Year: 2013

Setting The Value Proposition of Your Incentive Program – How Much is Enough?

how much is enoughI recently had a somewhat mundane, yet ironically valuable, experience that highlighted for me the importance of establishing an appropriate value proposition in your customer incentive or channel sales incentive program.  Here’s the story.

I purchased a number of items at a national-chain drugstore that has a loyalty program. After supplying my program ID and checking out, I received a coupon for future use at one of this chain’s stores. I glanced briefly at the coupon and saw that it was of modest value – but still somewhat valuable. So, I filed it away for future use.

Fairly shortly thereafter, I recognized that I needed some additional items, all of which I knew I could obtain at this chain’s stores. I retrieved the coupon and planned a visit to the drugstore. But then other factors intervened.

Specifically, I happened to be passing a discount chain store that also carries the items that I needed. I also knew that, on balance, those items would be a bit cheaper at the chain store. So, I turned into the parking lot, jumped into the store and made my purchase. The drugstore chain had lost my business – at least this time.  And the principal reason why is that the coupon was not of sufficient value to cause me to select its issuer (i.e., the drugstore) over another seller of the same undifferentiated products. The value proposition was simply not strong enough to overcome other factors like convenience and a slightly better price.

Establishing the value proposition is a key consideration in the early stages of incentive program design, as we and our clients seek to allocate the program’s budget. Many times there is a desire to make the program investment more “affordable” by reducing the award value assigned to individual program KPIs. And clearly, there is a balance to be struck between affordability and motivation.

But as you consider your program award rules, please keep in mind two of the best practices that we highlight on our web site:

And then contact us to help you strike the critical balance that will drive your program’s success.

Safety Incentive Programs: Follow the Leader!

Michelle Chappell’s most recent post, Leading from the Front: Developing a Safety Culture, emphasizes the importance of the company leader also complying with the company safety incentive program.  Employees tend to “follow the leader”, so if they see their leader’s actions correlating with the company culture, they will surely follow. To lead means “to guide… Read more »

Building True Loyalty: Closing the Expectations Gap

An article by Jim Tierney about a Colloquy study entitled “Global Strategy, Local Tactics” is very enlightening.  The study looks at loyalty programs in five different global regions and as Jim points out, exposes an expectations gap that leaves a large part of the market disengaged.  As a result, the majority of programs are not building… Read more »

Leading from the Front: Developing a Safety Culture

While researching ways leaders could communicate key safety incentive program messages to their participants, I came across a wonderful and informative post by Robert I. Sutton on the Harvard Business Review Blog Network.  In his post Robert shares a recent discussion he had with Paul Anderson.  Their discussion was centered on the impact Paul had… Read more »

Measuring Success: Sales Incentive Programs and ROI

Sales incentive programs can be an effective way of generating revenue when implemented correctly.  This can be done for channel sales incentive programs as well as direct sales.  However, it is important to have measurable goals in place prior to the program being launched in order to measure and adjust the program if necessary. This… Read more »