Incentive Award Programs

1-800-634-0836
1-515-226-9348
FAX: 1-515-226-9112

 info@ctm-incentives.com

Incentive Program Rules of Thumb - General Guidelines

Where to begin? Although there are many important considerations when planning an incentive program, you don’t need to "reinvent the wheel". Following are some general guidelines to step you through the process. For more assistance with your program, please feel free to contact CTM toll-free at 1-800-634-0836 or email info@ctm-incentives.com.

Decide WHO should participate - your target audience should be the participant that, when motivated, can most directly impact the program’s goals. Other factors to determine whom -

• Accessibility - is the information available to contact participants directly?
• Budget
• Company policy - are there company policies in place that limit the participation or types of awards that may be offered?

Remember with incentive programs - motivate to the middle, meaning that your top people are going to be self-motivated anyway and are motivated by recognition and ego, so while it’s important to include and recognize your top performers, it’s really the middle performers that will be motivated to stretch for those opportunities for success.

WHY - establishing the right goals. Goals should be:

• Realistic
• Measurable
• Attainable

Also, keep it simple! We recommend limiting your goals to 2 or 3 primary objectives. This helps keep the communication clear and keeps your audience engaged and not confused. The greatest award earning opportunity should directly tie in with the primary goal of the program. Spend where your goal is by allocating at least 60 -75% of the incentive award budget to participants for achievement of the primary objective.

WHEN - when to roll out the program and determining the length of the program. Keep in mind other factors within the company that may affect the timing of the program such as other marketing, sales promotion and advertising efforts.

WHAT - Your rule structure should target the goals of the program, can be easily and clearly communicated and when combined with the right awards, will be appealing and motivating to your target audience. Programs fall into 2 basic categories:

• Open-ended programs such as point based programs, plateau (step-up) programs, goal-based programs or a combination.
• Closed-end programs are good for a “fixed budget” since no matter how many participants achieve the goal, no more budget amount will be issued. Examples of this type of program are the top X number of salespeople receive the established award or the first X number of salespeople to achieve a specific goal receive the award.

Once you’ve determined whether it will be open or closed ended, there are 7 basic award plan structures:

1. Per unit awards - participants earn points for each unit sold and accumulate points towards a goal, usually a long-term program.
2. Hit & Win awards - simple structure - when they hit the goal, they receive the payout. Good for both long and short term and ensure that the company pays only for results achieved.
3. Plateau Awards - incremental award levels and criteria that participants must achieve to qualify for awards at each level. Good for short term programs, especially those with a one-time payout.
4. Award Pools - Present a group of participants with a fixed award amount that can be divided equally based on performance. Good when looking to foster team effort or individual effort is difficult to measure.
5. Games, sweepstakes, etc. - present participants with the CHANCE to win awards based on entries they earn for achieving defined performance criteria. Sweepstakes can be marketed in an exciting manner and may be a good use of limited budget relative to the size of the target audience.
6. Contests - a closed-ended structure that uses a fixed budget and a fixed number of winners such as Win, Place, Show
7. Competitive Groups - a variation on the contest structure that can be built around team, geographic or sales organizational structure.

Why Non-Cash Awards Work Better than Cash Awards

We frequently receive calls from professionals planning to change their reward programs or launch new programs who are wrestling with whether to offer cash rewards. Sometimes we get calls from people looking for advise on how to convert their cash-based incentive to other rewards. After all, often when you ask people what they want, they say “more money” - but cash is not the best reward to offer to help your company achieve its goals with the best return on investment (ROI). In all cases, we remind them that, of course, cash is part of the compensation plan, but for performance improvement, non-cash rewards such as merchandise and travel work better.

How much better does merchandise work than cash for your incentive rewards?

• Merchandise provides a 3 to 1 return on investment compared to cash rewards.
• On average, cash programs cost 12 cents per incremental dollar vs. 4 cents per dollar for merchandise programs.
• Merchandise programs need to net the participant 3% - 5% of his or her annual compensation to be effective. Cash programs require 5% - 15% to impact performance.

When using cash as an incentive, one of three things happens:

1. The participant is motivated to sell more than normal to earn extra cash.
2. The participant sells the same but makes more money.
3. The participant sells less than normal and uses the incentive to make up the difference.

Two out of three of the above scenarios guarantee failure for your incentive plan with cash rewards! In over ten years of study and data collection, not one study has indicated that cash is better. Cash is “slippery” - here today, gone tomorrow - while merchandise is “sticky” providing lasting trophy value.

Why does merchandise work better?

• Merchandise provides a tangible symbol of achievement and a lasting reminder of the achievement and the positive feelings that go along with it.
• Cash disappears into the bank account or wallet - in fact, 72% of cash award recipients use it to pay bills, can’t remember what they spent it on, or don’t even know they received it!
• Merchandise can be shown to others and it is socially acceptable to “boast” of the achievement. The same certainly cannot be said for cash.
• Merchandise provides a guilt-free form of reward, often something the participant would not otherwise buy, whereas a participant may feel guilty for not spending cash on necessities.
• Merchandise has a higher perceived value. The actual dollar value becomes secondary to the recognition.
• Merchandise connects the participant to the program’s sponsor; cash has a fixed value with no emotional connection.
• The participant’s family is often involved in the reward selection and the reward chosen may benefit the entire family whereas cash disappears into the family budget to pay for necessities.

CTM can assist you with all aspects of your incentive program to ensure its success. For an idea of some of the rewards we offer, click here:. Contact us toll-free at 1-800-634-0836 or email info@ctm-incentives.com

Tips for Sales Incentive Programs in a Slow Economy

Some of you are experiencing external factors such as falling consumer demand that outweigh the motivational forces that normally drive your sales incentive to succeed. Now, as you’re setting your goals for the coming months and year, it’s vitally important that your goals are realistic in light of present and projected circumstances. Unrealistic sales goals in the best of times will ensure failure of the most expertly designed and implemented sales incentive program. In tough economic times it can be disastrous. Here are a few tips:

• Keep your goals realistic; for example, if a typical sales goal calls for a 10% increase in sales, a realistic goal may be 3%.
• Many sales incentives pay out only for incremental sales. Economic factors may dictate that it’s practical to motivate salespeople to sustain their current level of sales. A sales contest that combines a per unit incentive with an overall achievement incentive may yield the results you’re looking for in the coming months.
• Consider short-term contests, such as quarterly or monthly, so that you have the flexibility to adjust your program to changing market conditions. Cumulative point programs allow participants to compete on a short-term basis, yet save award points toward a larger overall goal.

When changing your goals, remember to adjust your award budget accordingly so that your program continues to show a return on the investment. CTM can assist with your rule structure, tracking and reporting your program’s progress and suggesting and fulfilling appropriate awards within your budget, both offline and online. For more information on the services we provide, please click here or call us toll-free at 1-800-634-0836 or email info@ctm-incentives.com

“All Employee” Incentives Rally the Troops - 10 Steps To Building an All-Employee Incentive Program

Non-sales or “all employee” incentive programs present an economically sound solution for companies looking for ways to reduce costs, save money, generate new revenue and retain employees. They also help maintain or improve morale and increase employee awareness of corporate objectives. Who better to know how to make a job better, more efficient, safer, more productive, easier or less costly than the person who lives it day in and day out? Here are 10 steps to get you started motivating everyone in your organization. Look to CTM to provide expertise and high quality rewards.

1. Define Goals
2. Establish/Define Measurement Criteria
3. Define Success/Expected Results
4. Identify the Strategies
5. Build Management Support
6. Develop Specific Performance Criteria and Award Payout Structure
7. Identify Administrative System Tracking, Measurement and Reporting Requirement
8. Develop a Communication Plan
9. Launch, Manage and Monitor the Program
10. Publicly Recognize and Promote Successful Achievement of Corporate Goals

To find out how an all-employee performance improvement program can help your bottom line, call us toll-free at 1-800-634-0836 or email info@ctm-incentives.com

CTM offers both “Ready-To-Go” and customized programs to recognize and reward your employees for:

• Suggestion Program
• Safety Awareness
• Productivity Improvement
• Employee Recognition
• Quality Improvement
• Service Awards
• Lead Referral
• Employee Retention
• Attendance
• Customer Service
• Wellness