Cloud 9 Living - White Paper - Sales Incentives

1Copyright © 2010 by Cloud 9 Living, LLC

Why Experience Rewards Outper formTraditional Sales Incentives Every Time

Copyright © 2010 by Cloud 9 Living, LLC

All rights reserved. The information in this document is confidential and

proprietary. No portion of this document may be reproduced, stored in a

retrieval system or transmitted in any form or by any means – electronic,

photocopy, recording, scanning or other without the written permission

of the publisher.

Published by Cloud 9 Living, LLC

4999 Pearl East Circle

Suite 102

Boulder, CO. 80301

[email protected]

www.cloud9living.com


TABLE OF CONTENTS

Introduction 1

Provide the Ultimate in Trophy Value 2

Unleash the Powerful “Water Cooler Effect” 3

Exploit the Wants vs. Needs Phenomenon 4

Develop Strong Emotional Bonds 5

Motivate an Entire Sales Force, Not Just a Select Group 6

Avoide the Cash Trap 7

Breathe New Life Into Corporate Culture 9

Conclusion 10


Introduction

It’s an inescapable fact: a company is only as good as the people that

comprise it. And in order to maximize the abilities and contributions

of the workforce, a peak level of engagement is required that will

stimulate loyalty and a passionate desire to succeed both individually,

and as a vital element in the organizational whole.

Increasingly, sales managers are discovering that some of the more

traditional means of motivation – cash, merchandise, travel, etc. – no

longer provide what is necessary to both retain top performers, and

drive exceptional performance throughout the sales force. As the

desires and goals of employees become more dynamic, so must the

incentive platforms designed to engage them. As a result, many of

today’s leading sales organizations are turning to Experience Rewards

to stay ahead of the curve.

Experience Rewards offer unique and memorable life experiences as incentives to drive performance.

From hot stone massages and private winery tours to surfing lessons and Nextel Cup stockcar racing

schools, Experience Rewards offer something for everyone and have an infectious quality that

permeates throughout the sales force creating an environment of loyalty, high performance, and a

passionate investment in corporate growth.


Provide the Ultimate in Trophy Value

In order to fully maximize the effectiveness of a sales contest, the incentives

offered must generate excitement among your sales force not only on the

front end but also after the rewards have been distributed.

During this post-contest phase, the goal is to maintain the excitement generated by the program and carry that momentum into subsequent sales contest cycles. Experiences afford the best opportunity to achieve this.

Imagine walking into your sales rep’s office and seeing pictures of them golfing at Pinehurst #2, site of

several US Open tournaments, or pushing a fully loaded Land Rover to its limits on an off road course

or enjoying a romantic horseback ride on the beach with their significant other. Better yet, imagine

another sales rep seeing the picture and thinking “I want to do that”. Let’s face it, jealously can be a great

motivational tool.

These “trophies” serve as constant reminders of what is possible within your program.

Unlike cash, traditional gift cards and merchandise; experiences create unparalleled trophy value on display

in the most important place – your office, for all to see.

Cash is spent, merchandise ends up in the closet, but memories last forever.


Unleash the Powerful “Water Cooler Effect”Instead of discussing the latest reality TV development around the water cooler, watch as your sales reps recount the story of the sunset dinner cruise they had with their spouse that weekend or the guided snowmobile tour of 14,000 foot peaks they just returned from.

This storytelling, aka the “Water Cooler Effect”, has the potential to generate unmatched excitement throughout your entire sales force and increase the success of both ongoing and future sales contests.

Experience rewards naturally lend themselves to storytelling.

When was the last time you heard a salesperson bragging to his or her co-workers about how they spent the cash he or she won in last quarter’s sales contest to pay bills? Or have you ever heard a salesperson excitedly telling everyone on their sales team about how he used the gift card he won last quarter to make some unavoidable home improvements? Certainly not.

That’s because traditional rewards, though practical, do not effectively create the kind of buzz that can electrify an entire company and produce the results you need.

Conversely, envision one of your top salespeople coming back from a fighter pilot mission where he engaged in mock air-combat against enemy aircraft while flying an Italian built fighter plane. Or imagine the talk around the office when a member of your sales team who is an avid sailor returns from her chance to take the helm on an America’s Cup boat that was actually raced in this legendary event.

These are the type of “once-in-a-lifetime” moments Experience Rewards generate, creating unmatched storytelling material. And when program winners are talking about their experiences or sharing pictures of the dream activities they have partaken in, the excitement becomes an infectious driver of positive behavior.

Maintaining momentum is crucial to maximizing the effectiveness of an ongoing incentive program.

Having rewards that promote great storytelling by great storytellers (your top salespeople) will increase excitement and engagement for future sales contests, and will help you get more ROI from your incentives and rewards programs.

“Experiences are more pleasurable to talk about and they more successfully

foster successful social relationships.”

“To Have or Not to Have? That is the Question” Professors Thomas Gilovich, Cornell University & Leaf Van Boven, University of Colorado. Journal of Personality and Social Psychology, 12/2003


Exploit the Wants vs. Needs Phenomenon

Simply put, a Need is something that you must have – food, shelter etc.. A Want is something you would like to have – a new car, more time with your family etc.. Incentive programs that offer luxury rewards or non-essential items (Wants) are the most effective means to trigger heightened performance. Whereas incentives that are readily applied to obligations and necessities (Needs) draw all of the life out of an incentive program and create an association with personal burdens.

Despite that fact that employees may indicate they would prefer cash or merchandise, your organization will actually achieve better results through Experience Rewards.

“People are willing to work harder for luxuries or non-essential items. When they start thinking about dollars they become more rational, more economical and less willing to work for it.”

“Luxuries are more effective than cash and cash equivalents in triggering workplace performance that exceeds expectations.”

“The harder someone must work to achieve a goal, the more they want to receive a

non-essential item as a reward.”

“Earning the Right to Indulge” Professor Ran Kivetz Columbia Graduate School of Business. Journal of Marketing Research, May 2002

When an individual is offered an opportunity to achieve something that was not previously considered available, he or she will become engrossed in the quest to make that impossibility a reality.

Experience Rewards, such as having a gourmet chef prepare a meal for your family in the privacy of your own home, commonly represent activities that sales people may have dreamed of, but never really believed were attainable. Opening doors to these types of once-in-a-lifetime experiences will cater to personal passions and thereby stimulate engagement triggering heightened performance.

“For true motivation, you need to give people something they want or desire,

not something they need.”

“Avoiding the Cash Trap: Why Cash Kills Motivation” William Flanagan Incentive Magazine, Nov. 3, 2006


Develop Strong Emotional Bonds

Can your company weather a turnover storm? Consider this: according to Chris

Young, founder of The Rainmaker Group, a leading human talent selection and

development firm, the costs of employee turnover can be staggering, ranging

from ½ to 5 times an employee’s annual wages dependent upon his or her

position. While turnover is a natural – and not always unhealthy – cost of doing

business, it is a metric that clearly requires careful attention.

Regardless of business size, a high turnover rate can be devastating to the

bottom line and as such efforts must be made to retain great employees. But

the strategies cannot be passive. They must be carefully considered and

applied in such a way as to deliver maximum impact. Bringing the dynamic

concept of experience rewards to your sales force is the answer.

When you look back 5 years, can you remember what gift you were given for

your birthday? Chances are you can’t. But what everyone does hold on to are the memories made through

cherished life experiences. Like the night a couple got the chance to create and taste their own blend of

wine, or the first time they took a sunset helicopter tour of their city’s skyline, or the day they had the chance

to get behind the wheel of a Formula 2000 racecar and put the pedal to the metal.

These are the types of gifts that generate memories, and create an emotional, enduring connection.

If your salespeople link your company to great memories, both professional and personal, they will be more

dedicated and loyal members of your team.

“Employees who are engaged are less likely to leave.”

“Employee Engagement Now!” Martha C. White Motivation Strategies


Motivate an Entire Sales Force, Not Just a Select Group

A well designed incentive program must engage not just the historic top

performers, but the entire range of participants.

Most importantly, incentive programs must engage the second tier performers,

or “middle 60%”, who have yet to align their own performance with an invested

desire to see the company thrive.

“Paying more attention to the legions of average

performers can have a favorable long-term impact on

profits, market share, and customer retention.”

“The Service Profit Chain: How Leading Companies Link Profit and Growth to

Loyalty, Satisfaction and Value”

James L. Heskett, W. Earl Sasser,

Leonard A. Schlesinger

Individuals have different desires and passions that excite and drive them to perform. It is crucial to offer

incentives that will engage the maximum percentage of program participants. This can be challenging, as

sales people are individuals, and they are not all uniformly motivated by monetary bonuses, ipods, flat-screen

televisions, etc…

Using Experience Rewards can help you embrace this individualism and disparity in personal tastes rather than

leaving a percentage of participants feeling disenfranchised.

With a vast and diverse portfolio of experiences available with which to reward employees, there will be

something for everyone.


Avoid The Cash TrapCash

Everyone wants it, and there is always a practical need for it. As a result, businesses frequently offer cash incentives as the primary driver within sales contests.

The problem: cash does not effectively generate the excitement or motivation that sales contests are designed to achieve.

A 2005 study by the Incentive Federation showed that cash rewards are too practical and unemotional, and are remembered for the shortest periods of time. When cash is used as an incentive for sales con-tests, it invariably becomes perceived as an entitled aspect of overall compensation.

The same Incentive Federation study examined how cash incentives are spent and showed that 29% of recipients use the cash to pay bills, 18% do not remember how they spend it, 11% use the cash to buy household items, and 11% put the cash into savings. While these are all practical allocations of cash, they neither generate the level of excitement that experiences do, nor will such practical uses trigger improved sales performance

How Cash Incentives are Spent The Incentive Federation Study, 2005


Avoid The Cash Trap (cont.)

Merchandise

“People receive more enduring pleassure and satisfaction from

investing in life experiences than material posssesions.”

“To Have or Not to Have? That is the Question” Professors Thomas Gilovich, Cornell University & Leaf Van Boven, University of Colorado. Journal of Personality & Social Psychology, 12/03

Offering your sales people merchandise as an incentive often creates an environment of redundancy. How many digital cameras, ipods or watches does one person need? While merchandise incentives are a common choice, they do not effectively create a sense of excitement amongst a sales team that will result in increased sales.

The bottom line is that a vast percentage of your sales people may already have whatever merchandise you are offering and the reward will end up being another dust collector on the shelf.

Conversely, experiences live on for years as valued memories, and create an environment of “what’s next?” among program participants. Again, the point of an incentive program is to generate excite-ment; and TVs, Ipods, or company shirts just don’t do it anymore.

Travel

Many sales managers would rather not acknowledge the possibility that their sales people may not really want to go on the trip to Cancun they are offering for annual top performers.

But the reality is that travel rewards can be perceived as more of a burden than a blessing for recipients. Whether they are tired of going to the same destination over and over, tired of leaving their spouses and children behind, tired of mixing their “vacations” with work, or just tired of being on the road all the time; travel as a reward can become a drain on employee enthusiasm – which is contrary to the goal of incentive programs.

Experience rewards allow the recipient to choose what, where, when, and with whom.


Breathe New Life Into Corporate Culture and Increase Employee Engagement

“There is a direct link between employee

satisfaction and customer satisfaction, and

between customer satisfaction and improved

financial performance.”

“Linking Organizational Characteristics to Employee Behavior and At-titudes “ Forum for People Performance Management & Measurement Prof. Frank Mulhern and Patricia Whalen Northwestern University, 2003

Does your business effectively maximize this connection? How can you drive the right behavior to do so? A highly effective and qualitative way

is by creating an undeniably compelling, fresh, and inspiring Corporate Culture. Experiences can help you do it.

Employees want to be identified with something exciting and extraordinary.

Through Experience Rewards, engaging companies can transcend the catchphrase notion of “life/work balance” and actively incorporate that concept into the fundamental elements of organizational opera-tions, driving personal passions within the framework of corporate objectives and achieving long-term Loyalty.

Employees draw inspiration from a company that nurtures individual passions, fueling a continued con-tribution to company growth and development. Rewarding and incentivizing employees with memo-rable experiences like private Wine & Chocolate tastings or scenic snowmobiling tours creates a sense of involvement and corporate community.

The end result? A new face is stamped on the Corporate Culture. It is high impact, energetic, engaged, and highly effective.


Conclusion

A successful business relies upon a convergence of dedication on the part of its people and a spirit of engagement to nurture that dedication. The strongest tool at a company’s disposal for fostering an en-vironment of engagement is the performance incentive. And the most effective incentive programs take into account the dynamic personal passions of a diverse workforce and feed those passions in such a way that an alignment exists and evolves between individual and organizational goals.

Experience Rewards deliver on the goal of every incentive program by delivering unparalleled results.

As sales leaders adapt to the challenges presented in today’s business environment, they have begun to redefine their sales programs to attain the most effective results through the implementation of the extraordinary: Experience Rewards.

To learn more about bringing your sales incentive programs into the high-impact world of experiences, visit Cloud 9 Living’s corporate solutions website at www.corporate.cloud9living.com or call us at 1.866.525.6839.

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Cloud 9 Living - White Paper - Sales Incentives