Adapting Motivation & Incentive Planning & Programs for Small & Medium-Sized Businesses
Small and medium-size businesses (SMBs) have the same need to motivate and engage employees, channel partners and customers as large companies. "But there are some unique challenges faced by SMBs that have to be overcome to be effective, such as access to expert advice about how to structure incentive, recognition and loyalty programs, the technology platform needed to power them, award selection and fulfillment and more" explained Ira Ozer, an incentive and engagement consultant, adviser to the C-Suite Network, and president of Engagement Partners, of Chappaqua, N.Y.
Most incentive companies and award suppliers tend to focus on working with large companies, Ozer said, because the budgets they have are much larger than SMBs. It usually takes as much time to design and manage small programs as large ones, and often small companies are privately owned with a "do it ourselves" mentality and are much more sensitive to the prices they pay for goods and services.
The good news, Ozer added, is that some companies do work with SMBs and offer excellent solutions. The reason for that is simple: The SMB market represents approximately 80 percent of businesses in the United States, which is a significant opportunity for the incentive industry.
Susan Adams, senior director of engagement, Next Level Performance, New Brunswick, N.J., explained that it can be difficult for a small business to commit the resources to manage a reward and recognition program. "It is important for SMBs to consider, though, that these programs—among many other benefits—can have a profound impact on retention. The cost of turnover, when rolled together across all employees and departments, takes a real toll. By reallocating some of this expense to offset the cost of establishing and operating a meaningful engagement program, an organization can also reap the other benefits of engagement: profitability, customer satisfaction and reduced absenteeism, among many other metrics."
In other words, Adams contends, reward and recognition programs are an investment, and a worthwhile one.
When spread across an organization with tens or hundreds of thousands of participants, the programs' operational costs are reduced on a per-person basis. "Smaller organizations," she said, "must make tougher decisions on what kind or program and what level of support from a third-party provider they really need. They might choose an online platform that includes robust automated communications, or seek out a provider specialized in small to mid-sized firms. It is still entirely possible to run an effective program, with manageable entry and administrative costs."
Overcoming Differences in Scale
In working with a small business versus a larger corporation, said Bill Martocci, president, Carlisle Sales and Marketing, Belmar, N.J., differences can range from the overall formal culture, to the compensation structure, to the amount of red tape and decision-makers you need to engage to get things done.
"Small companies are generally more nimble and able to change and turn on a dime," he said, "while a larger corporation has obstacles, various levels of approval, and hurdles to navigate in order to implement what may be considered a simple plan."
Retention of employees and customers is just as troubling for small business as for the larger. However, that small business tries to formulate a plan, create the concept, organize and implement, all within their more limited resources of employees, money and time, Martocci said. "This leads to last-minute planning, securing of product, and often a tire-screeching execution of what they intended."
Small and medium-size businesses have the same need to motivate and engage employees, channel partners and customers as large companies.
Organization of the employee recognition, customer gift or sales incentive is often a problem, Martocci said. "Small companies often do not have the man hours to assign these tasks within a company and may feel that implementing a program through a traditional incentive house is cost-prohibitive. Small businesses need to know this channel exists and how to utilize all the tools within it."
That's true, said Jeff Dalton, president, Paramax, of Red Bank, N.J., who added that one of the biggest challenges small companies have is keeping up with the changes and advances in program technologies. Because of limited funds, Web technology providers tend to concentrate on bigger companies with larger budgets.
Meanwhile there are several advantages that small businesses have over their larger counterparts, when it comes to reward and recognition programs, Martocci said. "Small businesses," he believes, see more benefit to outward displays of recognition and gifting with "in person" presentation.
"On the employee side," he said, "the message resonates across departments and the company, while on the customer side, it is not so much an enticement for their client to utilize their business, but really another touch point to bring that customer in closer as a valued partner. Recognition of top performers, achievers of sales goals, company milestones, and years of service, as well as customer gifting, are the most common applications for small business."
If you are going to use gift cards as a reward, "There are several businesses who offer a gift card of choice product, which allows your recipient to redeem for a favorite brand," said Anne Jetter, vice president, new business development, Marketing Innovators, Rosemont, Ill.
"Giving a gift of choice from a provider such as Marketing Innovators, or National Gift Card lets the entire office choose where they'd like to enjoy breakfast or lunch from, turning a gift card into an 'office social' so everyone can share the excitement," Jetter said. "If sending a digital product, many sites allow you to drop a logo onto the template along with your customized message. This sends a clear message who it's from by highlighting your brand. If sending a physical card, create a branded holiday greeting card with your company logo, or a picture of your team, and affix the card inside with your signatures and customized message: 'Thanks—From the team.'"
What to Know About Providers
Incentive providers vary from large incentive houses and promotional product distributors to manufacturers representatives, Martocci explained.
The larger incentive houses are great for formal programs, and are able to provide a wide array of gifting options, distribution of the goods and measurement of the success of the program (ROI). Some promotional product distributors may already be in contact with the small businesses and have developed a relationship through some of the other items they may sell them like logo'd apparel.
"And then there are the manufacturers reps, who have direct relationships with the brands these companies are seeking," Martocci said. "There are many misconceptions small businesses hold about working with a rep. They think working through a rep is more expensive when reps typically offer below retail pricing."
Reps can help with larger quantities, securing the stock that small businesses would need to source from multiple retail locations on their own, Martocci said. "Reps, while often being less about measurement and more about price and delivery, can provide options that could be more suitable for the right fit for that small business. Reps bring with them the experience of having successfully arranged, organized and implemented other incentive opportunities, and that experience can help take the burden away from the small business of having to do it all."
Keys to Success at Any Size
When putting together a program, Adams suggested, "make it consistent across the organization. One of the biggest mistakes we see is when programs become too decentralized, with managers running ad hoc programs independently or within branches. In addition to the company messaging becoming too watered down, this creates inequity. It also creates a situation with too little control over the expense and any related tax issues."
When the recognition program is a stack of gift cards in a drawer, they often end up on the expense report and not in the HR budget with appropriate reporting, Adams said.
"The other problem we come across is a lack of communication," she added. "To really thrive, a program has to be top of mind. This means communicating to the entire audience frequently and with engaging materials. But this also means communicating to managers. If they don't know about the program, or don't fully understand that their active participation is fundamental to success, it will lose momentum and authenticity. Without communication and senior leader adoption, it can be really difficult to gain traction and build motivation."
For a company of any size, it's important to define the organization's values and goals and to create a framework and communications that bring people back to those concepts with regularity.
"Teammates thrive when they know what to do, feel appreciated for their efforts, and know that they are part of the social group of the workplace," Adams explained. "Rewards—from elaborate incentive travel programs to points to be used toward gift cards or merchandise—connect effort with personal attainment. This approach allows employees to take up the greater purpose of the organization and increases the chances of success."
Adams suggested that recognition programs be rooted in such values as collaboration, accountability, respect, ethical behavior and service."Our formal recognition program, for example, ties awards and public recognition events to our values, and encourages teammates to live the brand," she said.
Day-to-day recognition allows teammates to shine a light on the great work of their colleagues, as well as find information on recognition and reward programs, company events and other news. Achievements are rewarded with points that can be used for a wide array of options, connecting individual wishes and needs with the goals of the organization.
Knowledge Is Power
Melissa Van Dyke, president of the Incentive Research Foundation, is out to change the perception that small businesses are less adept at the use of non-cash awards.
"That is absolutely contrary to what we found in our research," she said. (See http://theirf.org/research/imra-small-business-merchandise-market-study/1874/), citing a 2016 IRF report.
"Even though they are small businesses, we found that three quarters of them are using merchandise rewards across the spectrum, with employees being at the top of the list," Van Dyke said. After employees, come salespeople, distributors and customers.
The merchandise budgets of small businesses vary considerably, according to the IRF report. Nearly half (47 percent) of businesses that offer qualifying merchandise have budgets of $10,000 or more. The vast majority of these businesses report their budgets have grown or stayed steady in the past year. Nearly half (47 percent) of the SMBs surveyed reported that their merchandise budgets have increased.
Overall, the IRF study found small businesses used merchandise rewards for a variety of objectives, whether that is morale, rewarding top performers, or even meeting sales quotas. "That was our biggest finding," Van Dyke said. "And the businesses that we talked to were growing as well. I don't think it is coincidental that three-quarters of the organizations we spoke to were growing, and nearly three-quarters were using non-cash rewards with employees, salespeople and distributors."
Even though small businesses are using non-cash awards and merchandise specifically to reward and recognize their key populations, Van Dyke said, "a majority of them are still purchasing rewards online, and many of them have not yet seen the advantages of working with a brand, or recognize the services and advantages that a merchandise rep can provide, which is even better for a small business: such as doing the pricing. That is one area where we can really help small businesses understand—that there is a better way to source their merchandise item than they might currently be using."
Other takeaways from the report, Van Dyke said, include that "decision-makers are generally unfamiliar with all the services and advantages a representative can provide. However, they indicate value for services a rep can provide that they don't currently have. For example, below-MSRP pricing is something they do not currently get and they are keenly interested."
Merchandise-purchasing small businesses source items online or from retailers more often than they do via sales representatives, the report noted. Results show they use multiple channels to source their merchandise. Among those who purchase merchandise from manufacturers representative(s), it is equally from those selling promotional products and those focused on brand-name merchandise. Many firms use both types of representatives.
The solution for many smaller companies begins with more knowledge. While it might be more difficult for some smaller organizations to keep up with the new technologies and programs, SMB executives should know that there is a plethora of excellent research, training programs and best practices available from industry associations including the Incentive Marketing Association (IMA) at www.incentivemarketing.org; the Incentive Research Foundation (IRF) at www.theirf.org; Recognition Professionals International (RPI) at www.recognition.org; and the Enterprise Engagement Alliance (EEA) at www.enterpriseengagement.org.
Educate yourself, Dalton said. "Join these organizations because they produce a lot of information that can be valuable to your business and more specifically, your recognition and reward programs. Join IMA, and read Premium Incentive Products magazine."
In addition, Ozer, of Engagement Partners, said, there are some incentive agencies, technology companies and award suppliers that have excellent solutions for SMBs, such as Hinda with its Engagement Express and Universal Rewards Exchange, Paramax with its Pepper Social Recognition Platform connected to RepLink with various distributors, Certif-A-Gift with its packaged plateau programs, GiftCertificates.com with its SuperCertificicate and many brands with simple ways to provide choice for incentive winners at various price points. And don't forget to look for a manufacturer's representative to help out. You can connect with these savvy professionals by visiting www.imraonline.org and using the "Find an IMRA Pro" tool.