Transparencies in the Incentive Business? Rarely!

Please read this blog post from Paul Hebert at I2I, the incentive consultancy that always tells it like it is, and we always seem to agree with (well on most things anyway).

In this post, Paul shares his top ten times when you should fire your incentive or rewards companies. And, from our perspective he’s right on, especially if you are looking for the company that will provide you with a program that has the best chance of producing results. Most reward companies today spend the vast majority of their time selling you on the merits of incentives and rewards and how their particular award specialty is the one that will do the best job, yada, yada, yada. They rarely spend any time with in depth research and discussion of what you want to accomplish and the best way to do that. They prefer to spend a lot of time promoting and justifying what award you should use. The best reward to use will be dependent on what it is you want to accomplish. Frankly, we’ve seen just about every reward in this industry used in just about every combination. And, the unpleasant fact is that many programs don’t produce results at all, and even when they do, most companies don’t do a very good job of measuring what happened, when, why and how.

And, for those of you out there who purchase reward programs, the onus is also on you if your programs don’t succeed. How often do you enter a reward or incentive challenge with a predetermined idea of what award you want to use? And then you select the type of award companies you want that can provide that award. Doing this will rarely get you the transparency and experienced recommendations you need to make the right decision. Often it’s just the opposite. You’ll get a structure that plays into the hands of the award companies trying to sell you their core products. We know, we were trained to do just that! When you find yourself in that situation you might want to read this post Do Incentive or Recognition Reward Programs Really Work? This post is the genesis of Your Baby’s Ugly! Keep this in mind the next time you plan your award program. You might find yourself using an award you never thought of that will give you much better results...yes even cash if that’s what it takes.

Travel Awards, Let the Buyer Beware

This post by Paul Hebert of Incentive Intelligence is right on the money. If you want to know about buying any type of group business meeting or incentive travel, this is a perfect place to start. If you’ve been buying group business meeting or incentive travel, this is a great refresher.
You don’t see much written in this blog about group travel, but in all the years we were active in the incentive industry about half of the awards we sold did in fact have to do with moving a lot of people all over the world to a lot of great (and on a rare occasion not so great) destinations. Travel was and still is in my opinion the most motivational of all awards. Unfortunately it typically only applies to certain objectives in the business world, usually sales and marketing, and then only to a small percentage of your participant base that you are trying to motivate.

Paul concludes with a section on value and trust. As so often happens in this relationship selling business, the value received for what you pay is often based on the relationship you have with the person providing the value. Frankly, anyone can sell you a hotel, some plane tickets, and buses to move your people back and forth. But not everyone can design a program that produces results, and that I believe is why you are investing so heavily in travel in the first place?

While travel is the most complex of all awards to purchase in this business, it is also one of the least profitable awards to the companies that sell it. It is quite often three or even four times less profitable than traditional catalog merchandise awards. The pricing and value of other incentive and recognition awards can be just as elusive as travel and is often hidden in decades old pricing schemes designed to keep the real value of the award hidden. It will behoove you to dig deep into all pricing to ensure that your participants get the true value of your award budget.

Be Well, Be Happy, Hug Someone

We Know What’s Right, but Don’t Often Do It

Check out this great and recent post at Incentive Intelligence. To say that this article tells it like it is is an understatement. Frankly, it is rare for anyone in the incentive industry to really say these things. You won’t hear these words from the salespeople selling you the trips, (well some good ones maybe) but that would be tantamount to forcing the client to face the truth and question whether they should even buy travel (or any award program for that matter),

Our post from last year on a similar subject may be in order here. It comments on findings from the Incentive Research Foundation Study about how customers seem to view award companies.

If all you are going to do is use your travel award supplier to manage the trip, there are many fine ones who can do just that. But if you don’t need or want to use the supplier for their incentive design and management expertise (you know, to see to it that the program works well, is communicated properly, measured and administered accordingly and sees to it that the money you spend actually provides you with a solid return) then you might as well get the cheapest price you can and hire a consultancy like Incentive Intelligence.

Be Well, Be Happy, Hug Someone

Should you be Able to Add Cash to an Incentive Award?

Saw another post recently (by our man who loves to hate gift cards) that 60% of people who spend a gift card end up spending in excess of the gift card value. He goes on to say that these folks don’t get something from the gift that you gave them; they get a discount on something from the card you gave them. “There is a difference.” Huh? He seems to infer that this is a bad thing?? Not from our perspective...looks like a great thing to us.

Let’s say that an employee in a rewards program earned a $100 gift card to her favorite shoe store, and store then had a fabulous sale where everything was marked down by 50%. This happens all the time, right? Especially in these economic times! So, she heads off to the store, finds three pairs of shoes that used to cost $100 each, with 50% discount they are now only $50 each. She loves all three pairs so she adds $50 of her own money and happily (probably more like ecstatic) walks out of the store with three terrific pairs of new shoes. Is this a bad thing? Not if you ask my wife or any of my three daughters it isn’t!

To understand this myopic opinion of adding cash (or a credit card) to an award earned is something the traditional merchandise companies fought against for years. There were two reasons for this, one ostensibly because if you allow a participant to add cash to an award they wouldn’t produce the effort necessary to win the award outright. They could under perform and still just add cash to make up the difference. While there may be some minor validity to this line of thought, the industry never produced any empirical evidence to support it. Just the opposite, when you allow some cash to be added to the award it can add to the stretch motivation needed to get to a higher award. I’ll be happy to show you how that can work, just let me know in the comments below.

The second reason is one that no one ever mentioned to a client. The reality was that the incentive companies didn’t want to allow cash added to an award because the value of the award was typically clouded in the smoke and mirrors pricing of award points. You see incentive companies didn’t want to provide the formula necessary to add cash because they would have to divulge the value of the award....and letting someone know they (or their company) were paying exorbitant amounts for awards could cause some real angst to say the least. Incentive companies really didn’t want advertise to the clients that the blender priced in points was double the cost of the same blender you could find down at their favorite store! I know this to be true because it seems I was spending half of my 25 years in the traditional merchandise award industry trying to defend these prices.

So, should you be able to add cash to an incentive award....why not?

For the latest in a gift card award system that provides ease, flexibility, terrific choice and value to your award needs, log on to the Award of Choice.

Brilliantly Presented Employee Recognition Research

Ok, I’m a nut on research and analysis. It’s what floats my boat and as often as not becomes the backbone of most of the recommendations I make to clients about reward and recognition programs. As my first thirty years in this business were mainly in the true performance improvement world where we used research, analysis, measurement, feedback communications and rewards to change performance I saw first-hand how these pieces to the incentive puzzle, implemented in unison, could drive spectacular results. However in the last ten years or so I have been more in the employee recognition side of the business where there has always been a dearth of any real analysis that you could show a client to prove the effectiveness of employee recognition. Analytical research to show that recognition award programs produce results is kind of a non sequitor.

Analysis in the recognition field has always been kind of soft dollar proof. Something like this: when employees are recognized they are more satisfied and more satisfied employees produce more satisfied customers who tend to be longer term and repeating customers who then buy more and contribute more to the bottom line, etc. The most compelling collection of evidence on the value of employee recognition is compiled in the book The Carrot Principle by Gostic and Elton. Loved the book, it’s definitely worth the read. Unfortunately the authors are employed by my largest competitor, one that I am in complete disagreement regarding award recommendations…they typically recommend a collection of traditional service merchandise awards that are highly overpriced with limited choice. The kind of awards that were used to reward and recognize our parents and grandparents…a tad out of touch with today’s business world. As shown in this blog in many places, these types of awards can be as much as 50% to 150% higher than retail and that certainly doesn’t help the cause of recognizing or motivating an employee. In my opinion, there are so many more award options that provide better choice and value to the employee. Except for the awards piece, they do a terrific job or training, communicating and implementing an employee recognition system…non better.

The book does a terrific job of convincing us that recognition when taken collectively with many other business strategies can drive substantial bottom line results. But it’s kind of a chicken and egg thing. What came first, the great company or the employee recognition? My guess is that one had a lot to do with the other. In any event, this book does provide some compelling evidence.

So take a look into employee recognition as a strategy to improve your company’s performance. If you’re not running a program for your employees you’re losing a valuable tool to produce results. The best time to do it is now, when the economy is in this terrible state and where employees are concerned for their future. Take the time to thank and recognize them for their performance, you might be surprised to see how much your business can improve.

And while you’re at it, take a look at our new product the Award of Choice…a high value low cost award system that provides tremendous choice and value to your employee. Compare it to other systems, we think you like what you see.

Be Well, Be Happy, Hug Someone

Amazon. Gone: The Incentive Industry Regroups Following The Retail Giant’s Abrupt Withdrawal From The Incentive Merchandise Fulfillment Market

This is the title of the cover story of the recently released May issue of Incentive Magazine. When I first saw it, it made me laugh, then after reading the article and some further reflection, I laughed again, but this time with a little derision.

The author does a fine job of pointing out the fact that Amazon, in a very abrupt fashion, decided to stop fulfilling merchandise awards to the incentive industry and what that means for the happy traditional merchandise fulfillers who remain to pick up the pieces. Amazon has not revealed the reasons for leaving the business “we do comment on internal business decisions.” In only a couple short years, they were able to gain several millions of dollars of incremental business (some have it as high as more than $50 million, I guess it wasn’t enough to motivate them to keep and attempt to grow that share of the incentive industry.

The questioned not raised in the article and one that needs to be addressed is why did so many companies in such a short time switch to fulfilling there awards program through Amazon.com in the first place? As I was involved in several sales of the Amazon.com product I can tell you first hand those clients were frankly sick and tired of the pathetic choice offered in traditional award catalogs and the ridiculous prices the traditional merchandise award companies were charging for the awards...often 100% more than retail! Amazon solved both those problems, millions of items to choose from at the best prices anywhere!

So what happens now? Well with glee in their eyes, the traditional merchandise boys will gladly fulfill your points based programs; shake your right hand for the business while they’re picking your pocket with their left. There’ll be a lot of hoo hoo about how they are going to add terrific new things to the tired traditional merchandise catalog, more this, more that etc. But in the end it will still be that same old pig that we’ve seen in the industry since the beginning of time.

Unless of course, you realize that the Amazon.com gift card, as shown on this merchant list at Award of Choice is still very much alive and well. You can still have the fabulous choice and terrific pricing, actually lower than before because the incentive houses won’t be adding their markup to Amazon’s cost.