There’s a fair amount of discussion around at the moment about motivation and incentives, largely inspired by the recent book “Drive” by Dan Pink (of which more another time).

Paul Hebert at the i2i blog has got an interesting observation, that what Dan Pink regards as motivation is not the same as what drives behaviour within companies.

So how do we at IncentiveDirect define motivation and incentives? To us, motivation is about personal desires and drives. Incentives are about behaviour and performance.

Incentive programs drive behaviours, provide direction, and they can help feed motivation.
But motivation, like The Force, only comes from within.

A fascinating article in BusinessWeek looks at the unique culture of online shoe retailer Zappos. The company, founded and run by Tony Hsieh, and now part of the Amazon retail empire, believes it has a unique corporate culture that in itself is a marketable commodity. Visitors pay to tour the companies offices and get an insight into the DNA of the company.

As on online business, all you have is your reputation. You have no physical presence. So Zappos goes out of its way to show a human side to the organisation.

Lots of companies like to make out they’re wacky places to work in order to disguise actually how drone like the work is, and where Zappos fits in this picture is uncertain. It’s definitely not something that would come naturally to a British or European company.

If there is anything to learn from Zappos, is that making a unique company culture can be not only good for staff loyalty but also PR and marketing. Motivation systems have a part to play in building a unique company culture, by rewarding the behaviours you want to encourage.

Progressive companies can target certain actions, for instance internal show-and-tell sessions that help staff communicate and build understanding, and reward good presentations. Prizes for internal company team competitions, logged on an online leaderboard, can act to focus everyone’s attention on key issues and create a healthy competitive atmosphere. Many organisations suffer loss of staff morale when employees do not get a sense of the bigger picture and their place in it, and what else is going on around them, Instead, cliques, petty politics and internal dogfighting – negative competitive aspects – undermine the organisation.

A big part of what Zappos do is to try and make work like play. At IncentiveDirect, we believe a more powerful concept is to try and make work like a game.

Discounts reward the people who pay for goods or services, not the people who buy or use them, and if they are not the same person, are an ineffective form of incentive. This is one area where a B2B incentive is very different to a B2C incentive, where the consumer is usually both buyer and user of the service or product being sold.

An incentive scheme aimed at increasing sales should always be aimed at those who make buying decisions.

Extending this further, it is clear that an incentive that is based on rewards rather than on discounts should be targetted at individuals, not organisations. If the people making the buying decisions are not the ones receiving the reward, then it is obvious that the reward has no influence to the person buying that service or product. There is no added incentive for them to buy that brand, or from that supplier, or to buy more, or a better model – the reward has no effect.

Only individuals can be influenced to change their behaviour through the emotional lure of a reward. Considered in the abstract, organisations make decisions based entirely on logic. But individuals within that company will still act emotionally. Buyer Decision Processing is still an emerging field of cognitive science.

There is no point in rewarding a company, you should be rewarding the person within the company who makes the choice to buy from you. Rewarding customer loyalty involves engaging individuals.

Attracting a fair amount of press coverage recently has been the publication of a book Scroogenomics: Why you shouldn’t Buy Presents for the Holidays by Joel Waldfogel. In it, Waldfogel argues against buying gifts at Christmas, suggesting that people consistently value the gifts they receive as less than their actual cost.

“When other people choose for us they do a poor job compared to when we choose for ourselves,” explains Mr Waldfogel, and calculates that “dollars on gifts for you produce 18 per cent less satisfaction, per dollar, than dollars you spend on yourself.” As an economist, Waldfogel views this as value destruction, to the tune of about $12 billion per year in the US alone.

There’s some interesting ideas here, and it’s tempting to think that it leads to the conclusion that cash makes a better gift choice than a present. However, studies have consistently shown that cash gets absorbed into satisfying needs rather than wants, making it harder to justify buying something they really want. ‘Buyers remorse’ is the name for the guilty feeling that people feel for treating themselves.

Waldfogel isn’t a total miserypants – “my beef is not with level of spending at Christmas but rather with the waste that this generates”, and acknowledges that presents, if well chosen, can actually add value,

Interestingly, Waldfogel proposes that giftcards could potentially be a less wasteful way of giving, if the amount that is wasted via non-redemption (euphemistically called ‘breakage’ by the voucher industry), could revert to charitable donations when they expire. But there is a greater chance of Christmas being cancelled before retailers adopt this practice,

We believe that our online points system iD-points provides the best of both worlds. It provides a mean for a recipients to choose their own gift, and get something they really want but without the buyers remorse that comes with cash. Recipients have no alternative but to treat themselves with great products from leading brands.

Mondays are the best day of the week for us. Why? Because that’s when all the new music and DVD’s come out. Fridays are also great because that’s when new games hit the shelves.

I’ve never forgotten that feeling of dashing to the record shop to buy the new album from my favourite band on the day it was released. With the modern advent of digital downloads and online shopping, these rites of passage may be less obvious, but the feeling doesn’t go away. It’s why people wait all night to buy the latest Apple iPhone, or queue to buy Windows 7, on the day it is released, or that line up outside games shops to get the latest must-have title. The power of modern marketing, creating launch-day fever, makes the simple act of purchasing a product part of a greater cultural event or communal experience.

At IncentiveDirect, we don’t just sell stuff. We love stuff. We love learning about new releases, researching new products, and finding out about the great gadgets coming down the line. This time of year is when all the big hitters are released, for the most important retail quarter of the year. We’re busy adding new entertainment titles, and getting excited about each week’s new batch of products.

A core part of our business at IncentiveDirect is supplying aspirational products from leading brands. This is what drives our customers End Users to improve their performance – to up their game, to work harder, to work smarter, to sell more, to do more. Without great products and prizes to aim for, the motivation is lost. Points mean nothing – it is what those points can be exchanged for that determines their value.

Aligning an incentive with phenomena such as new product launches, cultural events and sporting contests, allows a company to tap into the zeitgeist. It can be a great help in providing a theme and rich source of imagery and copy for creating marketing collateral such as flyers, e-mails and other communications. But it can also allow you to feed on the buzz and build upon it, adding competitions, quizzes and associated activities and prizes to carry your users along.

Associating your activity with aspirational brands and new releases is a powerful way to drive powerful user engagement and keep your incentive activity fresh and timely.