60% of all
U.S. businesses use non-cash sales rewards, spending conservatively $23 billion
annually on these awards. Following is a
summary of research completed by the Incentive Research Foundation about the
effective design elements of these sales incentive programs. For purposes of the research, the respondents
were designated either top performing companies (those with the highest revenue
growth, customer satisfaction, and employee satisfaction scores in their
industry) or average companies.
Setting
Program Objectives: Emphasize Multiple Behaviors
In the
past, sales programs concentrated almost completely on increasing sales
dollars. The research showed that many
more objectives are now used in these programs.
Most companies now use a mix of objectives, including:
·
80%
increasing overall sales
·
76%
improving morale
·
58%
productivity
·
47%
gaining market share
·
27%
increasing sales of specific products
·
21%
changing the sales culture
·
17%
promoting cost reduction
·
16%
rewarding training completion
Rules Structure: Center on Quotas
Companies
use multiple targets to achieve awards, including:
·
80%
earn awards on achieving quota
·
71%
earn awards by being a top performer
·
51%
earned awards based on team performance
·
40%
for discretionary sales awards
Rewarding
the Right People: Expand Your Footprint
Designers
are shifting from programs that just award the top performers to one that
includes more of the middle. More than
half (56) of top performing companies said they wanted their program to reach
more participants.
Program
Funding: Start at the Bottom
Top
performing companies are nearly 100% more likely than average performing
companies to use a bottom-up budget model and fund programs as a % of income
during the program period. Other
interesting notes were:
·
The
average business used 7.2% of income to calculate budgets, top performing
businesses use 9.4% of projected income.
·
Less
than half of average performing companies in the United States have no top stop
on their programs, but almost 80% of the top performing businesses have no top stop.
·
The typical sales person can expect to earn $3,916 in a top
performing business annually, with the top performers in these companies
earning over $5,000 in award.
What
Awards to Use: Combination is Common
Sales
programs can use one of many award types, including recognition awards, recognition events, merchandise, symbolic
awards, gift cards, logo merchandise, individual travel, group travel, group
incentive travel, and cash. On average,
businesses use more than seven types of awards for sales incentives.
The top
four awards used were:
·
72%
use gift cards
·
44%
use award points redeemable for a variety of things (including gift cards)
·
44%
use merchandise
·
34%
use group or individual travel
Multiple
Programs: Efficiency in Consolidation
Most
companies reporting use a single sales incentive program for the entire
organization, but more than half of the top performing companies had multiple
sales programs managed by one operation.
Program
Support: Think Outside Your Walls
·
60%
of all companies operate their own sales programs.
·
60%
of top performing companies used outside support from external partners.
·
Half
of companies engage outside supplier expertise for best ways to motivate
participants and over two-thirds using external award suppliers
Administration:
Communications and Tech Support
The IRF
research indicates that 43% of a top performing company’s budget generally goes
to program administration (design and operation) versus only
30% of a budget of an average performing company.
Over 70%
of businesses use some level of program-specific technology to support their
non-cash sales incentive programs.
Measuring
Effectiveness: Multiple Metrics
More than
75% of top performing firms fully leverage the data produced by their programs
to quide decisions in future program design.
Following
are the most used metrics and %:
·
66%
overall product sales in dollars
·
49%
net new customers
·
37%
product sales in unit
·
36%
revenue
·
25%
productivity
·
24%
staying in budget
·
14%
customer satisfaction surveys
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