler and GM) to getting rid of the flowers on the executive “What you need to do is go after your competitors’ business.” —Michael Spellecy, Maritz recalls LaBov. “I said, ‘Well, actually, sixty percent of the customers are buying. If you increase your market share from three percent to five percent, that will cover your drop in sales. Does that sound impossible?’ He said, ‘No.’ ” During the worst economic upheaval in 80 years, there are three basic responses that companies can take with regard to their incentive programs, according to LaBov. These are: first, keep their heads down and try to survive until better times; second, keep going with business as usual; and, third, aggressively seek out more business. “If ever there was a time when companies need to take an aggressive approach, really floors (Merrill Lynch reportedly saved $200,000), defending the incentive budget can be a battle. Which isn’t to say that there aren’t places to cut. Beauchine, of Carlson Marketing, suggests consolidating programs spread out among different divisions and regions, particularly for large multinational firms, to achieve economies of scale—a strategy that happens to play to the strengths of a large, global service provider like Carlson Marketing. Dealer Channel In some ways, companies running channel sales programs have less leeway to cancel or tone down programs than any other segment, says Bill Boyd, president and CEO of Sunbelt Motivation and Travel in Dallas. “They have to be responsive to performance improvement because their competitors could offer programs,” says Boyd. “There is more emphasis on them now than on internal sales programs, across the board.” Indeed, one of the most basic pieces of advice Robert Dawson, chair of the research committee of the Incentive Research Federation and founder of The Business Group in Rocklin, Calif., gives clients is, “always find out what your competition’s doing”—especially when they are considering canceling a program or cutting budgets. For all that, this is also an incentive segment where what is happening varies widely by industry: automakers and home builders are being crushed by the lack of available consumer credit and are mainly interested in short-term survival, while some insurance companies got hit so hard by the toxic mortgage security mess (think AIG) that they had to accept federal funding and are laying low to avoid being accused of running wasteful corporate junkets with taxpayer dollars. Even so, it is important to remember that your brand is in the hands of your channel partners—the people actually facing the end user, Spellecy says. “Reach out to your partner organizations,” he says. “Ask, what are you not getting that you need? What do you need your salespeople to do?” The answers may vary widely: more training incentives for salespeople or more customer events to rally consumers shellshocked by their plummeting home values and 401(k) accounts. One manufacturer of consumer goods that can only be seen as discretionary is Evinrude, a maker of high-end outboard motors celebrating its 100th anniversary this year. While they are running a number of consumer-focused promotions—special financing, extended service warranties, rebates and product upgrades—the firm is also running a channel sales program focused on training as well as sales. Last year, the firm instituted a training program 20 | Incentive | February 2009 | incentivemag.com http://www.incentivemag.com
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