Monday, February 23rd, 2009
A recent white paper from Incentive Performance Center, entitled Why Incentive Programs Endure Recessions, offers some interesting views on why motivation schemes are more recession proof than other forms of marketing.
The paper explores five areas why ‘savvy’ companies turn to incentives during a downswing:
- Low fixed costs, variable costs driven
by performance, high potential return
- Ability to effectively target audiences
(no pay and spray)
- Relative ease of measurement
- Potential for both
It’s inevitable that some companies will see an incentive program as a ‘cost’ that should be cut during a recession. Others will perhaps turn to cash, to make up for a lack of pay rises. But as we have hammered home before, cash is a poor incentive (see “Still thinking cash is king?” and Why cash kills motivation). A depressed economy won’t suddenly make cash an effective incentive tool.
Elsewhere, the latest Bellwether report from the IPA, shows marketing budgets slashed by over 40%, with the biggest loser the media (eg PR and advertising).
Sales promotion, which would include incentives and motivation activity, though down, is faring better than most other forms of marketing except online. Thus, the budgetary share for sales promotion has increased. Sales Promotion now accounts for 9.2% of overall spend, compared to Main Media (30.3%), Direct Marketing (24.9%) and ‘all other’ (25.7%).
It’s an ill wind that blows nobody any good, and those companies that can deliver cost-effective incentive solutions can gain market share and increase their customer base even more when everyone else is batttening down the hatches. There’s business to be won in a recession, no doubt.
In any incidence with mass casualties and limited medical resources, doctors and paramedics face the uneviable task of choosing whom to treat first. The triage technique is used to identify those who are most likely to benefit from medical attention, versus those who will probably survive regardless of medical intervention, and those who are unlikely to survive even with medical aid.
When planning an incentive activity, you can divide your workforce or sales network into three groups. There are those who are already motivated regardless of the incentive campaign, and those who will not be motivated by the particular campaign activity. Then there is the third group, those who can be influenced by the reward programme. It is this third group that the incentive campaign should focus on.
Targeting the incentive activity to those who will benefit most from it makes sense from a Return on Investment point of view. The key issue is in understanding the workforce, in order to determine who is in this third group.
One of the ways we find effective at iD-points is to require users to register for an incentive. That way they are engaged with the incentive program – they are motivated to join it.
Using surveys and knowledge test are other great ways of increasing user engagement with a campaign.
But the triage approach also shows that one size does not fit all. Different approaches are needed to drive greater performance from those who are already motivated, and those who are not. This requires finding out what does motivate these groups, and finding appropriate campaign structures and rewards.
Organisations need to run multiple campaigns to tackle different attitudes to motivation and different performance requirements.