How to Effectively Use Incentives And Promotions

by Alan Pollard

If the commission plan is the meat and potatoes of a company, the incentives and promotions are the dessert. Can a company live without these "desserts," and should it? That is the $64,000 question that every company executive and sales leader has to ask themselves.

Napoleon said, "Give me enough ribbon and I will conquer all of Europe." Another way of putting this is, "Recognition: babies cry for it and grown men die for it." This is the basic case for recognition and incentives. Every company must decide what activities are so important that they are willing to either pay commissions or create an incentive or recognition program for. However, if a company is creating incentives or providing recognition for things that do not help build its business, then it is just doing busy work.

How do you avoid getting caught in the trap?

Start by remembering the activities that created your long-term success. For example, how did you recruit and retain distributors? How did you find customers, get customers to try new products, and get the field behind a product launch? Does your product lend itself to a holiday special? Will customers refer other customers if given proper incentives? These questions and more need to be answered and stored in a company's "memory."

Next, take these activities one at a time and build an incentive or recognition program around getting the distributor force to re-focus on the important activity. We all need periodic re-focusing because like the seasons of the year some activities go dormant occasionally. For example, this Monday is Labor Day in the United States, the traditional end of summer. Vacations are over and everyone is ready to go back to work. Did you know that for many companies July and August are two of the slowest recruiting months of the year? For many companies, September is a good time to run a business building incentive, to shake out the cobwebs so to speak. January is also a good time for a business building incentive because everyone is getting back to work from the holidays.

Rotate your incentives.

You can't tell distributors to focus their efforts on five things at once. A much better way is to have an incentive to focus energy on one important activity for a month or two, then another incentive to focus attention on a second important activity for a month or two, and so forth. After you have worked your way through all the activities, the company starts over. What about activities that are so important for a company that it wants to always have incentives? That is what the commission plan is for: a permanent incentive plan. When properly done, incentives and the commission plan are two sides of the same coin.

So, is the answer to find a few good incentives and stick with them?

Yes and No. Now we are back to my dessert analogy. Dessert can be the spice of life, unless it is always green Jell-O with whipped cream; this is the challenge. Yes there has to be some consistency, and yes your business is built on some pretty basic principles and activities, but that doesn't mean your incentives and recognition have to be basic and boring. This is one area where companies can constantly improve. When I talk to distributors a common frustration is that, as companies the incentives get predictable. What is even worse is that the winners get predictable, at which point it is no longer an incentive.

I have also seen the fun and innovative side of incentives. Companies with talented and creative people who have the vision of creating incentives and recognition for those activities that are building the business and keep finding new ways, new methods and new rewards to keep them fresh.

I attend many company conventions and I never cease to be amazed at what good companies and top sales leaders can come up with. Most companies start their recognition program by printing a list of distributors who advanced in rank in the monthly magazine or newsletter; they also print some "Top 10" lists. That is certainly a great start, but as companies grow and rank advancement lists get bigger, individual names get lost, and a new distributor has no chance of getting on a traditional Top 10 list. The company then must think of how they are going to recognize a "hot" new distributor that is building a strong business, because if you can't, there is a new startup company down the street that is not too big to provide that distributor the recognition they need.

Great sales leaders also get into the act here. They are the great motivators; the distributors get much of their motivation from the sales leaders. As a result sales leaders should do certain kinds of recognition. At many company conventions you see top sales leaders provide identifying ribbons to their downline tying the group together. Leadership weekends and recognition certificates are other examples of programs effectively created by Sales leaders. Most of these incentive and recognition programs are simpler than ones run by the company because of record keeping issues.

Remember the five keys to making sure your incentives are good business:

1. Revelance: make them appropriate for your business.
2. Rotate them between the different important activities for maximum effect.
3. Innovate: create new and different incentives, even though you are promoting the same activities.
4. Recognize your up-and-coming sales people and sales leaders, or some other company will.
5. Incentives and recognition are everybody's business, from the company, to the sales leaders, to the sales people. Companies need to work with their top leaders in creating recognition and incentives, and provide the information to help them do it.

It is amazing how much a well designed and well executed incentives and recognition program can help a company, and how little it costs in comparison to anything else that gives that kind of benefit. To watch a company that is running an effective incentives program is something to behold.