Like any other industry in the global market, what incents people changes as the years go by. These shifts create trends that can be tracked and following them can greatly assist in the success of a reward program or system. So, to help you in your incentive success, here are the 8 trends that we are seeing within the incentive space and how they apply to you.
One of the remarkable things about HARDI is the coalescence of industry expertise from so many points of view. Every time HARDI welcomes a new member we contribute to this body of knowledge, and our industry adds another tool to unlock even greater potential.
One such company was on my mind recently, as the HARDI staff recently closed out our 2017 fiscal year and looks to complete the annual employee goal-setting cycle with a set of performance incentive payouts. Lucky us! Performance incentives, when tied to a strategic employee performance management system, is a topic I am passionate about, and I take great pride in the system HARDI uses to incentivize and reward the fantastic work of our employees. However, there’s always room for improvement, right?
HMI Performance Incentives is an incentive solutions company that joined HARDI in 2017. With such a rich understanding of how incentive programs work, I had reached out and asked for their opinion on the best factors to include in my 2018 program design. Read below for their analysis:
Incentives are the force that makes the world go ’round.
Well, maybe not literally, but certainly figuratively. If you think about it, people tend to make decisions based on what’s in it for them: financial motivation, recognition, a tangible item or experience, access to status or privileges, you name it. So, whether it’s in pursuit of an explicit reward or under the impression of some subliminal motivator, recognizing this fact and realizing what incentives will drive the people you wish to motivate gives you the ability to shift and adjust business strategy to achieve your goals.
However, like any other industry in the global market, what incents people changes as the years go by. These shifts create trends that can be tracked and following them can greatly assist in the success of a reward program or system. So, to help you in your incentive success, here are the 8 trends (in no particular order) that we are seeing within the incentive space and how they apply to you.
1. More Programs Rewarding Steps-of-the-Sale
While many programs and systems reward for achieving end goals such as making a sale, this method can, in some instances, incentivize work-arounds, muddled quality, and behaviors unforeseen prior to the installation of the incentive. In other words, the incentive becomes the problem. As you can imagine, this is not where you want to be. To combat these issues, reward programs have begun to install steps-of-the-sale and training systems.
You may be familiar with training systems, as they’re not a new trend by any means. These systems can help to educate your team on how to sell your products or the importance of including other add-ons into the end sale. They’re often very effective and can be rewarded based on completion of quizzes, tests, and certificates.
Steps-of-the-sale systems are a much more recent endeavor, however. These systems reward your audience for taking an action along the path of the sale. These actions might be as simple as following up with a prospect a certain way or as in depth as having their local business development manager (BDM) help them present to a potential client. The argument for these systems is based in percentages. Let’s look at an example.
Let’s say that your standardized sales process has 4 Steps in it. When a channel partner carries out Step 1, there’s a 10% chance that the sale will go through. As the partner carries out Step 2, however, that percentage jumps up to 20%. The percentage jumps to 30% for Step 3 and 40% for Step 4. You’ve seen success with this standard practice, but you’ve also found that when a partner introduces a BDM into the fray between Steps 1 and 2, the percentages jump higher, from 30% at Step 2 to 50% at Step 3 and 70% at Step 4. In a steps-of-the-sale system, rewards for this example can be given out when a partner enacts one of the steps or involves that BDM.
Installing an incentive that creates a drive to complete the next steps of a sale and even go outside the established process to acquire help on the sale can enhance the chance that the sale actually goes through, creating a significant bump in your revenue for the period. Not only that, but your partners and salespeople can often learn from these experiences and find what best works along that path to sale. What ensues is a greater feeling of confidence and thus a more effective salesperson.
2. “Datafication” Helps to Create Profiling and Personalization
Before the installation of data mining and the ability to analyze in-depth swaths of information, incenting an audience was a lot like buying a billboard. Maybe you knew where your audience lived and what might appeal to them, but generally everyone was lumped into a group or two and you would only have a slight idea of the performance.
Now, with business intelligence, you can segment and profile your audience into much more targeted groups or even drill down to the individual, making your efficiency in marketing to and communicating with them so much higher. Let’s take a look at what this might look like while marketing to reward program participants.
You’ve been able to garner a lot more data about your audience as of late. Some of the identifying data includes the participants’ date of enrollment into the program. In order to capitalize on this information, you can create a reason to celebrate and set up an anniversary email. The idea behind this, as you might guess, is to send participants an email on their anniversary of enrolling. Often times, these emails contain a few bonus points: an incentive to log in and participate in the program that day.
Emails like these and many other directly targeting marketing tactics often hold benefits in many criteria. For instance, open rates for anniversary emails are typically 150% higher than other tactics. This shows much more engagement for your emails. These emails also generate up to 5x as much revenue than other tactics, making them a cash cow.
So, when it comes to data, collect as much as you can, but also make sure you have the means and bandwidth to analyze it thoroughly.
3. Gamifying Your Tactics
Although gamification has been a buzz word in the incentive industry for a while, it still makes this list because it’s not going away anytime soon. For those unfamiliar with gamification, the theory is quite simple. The idea is that you would take every day business objectives that require actions that may be either tedious or monotonous to your audience and make them a little more fun, creating a game out of them. And thus, you have gamification.
This strategy has been installed in almost every industry and the results have been very compelling. One report puts the global market for gamification at over $1.6 billion and projects that number to climb to $11 billion by 2020. We know it works. Now, what does it look like? Gamification takes that “hit your goal and receive a reward” program that can be unengaging for some participants and flips it on its head. Let’s look at an example for clarification.
You have a product you need launched. Rather than dishing out points for incremental sales of the products, you simply substitute these points with a code given out after X sales of the product. This code will allow participants access to a game, which has been branded to meet your company standards or a theme that goes with the product launch. This game can be a game of chance (often preferred, as it allows for a fair distribution of winners), a game of skill, a scavenger hunt, and the list goes on.
Let’s say you picked a game of chance. Upon receiving their code, participants visit a website in which they set a wheel spinning using their code. The ticker lands on a tiered prize and the participant is rewarded. Driven to spin that wheel again, the participants get right back to selling the new product. It doesn’t stop there, though. You can utilize tactics such as placing a leaderboard on your website that depicts the best sellers of the period. This will certainly spark that competitive nature in your participants.
Whatever you pick, make 2018 the year for games and engagement.
4. Diagnostic Health Checks via Advanced Analytics
Data is not only useful when it comes to marketing and profiling your audience; it can also help to analyze your business operations and incentive program success. From all the useful data you can glean together, your insights can be limitless.
It used to be that you would buy into an incentive program and let it run for a year on its own. You could, of course, install some short-term promotions throughout, but generally you would not bother looking at the results until it was time to consider renewing the contract.
Now, we’re seeing more and more of these “Health Checks”: monthly or quarterly check-ins to see how the program is doing so far. These peeks under the hood can give you a vital glimpse into how your program has launched, how your KPIs (Key Performance Indicators) are performing, and what your goal achieving trajectory looks like. With all this information, you can understand exactly what you’ll need to maintain momentum.
A program that launches in February may have a great peak within the first month. So, you say, “Wow, what a success. Keep it going!” But by the time May comes around the enrollment has petered off. What your data might have told you is that a simple marketing campaign delivered at the beginning of March may have made the difference for your customers as they claim their product purchases. By constantly keeping your finger on the pulse of your program, you can not only monitor its success but also recognize gaps in engagement that can be filled with all sorts of strategies and tactics to keep momentum rolling in your favor.
5. Loyalty Hacking via A/B Testing
Every company has its very own loyalty Rubik’s cube. Once you’ve mastered the formula, you’ll see your success skyrocket. The only problem is that it can be difficult to unlock that formula.
One tactic you can use to secure it is A/B Testing. A/B Testing constitutes a test that pits two variations of the same deliverable against each other. The variation that comes closest to or exceeds the goal most thoroughly is the winner and is thus used to achieve the overall goal a little faster and more effectively. Typically, it’s important to keep the variations very similar, only altering one aspect per test so that you can really drill down to see what makes the most difference.
Let’s lay out an example.
You’ve got another product launch that needs to do well. You’ve tasked your team with developing a marketing tactic that’s going to really sell this thing. Your team comes up with a superb email that will be used to announce the launch. However, you want to know exactly what it is that will make this email so successful so that you can utilize the same layout for future launches. So, you set up an A/B Test. In this email you send out, you want to know what kind of subject line will work the best: abstract and enticing or direct and straight forward. Upon sending the email out, you find that it’s actually the more direct subject line that’s performed the best.
Looking at this example, it’s easy to say, “well, direct subject lines from now on!” However, in order to get conclusive evidence, you’ll need to run the same or similar tests multiple times to be able to solidly say that your audience responds more willingly to direct subject lines. You can learn more about the specifics of running an A/B Test here.
Although commonly used for smaller projects and marketing tactics, we’ve seen A/B Testing utilized in a much grander scale and believe it will be used to this extend more throughout 2018. For instance, how do you know what kind of earning structure will work best for your audience? Or, even if an incentive program will be the best solution to your business issues?
An A/B Test can be run for a short period of time in which one targeted group received rewards based on Earning Structure A, the second group being rewarded on Earning Structure B. The control group is made up of the people that do not receive any reward for their continued business.
After vigilant monitoring of the buying/selling behaviors of your customer/channel partners, you can determine what is the best tactic moving forward. It is A/B Testing scenarios like this one that will become so much more prevalent in 2018.
6. Creating Memorable Experiences to Drive Brand Loyalty
If you think about it, our main relationship with the companies that we purchase from are simply transactional. You may like them for their convenience or their superior customer service. These are good reasons to do business, but they’re still only transactional.
Now, think about the companies you admire for reasons outside of a transactional purpose. How motivating would it be to work with a company that provides you with something beyond just a transaction? What if they flew you out to the Bahamas for a few nights? What if you’ve always wanted to learn how to scuba dive, and by continuing to do business with this company, they’ll send you to a lesson?
Every time your customer recalls that once-in-a-lifetime memory, they will remember who it came from. Creating priceless experiences for customers creates positive and lasting brand association, which is why Group Incentive Travel and Experiential Rewards will continue to grow through 2018.
7. Mobile and Social Engagement Are Ever Growing
Smart phone usage will not peter off. This much is known for sure. The more we can do to get in front of the mobile age the better off we’ll be. It only makes sense to contact and communicate with our audiences on the devices they carry in their pockets daily. But beyond the importance of mobile engagement is the need for social engagement, as well.
More and more we will start to see social engagement strategies pop up in incentive solutions. These strategies may include tactics such as twitter feeds that pull live tweets on program websites, selfie and product postings, message boards where participants and administrators can communicate fluidly, and many more.
The most important aspect of these social and mobile strategies is creating a sense of community centered around the program itself. Whether it’s a closed community that exudes a sense of exclusivity or an open community that welcomes all ideas and conversation, your program should provide participants with a means to communicate freely.
The most important part? Creating this community in the most mobile-friendly way possible. Nothing is more frustrating in this instant-paced world we live in than a clunky, slow mobile experience.
8. Non-Cash Rewards Are King
Although it is essential to research your audience’s preference, study after study shows us that non-cash rewards work best when motivating members of an incentive program. To hark back to trend #6, how flat would removing a transactional feeling fall if instead of a group travel trip, you received cash…?
Time and time again, people will ask for a simple cash reward, thinking only of the ease of rewarding. However, if we run incentive programs the way they’re intended, you’ll see why this tactic is often times seen as insincere.
The purpose of incentive programs, of course, is to incent certain behaviors. As human beings, however, we don’t want to be just another number or participant in your program. Building relationships and creating meaningful experiences is the real way to motivate and incite action. You wouldn’t expect to receive cash from your spouse on your 40th birthday. Why, then, should we expect it from our reward programs? It’s a tough calling to live up to, but success in incentives depends on it.
Getting in front of any one of these trends will put you in good standing with your incentives in 2018. Any more, and you’re an incentive pro.
Whether you learn it here, from your competition, a research company, or some random blog on the internet, it’s always important to keep an eye on what’s going on around you and in your industry.
People change and so should your incentives!
A word from Emily
I want to thank HMI for providing this analysis, and I know I took a lot away as far as new approaches to try with our own staff going forward.