Be Proactive to Avoid Program Pitfalls
How to Recognize & Avoid Problems in Incentives & Rewards
Launching an effective incentive program that actually works requires an organization to develop a strategic reward system for participants that covers multiple areas. After all, incentives and rewards these days are much more than your standard benefits package.
There is an art and science to crafting an effective program. The art lies in developing a program that addresses real-world complexities and psychological nuances that will positively affect and engage participants day-to-day within any programmatic system; the science involves analytics, measuring the effectiveness of the program at every stage of usage, and return on investment.
Proactive engagement by program planners can do much to alleviate potential issues. "There are a few problems that can arise when planning and implementing a rewards program," said Dana LaSalvia, vice president of corporate communications and business development, Rymax, Pine Brook, N.J.
"One that immediately comes to mind," LaSalvia said, "is not offering rewards that your participants desire. Gift-giving and rewards can quickly become stale, so it's important to keep an eye on what's trending and what your program participants are motivated by. Keep things fresh for them so that they continue to be re-inspired and set new goals for themselves.
"Another common problem is lack of communication surrounding the program and what it entails. If participants do not clearly understand all guidelines and objectives or all the ways that they are able to earn rewards, they will not be motivated to participate, and your program will fall flat."
The key takeaway here, added Mary Luckey, sales engineer, Rewards & Fulfillment, Maritz Motivation Solutions, Fenton, Mo., is about planning, and how some companies don't systematically plan; they just launch a program.
When companies finally realize an incentive program will help their business, Luckey said, "They typically move too fast. The boss says we need to do it, so we need to launch in six weeks! Make sure you take the time to work with your incentive partner to identify the problem you're trying to solve, develop the right rule structure to change the behaviors, and offer rewards that will be motivating."
Not understanding that communicating the program is critical to the success of the program can be another problem, Luckey said. "Sometimes we work with clients who don't understand why their program isn't working. When we dive in, many times we find that the participants in the program don't even know there's a program. One email announcing a program isn't communicating. You need to make sure people know what they need to do and how they're doing throughout the program. If you don't tell people what they should do, how can you expect them to change their behaviors to achieve your goals? And if you're not tracking performance and providing feedback to keep them engaged, they're going to lose focus on your goals. Often people don't spend enough time on these two areas to engage their people and maintain their attention throughout the program."
Here's an idea: Work to develop a communication strategy that includes ongoing communications with various touchpoints and vehicles.
Email is great, Luckey said, but social media channels should also be considered. And don't rule out print. Sometimes it's the best way to get attention because we don't get much in our physical mailboxes anymore. Luckey also suggested segmenting and personalizing communications. "If you want me to improve my performance," she said, "a general message that goes to everyone only goes so far. But, if you tell me exactly where I stand in the program and what I need to do to earn a reward, I'll be much more likely to do what you want. We call this 'progress feedback'—giving people feedback on their behavior on an ongoing basis so they know what to do to reach a goal. A comprehensive communications plan cannot be overemphasized. And ironically, when budgets get tight, it's one of the first things to go."
Not having a clear view of the ROI that the program is generating is a critical shortcoming. "I've worked with many clients over the years that don't really measure the success of their program—which can be very dangerous," Luckey said.
At some point, a C-suite member is going to ask the question, how is this program helping our business? If you can't answer that question, it won't be good. Maritz, for example, has a full team of decision scientists that helps clients analyze program data and develop strategies to improve performance and business results.
"At the least," she said, "when you launch a program, make sure you and your incentive provider have a clear understanding of what success looks like, even if you start with very basic metrics such as number of enrollments or other basic key performance indicators (KPIs). It's better to start with something and build on it over time."
It's important that there is true support for a program at the highest levels of the organization. If it's not supported by the top, it won't get the attention it deserves.
Audience Targeting & Other Issues
You can also proactively avoid problems through careful audience targeting, said Ric Neely, director of marketing, Hinda Incentives, Chicago.
"The goal of any program is to encourage people to change behaviors. But that means finding the right people who can reasonably affect the outcomes in the shortest time possible. Let's say your goal is to increase monthly revenue by increasing the number of services you provide customers. You may automatically think that would be a program targeting your outside sales personnel. But if you're outside sales team is strictly an acquisition team and solely focused on closing new customers identified through your lead generation system, using them as your only way to increase services may not work as well as you hope. It could even negatively impact prospects who feel they are looking for one service while your sales rep is pushing five services."
Maybe your product requires a service person to come out and install it and trainers to teach a customer's staff how to use it, after the initial sale. In this case, Neely said, you might be better off having these people concentrating on identifying more opportunities while they're onsite to expand your services with the customer. "A referral program for your installers and trainers could help identify opportunities targeted to the individual customer, so they're more likely to close when they go back to the sales team."
One of the big debates in building any program, Neely said, often comes down to the rewards. Some people feel that "cash is king" and that should always be the reward. But studies show it can cost three to five times more than non-cash awards.
"Some people only want to reward the top people and use travel," Neely said, "but is that going to engage enough to get the results you need? Others want to choose only one award while others want to make sure people can redeem for millions of millions of awards."
A perspective from a supplier also needs to be mentioned, said Scott Kooken, president, Links Unlimited, Cincinnati, Ohio. "We are a master supplier for incentive and loyalty programs," he said, "and from our perspective, we also see customers not look at the big picture in planning and implementing and managing programs."
One common mistake is order processes that are too difficult, so look for ease of engagement in the ordering process. Mismanagement of customer service and poor fulfillment are other common problems.
Meanwhile, setting unrealistic program goals is another common mistake, said Neely. If you set a goal that people automatically feel they can't achieve, they simply disengage from the program. Take the time to set goals that encourage people to stretch out of their ordinary comfort zones, but still seem attainable. That may mean looking at your past history and structuring goals based on what they have done in the past.
"One of the most common mistakes I have seen on the rewards side is managers selecting the awards they want," Neely said. "This is often when they make the mistake of choosing only one or two items as an award. But I can assure you, all of your people are different and each will be influenced by different rewards. Providing them a rewards portfolio with enough diversity to allow them to choose something that is meaningful and important to them personally can help them engage early and stay engaged throughout your program. But the trick is to make sure it isn't so broad as to be overwhelming."
LaSalvia believes that not having a clear understanding of your audience is one of the biggest mistakes that you can make with your program. Knowing your audience and their lifestyles and offering them a selection of rewards that meet their wants and needs is vital to the success of a program.
Another mistake is rewarding program participants only once a year. It is important to have frequent touchpoints throughout the year, so participants stay engaged and motivated with new goals and new opportunities to earn rewards.
Lastly, ignoring peer-to-peer recognition, especially in employee engagement programs, is a common mistake that negatively affects a program.
"Keep in mind," LaSalvia said, "that recognition doesn't have to be limited to a manager recognizing team members, and peer-to-peer recognition is an effective avenue to showcase appreciation and motivate employees."
Ira Ozer, president, Innovation Meetings and Engagement Partners, Chappaqua, N.Y., neatly summarized some other critical mistakes made by planners: If there is no plan or method to project and measure return on investment (ROI) for the program, that's a mistake, he said. Given such an oversight, no proven business case can be developed. Instead of being considered critical initiatives that must be done, incentive programs are often considered contests that are nice to do.
Sponsoring companies (buyers) are sometimes confused about different vendors' solutions and compare apples to oranges, Ozer observed. "This leads to many problems in actual pricing, inventory management, fulfillment, quality and customer satisfaction."
Ozer said a problem occurs when incentives are chosen because of the interests of the CEO or other leader, not the participants, so they are not appealing and therefore not engaging or motivational. And finally, he said, there can be an issue when buyers make assumptions about incentive technology platform capabilities, such as assuming that specific reports will be available, and then find out that their needs are not included and must be programmed at extra expense and time.
Recovering From Mistakes
Gaining feedback from participants is critical to recovering, LaSalvia said. Listen to your audience and their feedback and adjust the program as needed, something along the lines of including a brief survey or implementing a chat feature where you can have two-way engagement with participants is a huge opportunity for companies to support continual customer enhancements and improve customer service standards. "Also, frequently changing up reward offerings and adding new ways that participants can earn points for rewards will ensure that the program and the rewards themselves stay enticing."
Recovering from a mistake sometimes means simply admitting to it, and taking immediate corrective actions, Neely suggested. "Let's say, for example, you wanted to enroll distributor sales reps in your program, but the qualifier was too high to engage them and you only offered a few reward options. Enrollment was extraordinarily low, and the distributor feedback pointed to the qualifier and rewards as the problem."
Immediately redesign the program to lower the qualifier and offer a broader reward selection, Neely said. "Re-announce it, and tell them you listened to their issues and responded. The folks who have already enrolled will see it as a benefit, and those who didn't enroll will see how you've responded to them immediately. The key is to correct it quickly and show them you've listened and responded."
That's right, Luckey said. "Acknowledge that something went wrong, and focus on a solution rather than pointing fingers and trying to find blame. Let's face it, nothing is perfect and things will go wrong. We're all human beings."
Prevent Mistakes in the First Place
Planning and transparency is one way to avoid problems, explained Luckey. "The more a company and their incentive provider work together collaboratively—in a partnership as opposed to a vendor relationship—the better the program will be and the fewer the mistakes," she said.
And make sure there is a clear program leader on both on the client and incentive provider side. Sometimes, Luckey said, "there are just too many cooks in the kitchen and things get messy."
Even though there may be many other people weighing in on both sides, let the communications stay between one person from each organization. If you can work within this framework there's much less chance for miscommunication, which is where a lot of mistakes take place.
Neely offered a checklist of ideas to prevent mistakes. It begins by gathering the information you need to identify the people who can change their behaviors to meet your objectives and take the time to set attainable goals. Learn from the past and get input from people within the organization:
If your enrollment isn't what you expect, said Ozer, take action to find out why. Talk to the managers. Talk to eligible participants who enrolled and also those who didn't.
Look for help from people experienced in developing these programs.
"Planning is always the key," Ozer said. "Take the time to plan your program and include milestones to help you determine if corrections are needed. You can anticipate and thus avoid problems by seeking the advice of an unbiased expert, who is experienced, trained and certified by the relevant industry associations to help assess and design the program and select the best company that fits their need.
"And finally, implement Service Level Agreements (SLAs) within supplier contracts, make a plan to continuously monitor the participation, engagement and results of the program, and adjust the elements and communications accordingly. Press the vendor to fix mistakes and improve their performance."