Incentive - February 2009 - (Page 21) focused on the differentiators that set Evinrude products apart from the competition, LaBov says. While the core of the program was a goal-based incentive award, dealer salespeople had to be certified on that training program to participate. “Seventy percent of those who made their goals went through the training program,” LaBov says. “Seventy percent of those who did not make their goals did not go through the training.” Recognition and Engagement What incentive program are we offering? How about a job?—at a time when everybody’s laying off and no one’s hiring. With the unemployment rate above 7 percent at the start of the year, according to the U.S. Bureau of Labor Statistics, companies can get away with that attitude to both sales and non-sales employees alike. But they will remember it. “We are asking [sales and non-sales staff] to do more, and we are giving them less,” says Dawson, author of The Secret to Incentive Program Success, which will be published this month. “When we get out of this hole, they will say, maybe it is time to move on. Is that how you want your long-range plan to look?” That doesn’t just apply to the sales department, says Eric Mosley, CEO of Southborough, Mass.–based recognition provider Globoforce. “In good times, management would use incentives, bonuses and stock options to reward good behavior,” Mosley says. “Those tools are taken away from them in bad economic times.” Employee recognition programs, he says, offer a cost-effective replacement. “Instead of giving one employee $10,000, you can give 100 employees an award worth $100.” Beyond that, switching from a cashbased recognition strategy to non-cash program is a great way to save money without appearing to reduce award values, says Derek Irvine, Globoforce’s vice president of global strategy. One client cut its $14 million cash incentive budget in half when switching to non-cash, Irvine says. “And they were able to get a double-digit increase in employee satisfaction,” he adds. Irvine advocates programs that combine manager-to-peer and peer-to-peer recognition, adding that they should be built around strategic goals like cost reduction and productivity growth. Irvine points to the merger of media firms Thomson and Reuters last year, noting that one of the drivers of that combination was to save costs and amalgamate programs, and one of the main goals of the post-merger program was One Company in One Year. “Employees were able to see what matters,” he says. Not just after a merger, workers of all stripes are experiencing economic anxiety in the workplace. In a recent survey, a third of those polled called it high or severe. Mel Van Dyke, employee engagement practice consultant for Maritz, notes that it is particularly important to engage survivors after layoffs, when top performers are even more vital to the company. It’s also important to show ROI to ensure your program survives. Spellecy pointed to a recent retention program run by one division of a retail client. Specifically designed to reduce churn, the program’s return was 6 to 1, he says. “Their profit was up 2.8 percent, and the rest of the company’s was down 5.4 percent.” Consumer If anything, consumer-focused incentive programs are growing, not shrinking. After all, except for the industries at the epicenter of this financial crisis, like banking and automobile manufacturers, the biggest problem is that frightened consumers aren’t spending money. Specifically, 2008 holiday retail sales declined 2.8 percent, meaning consumers spent nearly $13 billion less than in 2007—the first decline in holiday sales since the National Retail Federation started tracking them in 1995. In fact, LaBov points out that during economic downturns, companies get more creative. He notes that American Airlines’ frequent flier program was created during a recession. “That is a classic incentive program,” he adds. “Customer engagement has become the holy grail of this economy,” says Marti Beller, president of Richmond, Va.–based Affinion Loyalty Group. “[Companies] are looking for people who identify with their brand and don’t see it as a commodity. “The one-size-fits-all, cast a wide net and you’ll get enough in the net to make it work,” campaign is yesterday’s marketing tool, says Beller. “It is as important to know who not to market to as who to market to…you use money in a much more economical way.” One promotional campaign that impressed Beller recently was Nordstrom’s double rewards holiday campaign, targeting loyalty program members who earn points with each purchase and can spend them at Nordstrom’s. “As soon as the economy started taking its toll, Nordstrom sent out a widespread communication—it was on every communication I, as a Nordstrom customer, got from the beginning of November on— that [it was] giving double rewards points as a way to make people’s money go farther. “The way they positioned it was very smart, especially with holiday spend on the horizon,” Beller says. “It allowed people to feel rewarded in an incremental way, during a time when they were most likely going to spend some money to begin with. Instead of doing a sale, which everybody did, they said ‘We’re going to give you double points.’ They put this right around the economy message—these points drive greater rebates back to you, and we want you to get more for your money. That resonated with consumers.” In the end, it didn’t save Nordstrom from a dismal holiday season, but the Seattle-based retailer beat analyst expectations and its sales dropped only half as much as competitor Saks’. While every type of incentive program is facing challenges, those faced by the automotive and banking industry—at the epicenter of the crisis—are different from those facing industries like retail and manufacturing, which are struggling in the face of a spending slowdown by skittish buyers. In the next part of this survival guide, we’ll break it down by industry, looking at automotive, banking, insurance, manufacturing, pharmaceutical, retail, and technology and telecommunications. incentivemag.com | February 2009 | Incentive | 21 http://www.incentivemag.com
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