Guest Column - November/December 2010

Angels on the Head of a Pin

Determining the Size & Scope of Your Program

By Jon Hanson

Dear Editor:
I'm putting an incentive program together for my 150 sales people. How many products should I put in the program to get the performance results we're looking for?

-- A faithful and curious reader

Incentive programs have created sales, encouraged performance and rewarded participation for more than 80 years. Based on an Incentive Federation study, 49 percent of all large companies and 30 percent of small to mid-sized firms use merchandise-based motivation programs. Incentives work because they are often the most cost-effective way to get measurable results.

So, if you're putting together a company incentive program, how many products should you offer? Some say, "All you need is one, if it inspires everybody." Others say, "Put a ton of products in the mix and watch the performance really grow."

How does an incentive planner choose the size and scope of merchandise for a program? Selecting the correct number of items is a search for balance between the forces of program expectations and the needs of the program participants. Offer too few products, and motivation levels may fall. Add too many, and confusion could reign.

Counting the Angels

For centuries, a debate raged about "How many angels can sit on the head of a pin?" Medieval Europe had churches filled with learned people arguing this weighty concept. Today we view the question as a metaphor for wasting time debating topics of no practical value. So, just how practical is the issue of counting products on the head of an incentive program? If you're responsible for selecting products, you probably think the answer is pretty important. Since the average merchandise incentive program is budgeted at nearly $120,000, managers have a powerful reason to make correct decisions.

Indeed, a 2006 Incentive Federation study found that 77 percent of the companies with incentive programs view their merchandise commitment as an investment and not a cost. And this investment is expected to generate positive returns in the form of measurable performance increases, improved sales, loyalty and a host of other behaviors.

Joyce Engberg, director of Merchandising for Carlson Marketing, one of America's largest incentive companies, said that her buyers use sophisticated analytics to target and engage their clients' program participants and use that information to choose the right items.

"We work hard to understand the audience and their needs," Engberg said. "That's how we select the items we put in a program. The exact nature and quantity of products depends on the program and its overall goals."

It's All About Results

Like any business strategy, motivation works best when matched to goals and objectives. When the reason for creating the program has been defined and the group that will participate has been chosen, the remaining tasks center on product selection.

Far from being magic, there is actually a science that can be applied to the choosing of merchandise. Experience has shown that the most successful programs are the ones that have a clear idea of the target, a practical method for measuring results, and merchandise that will inspire and motivate participants.

Professional program developers have taken this process to an elevated place where art and science combine to create results. "Our specialized merchandisers are dedicated in selecting proper rewards for corporate incentive programs by choosing specific brand names for each client demographic, whether it be gender, age, income, disabilities or mobility," explained LeeAnn Schumacher, director of Strategic Sourcing & Merchandising for Summit Group, a full-service integrated marketing company.

Being able to identify all unique characteristics of the program participants makes the task of merchandise selection more focused. Adding brand names to the mix makes it easier to "distinguish recognition from cash incentives or compensation strategies," Schumacher added.

At a time of Internet commoditization, a merchandise incentive program must spotlight the core reason for its existence: motivation. Incentive professionals recognize that stimulating people to achieve a higher level of performance is not just offering a collection of products. It's offering the right collection of products. To change or modify behavior, a program must offer a stimulating incentive collection—a powerful reason for participants to achieve beyond expectation.

In the incentive business, selecting products that are "needed" has always been an important guideline, according to Engberg. But in today's stressful economic world, there is another thing to consider, the concept of "want." Engberg said program participants are choosing their awards and saying, "I can't afford this item but I want it. I deserve it. I want to pamper myself so I'll use my program points, not cash, to get it."