Incentive rewards make great motivational tools to reinforce your corporate strategies and sales goals. But if they’re not incorporated properly into your organization, you won’t see the full potential of incentives and reward programs to boost your business. As the saying goes, you have to choose the right man for the job—the same is true when it comes to incentive rewards. Different types of incentive rewards are suited to achieving different results.

Use the Right Incentive Rewards Now you’re probably dying to know which rewards are best for which goals, right? We’ll explore that soon. But first, let’s talk about two things that are essential to a successful incentive program: alignment and communication.

Aligning Incentive Programs with Organizational Goals

There are several business goals incentives help organizations achieve—retaining customer loyalty, boosting sales motivation, training salesforces and developing better relationships with sales channel partners. Before you settle on an incentive program goal and decide which rewards to offer, make sure the goals you want to achieve and the way you present them are aligned with your corporate objectives and overall organizational goals. An incentive program that isn’t aligned with your other corporate messages could hinder your program before you even get it off the ground.

“Incentive compensation is the third rail in marketing, product [management], and sales alignment,” according to Tony Jaros, SVP and chief research officer at SiriusDecisions. “The wrong variable compensation can cause conflict and create fiefdoms instead of encourage collaboration. Alignment becomes impossible in an environment with competing goals.”

Using Incentive Program Communication to Achieve Alignment

How can you make sure your incentive program is aligned with your overall business goals? Communicate the incentive program’s purpose clearly in the beginning and send multichannel messages to participants often. Use the right channels, the right branding/imagery and make sure you’re sending out exactly the message you want to deliver. If a major part of your organization’s mission is producing energy-efficient products, for example, maybe your incentive program should offer rewards for selling green products and promote environmentally friendly incentive rewards.

According to an FMI study on incentive program effectiveness, “Communicating quarterly progress is very important, but the critical part is providing meaningful information that the participants in an incentive plan can understand and use to improve their performance.”

So, align your program with your business goals to avoid conflicting goals and messages, and use communication to its fullest to get that alignment across to participants. Got it? Good. Let’s move on to different types of incentive rewards.

When to Use Online Rewards

If you’ve ever been in charge of people, sales or customer relations, you’ve probably heard of the 20/60/20 rule. It goes like this: the top 20% of the group are your bread and butter. The bottom 20% are stragglers. The rest—the 60% majority—are somewhere in the middle, floating around ambiguously and not too reliably good or bad. Motivating that 60% majority can have a huge impact on your business. According to Qvidian, “a 5% gain in the middle 60% of your sales performers can deliver over 91% greater sales than a 5% shift in your top 20%.”

Online rewards, or merchandise rewards earned in points-based, online rewards programs, are great for motivating that 60% of your workforce or customer base. Online rewards are accumulative, meaning that participants save up points over time to exchange them for merchandise. You can make steady, incremental gains when you motivate your middle 60% over long periods of time.

Many studies, such as this one in Management Accounting Quarterly, recommend using tangible incentives like online rewards instead of cash for long-term incentive plans because, “Cash bonus incentives can deteriorate performance and … noncash incentives can help mitigate such negative effects.” People tend to become desensitized to the value of cash rewards, quick to count it toward their regular salary, meaning that you have to continually up the amount of cash rewards you offer to keep increasing motivation. With points-based merchandise reward programs, though, the points take participants’ minds off money and focus them on what really matters—exciting incentive rewards they deserve for reaching your goals.

When to Use Travel Incentives

Travel incentives are best reserved as rewards for your top performers. Be they your top salespeople or your most loyal B2B customers, you want to offer them something they’ll never forget so they feel truly appreciated and are far less likely to go seeking other opportunities with your competition. Sharing group travel experiences creates bonds and lasting memories that strengthen business relationships.

Because travel incentives are a bigger investment of time and money than other incentive rewards—but and investment that’s guaranteed to pay off—you want to make sure your recipients are those who have the biggest and most direct impact on your business. A 2015 Incentive Federation study found that, “only 1% of employee programs use group incentive trips, whereas 18% of channel partner and 21% of sales incentive programs use them.”

When to Use Card Rewards

Those who run sales incentive programs tend to like gift and debit card rewards because they’re quick and easy to deliver, with no program training necessary. In an environment where products or services also need to be pushed out quickly with spiff incentives, or immediate sales rewards, card rewards are an excellent grab-and-go option.

Another, relatively more recent benefit of using card rewards is the ability to send participants virtual e-codes through email. The recipient of the code can plug it into any online store that accepts VISA® cards and have their purchase shipped locally. That makes it easy for incentive program managers to reward an international participant base.

Measure Progress with Incentive Program Reports

The only way to be absolutely positive you’re using the right incentive rewards is to measure your progress. Get input from your participants. Pay attention to their activity with analytics and reports.The Incentive Federation says that “only a third of companies have access to a reporting portal where program administrators can access standard or generate custom reports.” Those companies have underestimate the value of incentive program data—if you have easy access to program reports, you’ll already be a big step ahead of most organizations.

Program reports can teach you what works and what doesn’t. They help you keep track of your goals so you can rethink your strategy when necessary. You may have to tweak your incentive program marketing, your participant audience or the incentive rewards you offer to get the results you want. No matter what, your program has to evolve. No business’s goals stay the same, right? So pay attention to the data and results you get from your program to keep it agile and ready to reach new goals.

To sum up: make sure you’re using the right incentive rewards to achieve the results you’re after. The following incentive rewards are stronger and more likely to reach your goals when used in these ways:

Online rewards

  • To motivate the middle 60%
  • To sustain motivation in long-term incentive plans

Travel incentives

  • To motivate top performers, or your top 20%
  • To motivate and build brand loyalty among those who have the biggest impact on your sales

Card rewards

  • To reward quick, short-term sales promotions
  • To reward large, international participant bases

By aligning your program with your organizational goals, taking advantage of the strengths of different incentive rewards and measuring your program’s progress, you’ll be way ahead of the game when it comes to using incentive programs strategically to get exactly what you want from them.

<strong>About </strong>Steve Damerow

About Steve Damerow

Steve Damerow is the Founder of Incentive Solutions, an incentive program provider in Atlanta specializing in helping B2B companies increase distribution channel sales, establish customer loyalty and retention, and develop long-lasting channel partnerships.

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