Since the Bribery Act 2010 came into law in July 2011, there has been a large amount of Fear, Uncertainty and Doubt that incentives, promotions and reward programmes could fall foul of it, and that companies operating such activities may be prosecuted for it.

It’s a situation that is not helped by a lack of clear guidance from lawyers, and the incentive industry itself. Nor do sensationalist headlines in the tabloids help, such as this ridiculous Daily Mail story that claims that tips for the postman could land them in jail. It’s a story that manages to contradict itself, concluding with a Royal Mail spokesman saying:

” ‘As has been the case for many years, postmen and women are able to accept Christmas tips. ‘They cannot, however, be accepted in return for favours or preferential treatment. It is entirely up to customers if they wish to give a tip to postmen and women at Christmas and to what value.”

Under section two of the Act it is an offence if a person requests, agrees to receive, or accepts an advantage, financial or otherwise, with the intention that they or someone else perform a “relevant function or activity” improperly. Under the Act, the maximum penalty for individuals found guilty of bribery is 10 years’ imprisonment and an unlimited fine. But employers can also be liable for their employees actions.

One of the main concern of the Serious Fraud Office, whose job it is to enforce this Act, is of companies using gifts to influence behaviour of individuals without their employers knowing about it.

This article at Out-law.com tries to make sense of the Act, and includes advice from their anti-corruption expert, Barry Vitou:

“The Bribery Act makes it an offence for businesses to fail to prevent bribery by people working for or on behalf of a business. Companies can escape liability if they show that they have ‘adequate procedures’ designed to prevent bribery in place.

Vitou said that it was “key” that business make “fully transparent” any incentive arrangements. Richard Alderman, SFO director, has previously stated that giving incentives can be justified but that businesses should declare what they issue.

“Incentive payments are normally designed for commercial reasons and are commercially justifiable,” Alderman said in a speech in May.
“There are risks though. What we have been talking about with corporates is the need for transparency and, in particular, the need to know where the money goes and the fact that it is justifiable. We also talk about the need for a senior person at the corporate’s head office to have visibility of what is happening and to be satisfied that what is happening is justifiable,” he said.

Alderman has also previously encouraged ‘whistle-blowing’ by corporates.

Vitou said that businesses issuing ‘special payment incentive for fast sales’ (SPIFFS) or similar incentives should only do so if the gifts or payments are made transparently in writing and with the knowledge of the employer of those receiving the incentive. “

Vitou also operates a website dedicated to the Bribery Act, www.thebriberyact.com, and there are several pages looking at incentive programs, such as this one on incentives and promotions, and this on SPIFF prizes.

A look at a history of bribery cases shows that successful prosecutions have all been as a result of clear cut misdemeanours by the offenders, all for cash payments. The first successful prosecution under the new Bribery Act was to a court clerk who took a £500 bribe to ‘get rid of a speeding charge’. So far there have been now cases against a corporation under the new act.

Back to incentives, and the key word emerging from the SFO is ‘transparency’. As long as all parties are clear on what incentives are being made, to whom and for what, then incentive programs are a commercially justifiable part of a company’s sales promotion and customer loyalty strategy. The need for transparency makes it even more important that prizes are distributed as part of a structured incentive programme that can be tracked and audited. IncentiveDirect’s iD-points system makes it easy for our clients to see what points have been distributed to whom.

Where we are seeing a change is in our clients ensuring that the employers of the recipients are aware of the incentive campaigns that are being run. Some of our clients running third-party incentives are choosing to only allow prizes to be delivered to a business, to be clear that these are B2B rewards for business customer loyalty.

“The squeaky wheel gets the grease”, runs the proverb, underlining the human tendency to focus our attention on immediate concerns rather than plan proactively for the future.

I was thinking about the squeaky wheel syndrome when discussing a client’s incentive program that had taken a downturn in activity, and crucially, attention from their marketing manager.

Part of the problem was that the incentive program we operate for them runs smoothly, worry and hassle free, But this also allowed them to direct their attention onto other issues, and stop thinking about ways to improve and adjust their incentive program. As a result the program was starting to look a little stale, and was no longer engaging its users to the degree it had previously. There were no short-burst campaigns, no themed promotions, no e-mail marketing. Users were earning points for doing the same old things, or in many cases no longer earning them. Their business had moved on but the incentive hadn’t.

Left untouched the incentive program would have become a big problem that needed fixing. It wasn’t a squeaky wheel yet, but it would soon become one. Fortunately, we were able to work with the marketing manager, and suggest a refresh of the promotion, and a mini-reboot, which has re-energised the incentive and seen reward levels, user engagement and most importantly, the Return on Investment all back to where they should be. If things had of gotten worse these simple measures would not have been enough to restore users engagement.

What parts of your sales and marketing are a ‘squeaky wheel’? By only focussing on immediate problems, planning for the future can often take a back seat, leading to bigger problems down the road. Ultimately it’s an inefficient and ineffective way to work. Often squeaky wheels are masking bigger problems that need to be addressed, and at other times a ‘squeaky wheel’ needs to be replaced not just remedied.

In 2012, it’s time to stop oiling the squeaky wheel. This year, it is all about being proactive, not reactive. Now is the time to start planning the future, not waiting for it to happen. Start by auditing your current activities and service providers and decide if they are functioning well, and if not, whether they should be forgotten, fixed, or fired.

“Stop the Sabotage” says Nigel Botterill, who in this video goes into a lengthy anecdote about finding Rick Stein behind the counter early one Saturday at his Seafood Deli in Padstow.

Stop the sabotage from The Wow Company on Vimeo.

To summarize:
Ian the fishmonger wasn’t upselling.
Barbara the cashier wasn’t registering users to the mailing list.

Whilst Stein was there that Saturday notionally to “keep his hand in”, ‘Botty’ understands that he was there to stop the inadvertent sabotage of his business. While he is at pains to point out that the staff were otherwise very good at their job, they weren’t going the extra distance. This is because they did not see it as part of their job, there was no benefit or motivation for them to do that. As a consequence, the business was losing out on valuable custom. Rick Stein was prepared to go the extra mile, because he could see the bigger picture, and understand how he could add value to the customer relationship. As the owner of the business, he also had the vested financial interest, of course.

Rewards can change this staff default modus operandi by providing a direct benefit to go beyond the job description. A structured incentive program like iD-points can go further still – to reinforce the behaviours with communication to help staff understand the ‘why’ as well as the ‘what’. It can supplement the basic reward with additional rewards for their ideas and feedback too.

While Botterill is right that no-one will ever care as much as a business as the business owner, incentives can at least help to make them care a lot.

New trends in social media add incentives and game elements to add appeal, foster competition, and reward participation. But can they create truly compelling experiences?

Social media, a term that didn’t exist 5 years ago, is now one of the key means for brands to connect with the customers, and for people to connect with friends and peers. Now social media is moving beyond the currency of ‘friends’ and ‘followers’ and adding new measures of engagement, new ways of motivating participation, and new ways of rewarding success.

The most obvious way that rewards and motivation are filtering into the social media landscape this is through the introduction of game-like elements, such as points rewards, unlocking achievements and abilities (levelling up), and then measures of success such as high score tables, leaderboards, badges.

A great example of this ‘gamification’ is Nike+ from Nike. This takes the usually solitary pastime of running and turns it into a social experience as well as a motivation tool, by recording data from your runs and then uploading them to the Nike+ site from a range of devices, including iPhone and iPod.

As well as allowing you to track your runs and review your running history, you can set goals for distance or time, and reach levels based on total distance covered. You can also tweet or update your Facebook status with details of your activity, set challenges to your friends and also join public challenges. The iPhone app and new Nike+ SportWatch GPS also allow mapping of your runs using GPS data.

Fans of Nike+ (of which I am one – here’s my profile) find that the positive feedback loop it creates encourages them to run more, set targets, and ultimately perform better. The game-like elements help to make users more proactive and provide a support network for ongoing encouragement as well as celebrating achievements

Another great example that has recently launched is the Heineken Star Player iPhone app This allows users to play live alongside Champions League football matches and try and predict when a goal will be scored, to earn points. There are also other opportunities to score points by guessing the outcome of free kicks and corners, plus quiz questions. It provides a new angle to watching a football match with friends and an added level of interest. There is the inevitable connection with Facebook and Twitter and the opportunity to build mini-leagues of friends, alongside the global league of all users. The Heineken branding is ever-present but fairly low-key. Whilst points don’t represent anything other than your score which can be compared against other users, perhaps future versions will translate points into a virtual currency which can be used to acquire Heineken merchandise.

Gamification

Star Player manages to avoid the biggest problem of adding game elements to social networking, which is that they add the reward mechanisms of games but with no real underlying gameplay, or compelling raison d’etre. In Gamification and It’s Discontents, Steven Poole highlights the problems in adding a thin game layer over real life, in that it can provide a virtual presenteeism rather than any real degree of engagement:

“isn’t the idea of being ‘mayor’ of your local Starbucks or indie equivalent, as is possible in Foursquare, rather strange? You don’t become mayor in real life just by turning up at the town hall more than anyone else.”

Poole also discusses a new social game, Chromaroma, based on users travelling habits around London. By using the journey data from your Oyster card (the contactless ticketing technology used on buses and the Underground in London), and now also your Barclays Cycle Hire (aka Boris-bike) travel data, it aims to add a game-like dimension to commuting around London. Users, once signed up, choose to be on the Blue, Green, Red or Yellow team, with the aim of taking ownership of certain stations or lines, based on where they start or complete their journeys. But does anyone really play Chromaroma?

I joined Chromaroma, and it seems rather pointless, if you’ll excuse the pun. In its current incarnation I can’t see it changing the way users travel across London, nor does it turn London into some kind of consensual game-space the way that, say, Streetwars or NikeGrid did, or PacManhattan does in New York. Earning points for completing a travel journey is unlikely to change anyone’s travel habits or which station they travel too, and so rewarding users for doing what they do anyway is rather meaningless. Perhaps Chromaroma will morph into a more narrative, ARG game route like Perplexcity rather than the check-in based Foursquare model.

Gamification, or ‘pointsification’, as Margaret Robertson of Hide and Seek insists it should be called, does not create a full game experience because there are no meaningful consequences from the choices the player makes on the game itself. In other words, if you don’t go for a run, Nike+ will still be waiting there for you when you do.

“Games give their players meaningful choices that meaningfully impact on the world of the game. Deciding to run two miles today rather than one, or drink two liters of Coke instead of four are just choices of quantity.”

The choices you make don’t affect the game at all; the process is all one way rather than being fully interactive. A game should a series of unfolding series of actions which have consequences, positive and negative.

“Games offer fail conditions as well as win conditions. They are able to deliver the high levels of emotional engagement they’re famed for because they’re also adept at delivering the lows of loss, humiliation and frustration. The world of user experience design from which the concept of gamification has arisen has spent the last twenty years erasing loss, humiliation and frustration from its flows. A world of badges and points only offers upwards escalation, and without the pain of loss and failure, these mean far less. And when this upward escalation is based only on accumulation of points, rather than on expressions of my choices and my skills, then this further strips out the sense of agency and competence, so crucial to the emotional and neurological buzz we get from gaming.”

1-Up or 2-Up

Robertson is rightly critical of such a restrictive view of gaming because it can obscure the deeper potential that games may offer not only social media but also customer loyalty and brand engagement. Games like Heineken Star Player show the way that social games can provide an a interactive side-channel, an approach that I can see becoming increasingly commonplace for brands and for business. There is also massive potential for games to become much more integral to the incentives and motivation market, to move beyond the simple game-like elements of rewards, points and achievements to a more dynamic in-game experience full of choices and consequences. These can be used support not just competitive play based on sales performance or other indicators, but also co-operative play such as team-building, training and knowledge sharing.

Facebook has recently launched a service called Deals, which allows users to get special offers at retail destinations when they ‘check-in’ to that location with their Facebook account.

“When you’re looking at the Nearby Places list on your mobile phone, certain places will display a yellow ticket next to their name. Clicking through will show you the details of the offer, and then checking in will display a voucher that you can show to the person on the till to validate it. Types of deal include charity giveaways, freebie giveaways, loyalty card-like counters and deals that require you to check in multiple people at the same time.”

Deals is like a combination of FourSquare, with its social currency of ‘check-ins’ and discount voucher sites like Groupon, and represent the new face of customer loyalty. Beyond simple loyalty cards and rubber stamps, the emphasis is on broadcasting your customer loyalty to your ‘friends’, and is most apt for restaurants and coffee shops.

But perhaps more than genuine customer loyalty, Deals could simply encourage a kind of consumer nomadism, a rootless shifting customer base that constantly moves to where the best offer is. It smacks of presenteeism rather than engagement, a flash mob of punters showing up expecting a discount rather than genuine loyalty between a retailer and its customers.

As some retailers who have used Groupon have discovered, suddenly having a herd of new, temporary customers is a Faustian bargain that doesn’t necessarily translate into long-term, full-paying customers, and whose main winner is Groupon itself. And there’s always the chance that genuinely loyal customers may get shoved to the side by the stampede of coupon waving bargain hunters.

Discounting is always a risky proposition – especially with emerging ecosystems such as Groupon, where a misjudgement can lead to big losses for a business – and can rapidly become a race to the bottom. At IncentiveDirect, we believe incentives that reward sales generation are a low risk way of driving sales and growing business in a manageable, sustainable way.