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.

Kaizen (pronounced “kigh-zen”) is the time-honored practice of continuous, incremental improvement. In the software industry, it’s the practice of actively improving designs, code, processes, and everything else, continuously, now and forever, to create a complete customer experience. The principles of the Kaizen Software Manifesto are:

1. Make continuous improvements in every aspect of the business.
2. Actively pursue a superior, complete customer experience.
3. Continually improve designs, code, and processes.
4. Strive to increase agility (binshou) while reducing costs.
5. Use the Deming Cycle to minimize disruption from change.
6. Prevent errors (poka-yoke), in software and in business.
7. Respect people, leverage expertise, and trust staff.
8. Reward suggestions, improvements, and progress.
9. Always move forward.

At IncentiveDirect, we’re embracing Kaizen principles in the development of our incentive systems.

“Quis custodiet ipsos custodes?” was the question posed by Roman poet Juvenal, which translates to “Who watches the watchmen?”

It was a question first pondered by Plato in The Republic, who in his description of the perfect city, envisaged a guardian class to protect it. The question put to Socrates was “Who will guard the guardians?”

The context in Plato is the morality of those put in positions of power and authority. But to put a motivational spin on it all, in an incentive system, who rewards those who are doing the rewarding? At IncentiveDirect, we are.

Beginning in the new year, we will be rewarding all Supervisors who purchase points in our iD-points rewards and motivation system. All our Supervisors will become End Users in the IncentiveDirect incentive, and get to experience first hand how the system works from the other side of the fence.

As well as rewarding points purchases, we may also reward additional points for Supervisors who are really making use of the features in iD-points such as Knowledge Tests, Surveys and the Supervisor reporting tools.

At the end of the day, companies who are using iD-points to its full potential are likely to be engaging their users fully, buying more points, and reaping the benefits of a motivated sales force. So it makes sense to reward them and motivate them further too.

An incentive that relies on non-redemption is a risky strategy.

The Guardian’s Capital Letters is a great place to discover tales of investment scams, corporate greed, shameful customer service, and unsustainable business practices.

From a recent edition comes another tale of woe:

“I am struggling to get my cash back from a contract with The Mobile Outlet. I signed up last September for a £35-a-month deal which will provide my money back if I claim cashbacks according to their rules. I sent off bills in January by recorded delivery, and a second lot in April. But despite phone calls and letters, I have got nowhere. Can you help?”

As Tony Levene replies:

“As with many of the other companies operating “free calls by voucher redemption” promotions, The Mobile Outlet is bust. The cashback model failed to work – it needed more than 70% of customers to forget to redeem (these would be thrown off the scheme) to be successful, but most set their phones to send reminders to themselves so it slipped few minds.”

Trying to operate a business on the basis of non-redemption is a risky strategy, and one that puts your objectives at odds with that of your customers.

We have seen that non-redemption is the dark secret of the voucher industry, with non-redemption rates as high as 30% putting money straight into the pockets of retailers and voucher companies. For many voucher companies much of their profits stems from non-redemption. However, requiring 70% is an insane business model that proved unsustainable, especially if the process of redemption is straightforward.

At IncentiveDirect, using our SweepBack technology, any unspent points are recirculated back to the clients, who can then redistribute them to others, or use it to fund other incentive activity such as surveys or product knowledge tests.

Witnessing the chaos that has taken place over the opening of Heathrow Terminal 5 over the last few days is a salient warning over the dangers of launching a new system, as we are preparing to do with iD-points.

The madness and confusion that has reigned at T5, due to issues with the baggage system, has been not only a PR disaster for British Airways and British Airports Authority, but also a financial disaster, potentially costing billions of pounds.

There are lessons that we can learn from the T5 meltdown, and we will be applying all of these as we look to roll-out the new version of iD-points.

1. Problems occur in unexpected ways

Launching a new system, like opening a new aiport terminal, is a complicated business. Problems will spring from unlikely sources. In the case of T5, who could have predicted that the lack of security guards admitting baggage handlers to their carpark would be one of the root causes? Small details can have a knock on butterfly effect, which in the case of T5 led to delays and confusion, then to flights departing with no baggage, and finally dozens of flights cancelled altogether.

No matter how elegant the grand plan, the devil is in the details.

2. Dont make a drama into a crisis

Once things started to go wrong, BA and BAA handled the situation terribly, creating more confusion, anger and resentment amongst passengers. Inevitably they have been blaming each other.

Customer service is always the key, no matter how good the product. As we have always said, you only really find out whether customer service is any good when there’s a problem.

Some of BA’s fall from grace may have had something to do with the overconfident tone set by BA’s and BAA’s marketing machine. Back in September 2007, Geoff Want, director of ground operations at British Airways, boasted:

“We’ve six months left before we start using this building and we can’t wait. It’s a once in a lifetime opportunity. In the next few months we are going to test every aspect of it so it will work perfectly from day one.”

Meanwhile the Terminal 5 website at features a rolling slideshow of the calming concourse, ‘effortless transfers’, 10-minute check-in, and a baggage system “ready for what’s ahead”.

This gulf between hype and reality is not only insulting but it is also an abuse of trust. It’s better to prove how good things are than boast how good they’re going to be.

3. Slow rollouts are preferable to big launches

Who knows why such a large number of BA flights were switched across to T5 at once, rather than a slow transition from one terminal to the other. Economic pressures mean that BA are looking to move all their flights across to T5 by April 30th – an aggressive schedule that leaves almost no margin for teething problems, let alone scenes of grand chaos central. But I suspect that there was also a desire to create a fanfare event, a grand spectacle. It was a risky decision which has backfired spectacularly.

4. Stress tests are essential

One has to doubt whether enough testing and training took place in T5. It would have been a good idea to run more ‘stress tests’, ie running the airport as if it were in operation, but with staff and ‘actors’ rather than fare-paying customers to make sure all parts of the process of check-in, departure and arrival were working smoothly.

The emergency services regularly stage mock incidents to test their procedures, skills and grace under pressure – this seems to have been lacking at T5. Likewise in web application development proper testing involves load testing the system with simulated traffic levels, dummy data, and live beta testing before being deployed to the actual user base.

The new version of iD-points is our T5. Let’s make sure it goes a lot smoother!

In the light of recent fiascos at a number of UK companies and government departments, it’s important to realise that with each event consumers and the public’s trust in these bodies diminishes.

Our clients trust us with sensitive information. We take great care of that trust because once it is lost it won’t come back.

Like Northern Rock, we hold peoples money for them. Which is why it is essential that we have reserves to meet any redemption.

Like HM Revenue & Customs, we hold data on all of our end users. We have a number of processes to ensure that this data is held securely. We are registered as a Data Controller with the Information Controllers Office under the Data Protection Act (1984), and review our processes with regard to privacy and security.

Like Southern Water, we make assurances about our level of service. While we are not regulated we do have a duty of care. Once you start being deceitful, you create an edifice built on lies and misinformation. Truth and openness is a much stronger platform on which to grow a business.

Our clients are more than welcome to ask us about our business processes, and what we are doing to protect their money, their data, and their users privacy.