“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 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.

In business, decisions are often made by the person who takes home the biggest paycheck. This is known as the HiPPO problem (Highest Paid Person’s Opinion). As this article states:

“HIPPO is the high level manager who comes to your project at the last moment and offers an opinion on what to include to make the project a success. And you must consider it, even if the idea is out of scope, past deadline or [...] crazy”

People who throw their weight around without regard for the considered opinions of those below them on the org chart, create toxic workplaces. Eventually, people will start deferring more and more decisions to the HiPPO, rather than seeking creative solutions for themselves that may get overruled on a whim. And of course, it continues to feed to ego of HiPPOs to think they are geniuses (otherwise why else would they be paid so much?) who can turn their instinctive insight onto whatever they rest their eyeballs on.

All of this leads to a culture of complacency for most and the feeding of rampant egos for few. This state of affairs may be hidden or ignored when times are good – as Pixar founder Ed Catmull says, “success hides problems” – but does not bode well for long term success. Motivation systems that continually reward the same behaviours, or only reward the superstars, fuel complacency and egotism, reinforcing the toxic workpace.

At the Harvard Business Review, Peter Sims thinks that Google, who he thinks are at a ‘pivotal moment in its history’ could learn from Pixar, where processes are in place to ensure that success doesn’t breed complacency.

“what Pixar has that Google does not is a culture where the fear of complacency is a strong motivator, where new problems are identified, discussed, and addressed openly and honestly, all of which requires humility”

Humility of top executives, and active steps to prevent complacency, resting on laurels, are key tenets of the Pixar approach, and ones that all companies should embrace. Motivation programs can be used to help stir up new ways of working, and help ensure that the best ideas win, regardless of where they came from.

Or as that old warhorse Winston Churchill once said: “Success is not final, failure is not fatal: it is the courage to continue that counts”

The recession has changed the marketplace forever. The New Consumer will change the way that business and consumers think and behave. From now on, there is a permanent shift in the consumer mindset, and this will translate into the way that businesses operate in order to survive and prosper.

So what does the New Consumer look like

• The New Consumer is more careful about what they buy.
• The New Consumer want to feel connected to the things they own.
• The New Consumer is looking for long term value rather than short term cost saving.
• The New Consumer will only buy once they are convinced it is the right product for them.
• The New Consumer values their time more than ever.

The continued growth of companies like Apple is an object lesson that people are willing to spend, and often pay more, for items that they believe will last longer, serve them better, and save them time. Consumers are growing tired of cheap, poorly made stuff that doesn’t last, clutters up their houses, and makes them feel guilty when they have to throw it out. The new consumer wants to own fewer but better things that have a deeper resonance with them.

A report by Price Waterhouse Coopers states that this mindset is likely to remain even after the recession has ended.

“Companies need to recognize that there will not be a wholesale return to a pre-recession shopping mode and will need to adapt to the changed behaviors and patterns to win in today’s changed marketplace”

This should represent a seismic shift in how businesses sell to their customers. Customer service is becoming ever more important, in helping consumers find the product which is right for them, rather than trying for the quick sale.

This is not just about the High Street, but online retailing too. A recent report by Fast Company shows that bad customer experience when buying online leads to not only a negative impression which is unlikely to lead to repeat custom, but that ‘cart abandonment’, the termination of the sales transaction, could be costing US businesses up to $44 billion a year.

This also needs to filter through to incentive programs. Incentives should focus not just on rewarding the sales team for making the sale, but rewarding everyone involved in making the customer feel like a king. Smarter sales incentives look at the bigger picture and focus on building longer term relationships with customers. Most customer loyalty programs, rubber stamping a card for a chance of a free coffee or a discount, are lazy choices. They are no match for a structured internal incentive solution that empowers employees to offer killer customer service, by:

• rewarding them to improve their knowledge so they can offer better advice
• rewarding them to improve their skills so that they are better employees
• rewarding them for going the extra mile
• making the right sale to the customer
• recognising the lifetime value of a customer

For an inspirational video on how far customer service can take you, check out this video, Creating Lifetime Customers, from Chris Zane of Zanes Cycles. It’s over an hour long but it’s well worth it, and at the end of it you may feel like you want to open a bicycle shop.

What’s also fascinating about Zane’s presentation is that Zanes isn’t just about B2C retail, as they also fulfil bikes for a number of incentive programs for clients including American Express and Tropicana. The same lessons apply to the incentives market. As a provider of incentive services and product fulfilment, we are representing our clients to their customers, and sitting in the middle. To be successful, we need to provide great service both ways.

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.

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.

On one level, IncentiveDirect are a logistics company. We ship stuff, all across Europe. We have a deep and wide relationship with an array of couriers, box shifters, men with van, and postal services, both for deliveries and collections.

We’ve seen delivery charges rise sharply over the last year. Perhaps due to the recession, perhaps due to rising fuel costs, it seems that these days delivery companies are less happy to lose on the swings and win on the roundabouts. In other words, few couriers will now accept that they will make less money delivering to the out of the way destinations than the closer to home destinations. Instead, not only have they ramped up overseas delivery charges, they have brought in an array of additional surcharges to deliver to anywhere off the beaten track in the UK. It seems that if they have to cross a body of water, then the price increases dramatically. Deliveries to the islands of Scotland for instance, will attract surcharges, as do the Scilly Isles and the Channel Islands, but now so does Northern Ireland. Some couriers even add a surcharge to deliver to the Isle of Wight. We’re even seeing the Scottish Highlands being treated differently from the rest of mainland Britain.

In our iD-points online incentive system, the price that users pay in points needs to cover the cost of shipping, so we need to know the cost to ship an item to the users destination, before they order it. This year we have spent a lot of time tweaking our system so we can manage these additional shipping costs to non-mainland UK destinations.

The only provider which still offers a ‘universal service’ to the whole of the UK is the Royal Mail, which is bound to deliver to the whole of the UK for the same cost. Meanwhile an array of providers have come in to cherry-pick the lucrative mail contracts, which may be able to offer a cheaper service for some deliveries, but whose costs and surcharges rapidly escalate if the delivery is beyond central England. In a deregulated business environment, this is perhaps inevitable, but it is not a level playing field for the Royal Mail.

On the whole, the Royal Mail offers a fantastic service, at a price that no other provider can match. It’s in everyone’s interest that we have an efficient national postal service in the UK, offering a universal service, and that can continue to provide a quality service at a reasonable cost. We hope that its staff and management can resolve their differences, and work together to help Royal Mail to improve its service further.

In an interesting presentation from the July TED conference, career analyst Dan Pink makes a convincing case that incentives are ineffective at enabling innovative thinking. This is something that social scientists know, argues Pink, but that business seems keen to ignore. Incentives are only effective at improving performance along already established paths, not in enabling the forging of new paths.

It’s an interesting presentation because it should force all operators of incentive solutions all to think about whether they are stifling the behaviours we are trying to promote.

There is a flip side to this, and this is the success of prize funds such as the X-Prize, or the Netflix recommendation engine prize.

Called the Netflix prize, a reward of $1 million dollars was offered by the movie rental company, to any team that could improve film recommendations that were 10% better than those produced by its current system. Earlier this year, a team managed to achieve this, after nearly 3 years and a massive collaborative effort. In fact, thousands of people entered the competition, many of whom would have had no chance of winning, but saw the opportunity to learn about machine intelligence with a state of the art set of test data.

So the question is whether the prize hindered the finding of a solution, or enabled it? Certainly Netflix has earned marketing and PR coverage and respect from the development community to more than justify the $1 million prize, but how many teams would have persevered if there had been no prize at the end of it.

Perhaps the answer lies in a blog post by one of the participants of the Netflix contest, Justaguyinagarage. In his post, Reflections on the Netflix competition, he gave kudos to Netflix for running the competition in such a well structured way:

“It was run in an exemplary fashion throughout and should, I believe, become the model for other competitions that people might choose to run. Some of the key features that made it such a success are:

a. A clear, unambiguous target and challenging target. How a 10% target was chosen, will I suspect, remain forever a mystery but it was almost perfect – seemingly unattainable at the beginning and difficult enough so that it took almost 3 years to crack – but not so difficult as to be impossible.

b. Continuous feedback provided so one could identify whether the approaches you were investigating were going in the right direction.

c. A forum so that the competitors could share ideas and help each other (more about that later).

d. Conference sessions so competitors could meet and discuss ideas.

e. Zero entry cost (apart, of course, from the contestant’s time).

f. A clear set of rules.”

As a set of guidelines for anyone looking to run an incentive, these could hardly be bettered. An objective, unambiguous target, a clear set of rules, feedback and discussion forums to promote knowledge sharing – these are surely the ingredients for successful incentives, whether the objectives are simply to sell more stuff, or something that requires creativity or innovative thinking.

For Dan Pink, the answer lies in what he calls “intrinsic motivators”, understanding peoples inner desires, which Pink subdivides into three categories: autonomy -”the urge to direct our own lives”; mastery – “the desire to get better and better at something that matters”; and purpose – “the yearning to do what we do in the service of something larger than ourselves”, which can be achieved giving employees more freedom to choose their own destiny. So is it possible to use incentives to drive people to achieve these goals? The Netflix prize would seem to show that it can.

The low risk of incentives make it easier to fail often, and fail better.

People are conditioned to try and avoid failure, but this often prevents them taking chances. In looking to create a marketing promotion, too many companies avoid creating memorable and effective campaigns because the costs of implementing the campaign are so high that they can’t afford to get it wrong. “Not getting it wrong” is more important than “getting it right”, so the results are often just “kind of okay”. Or worse still, having invested so much money into a marketing campaign, more money is poured in, trying to turn a donkey into a racehorse. Economists call this a sunk cost fallacy.

The low cost of implementing an incentive campaign, using a system like iD-points, allows a company to try different approaches to drive sales. If one approach is not working, it’s easy to change the parameters, to move the goalposts, to create a different set of drivers and incentives, until an effective one is found. It’s possible to take a risk, get the feedback and measure the success, without incurring high sunk costs where the temptation is to keep plowing in more money. If something isn’t working, try another approach. Crucially, if the effectiveness of incentive activity starts to fall away, the parameters can be shifted and the activity refocused.

Incentives are the low risk marketing option.

A prospect recently said that a customer loyalty program was not needed because they got 80% of their revenue from 20% of their customers.

This company wasn’t unique – most small companies’ business also fits the 80/20 rule – also called the Pareto principle or the law of the vital few

Like any other small company, they get the majority of their income from a small number of regular customers to whom they probably have to give exceptional service for fear of losing them. There’s no requirement to run a loyalty incentive for those customers.

But that is exactly the point – how does a company engage with and increase it’s business with the other 80%?

How about an incentive for those customers that may buy occasionally? A customer loyalty incentive is something that could turn an intermittent client into a regular, valued customer.