Incentive Intelligence

Channel Loyalty - Is It Possible Today?

The short answer is yes.  But this would rank right up there as one of my top 10 boring-est blog posts if that was the only answer I gave.

Most of the posts on this blog focus on the employee side of the equation.  That’s natural given the state of the economy, layoffs, employee fears and the need to engage your employees to weather the storm.  However, if you rely on independent channels to distribute and sell your products now is a very, very good time to really look at the way you’re engaging them and how you’re helping them weather that same storm.  Sharing their pain now will lead to benefits tomorrow.

Work Hard to Make Your Customers Successful

Most channel partners are small businesses.  There are a few that are very, very large but the majority of the people you rely on to represent your brand and connect with your end users and final customers are small to medium-sized businesses.  This means they are feeling the pinch as much if not more than you.  And who will they remember when this economic kidney stone passes? 

They will remember those vendors and suppliers who helped them stay in business, helped them get new customers, helped them reduce costs and helped them be better businesses in the future. As a partner in their success, you need to really dig into the market right now and find out what needs they have and how you can help address those needs. 

Are You Waldo?

Creating a strong program that drives performance for you - and helps drive business for them is critical.  But I offer this word of caution.  Just as with employee programs the old standby's won't work.  The best way to sum it up is with this cartoon from Tom Fishburne... (If you don't subscribe to his site you should - great management/marketing cartoons.)

Focus on Them!

Not unlike other types of loyalty applications the first step is to check your ego at the door.  Don't assume because you NEED their loyalty they WANT to give it to you.  You're not the only suitor.  But if you're smart you just might be the only suitor that actually listens and responds to their needs.  Ask them questions (don't judge the answers just yet)...

• What is their point of pain dealing with their vendors - all of them - and you in particular?
• What does their business need?  Don't ask about lowering prices - ask about employee turnover, accounting issues, tax support, other business activities. (Remember - don't judge the answer yet.)
• What are their customers saying?  What help does their customer base need?
• What can you do for them?

Once you understand their pain you can find ways to connect what you do to what you can do for them.  Maybe offering SMB services at discounted prices through third-party partnerships will drive them toward your offerings?  That would be more valuable to them in the long run than simply dropping the price 10%.  Don't assume just because you manufacture widgets you don't have a way to help with their employee turnover problem.  As a manufacturer or vendor - you may have more clout than a small business would and could help them access resources they wouldn't normally be able to.

In most programs targeting the distribution channel, price and promotion lead the discussion.  "Buy more and I'll drop the price."  But look around - everyone is saying the same thing.  Try putting yourself in their shoes.  They need less help buying your stuff and more help selling their stuff.

Don't follow the traditional path.  Ask yourself "Does my loyalty initiative focus on what I need or on what they need?

Start looking at loyalty as a "giving" program - not a taking program and I'm sure you'll find more partners willing to help you out as well.
 

 

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• Considering Cutting Your Price? Think Carefully Before You Do. (myventurepad.com)

Should Your CEO Be One of Your Temporary Employees?

During tough economic times it may make sense to use temp employees to fill some holes in the staffing at many companies.  But does it make sense to use temp CFOs?  Temp VP HR?  Temp CEO?  Workforce Management recently ran a post on this and Kris Dunn (HR Capitalist fame) and myself took the concept out for a test ride over on Fistful of Talent.  Read our take and then give us your comments.

Kris's post - Temp Execs - What Could Go Wrong?

Our Post -Temp Execs Mean Temp Empoyees

Temp CEO - hmmmm... I wonder what the compensation package looks like?

The American Dream and Incentives - What Our Politicians Can't Get Right

On the front page of today's Greenville, SC newspaper, down below the cover story of home-town boy Lucas Glover winning the PGA US Open, is an article entitled "Homebuyers may get $15,000 tax break."  I tried to find it on line to provide the link but #fail on that. 

The article is about how our brilliant lawmakers are trying to expand the tax credit from $8,000 to $15,000 for those that buy a home in this depressed market.  The real money quotes in the article are from Donald Schunk, research economist with Coastal Carolina University.  Here's the quote:

""If the goal is to have more people buy homes, it would work," he said of expanding the program.  But 'if it takes a program like this to help someone buy a home, is that really something we should be doing?  We have a pretty clear record where people were helped to get into homes' and then couldn't afford the mortgages."

The American dream, Schunk said, 'is not simply buying a home.  It's working hard to afford a home, buying it and being able to comfortably enjoy living in it.'"

Read that last statement again.  Then read it again. 

The American Dream isn't about owning a home - it's about WORKING HARD TO AFFORD A HOME!

This is the problem many incentive programs have - they define the outcome - "own a home" and provide incentives for that.  In this case the real objective is to motivate poeple to "work hard to AFFORD a home."  That's what we need to encourage, reward, and motivate.  I've said it a hundred times - results only exist at the end of a string of behaviors.   Motivate the behavior not the result.

Using this example here are some things off the top of my head (and I'm sure many of you could come up with more better options as well) that would move people toward the goal of the American Dream - "Working hard to AFFORD a home."

• Provide tax credits to those that contribute at least 20% in down payment (pick a number - the point is to have skin in the game.)
• Set up "home saving accounts" similar to Health Savings Accounts and make the deposits and the interest tax free
• Provide tax rebates to those that make payments on time
• Make financial planning fees tax deductible
• Make courses in budgeting and financial planning tax deductible
• Provide companies that make responsible loans with incentives to continue to provide those loans

I'm not a big fan of government intervention - but if we're going to let them stick their noses into our business we should at least make sure they don't do more harm than good.

Motivate the behavior not just reward the result!

Increase Punishment to Drive Individual, Team and Company Performance

To run a quality company with a strong culture we need more punishment in our work places.

I can hear the comments - "What?  You're all about incentives and rewards - why are you pushing punishment?"

While incentives and rewards are one of the things that we talk about here - what we really are about is influencing behavior.  And influencing behavior isn't always about dangling carrots.  Sometimes it's about the stick.  Traditionally, businesses have used reward programs to guide behavior toward specific goals.  But what do we do about behavior we don't want in the first place?  How do you "extinguish" a behavior?

That's where punishment comes in.  First of all - punishment is different than negative reinforcement.  Negative reinforcement is removing a negative state when a behavior is exhibited - versus providing a positive state when a behavior is exhibited.  The difference is in one case I get something (reward) in the other something is taken away (negative state.)

Punishment is not negative reinforcement.  Punishment is introducing a negative state when a behavior is exhibited.  And believe it or not - I think we have too little punishment in our workplace today.

Punishment for Individuals

The example I always use about punishment is when a child starts to run into a busy street without looking.  Most parents will grab the child roughly, either yell - or at least make their voice very stern - and admonish the child for the behavior.  In the good ole' days they might even swat them on the back end to really make the message hit home.  That's punishment.  You wouldn't let the child run into the road and hope they didn't get hit and then offer them candy if they never did it again.  In this extreme example punishment is the proper response.  The reason it's proper is because the behavior you're trying to extinguish violates a very important rule - don't get killed.

Your company has very important rules.  Don't cheat, steal, fight, etc.  Every company has rules that individuals must follow to stay employed.  When those rules are broken - punishment (firing, leave without pay, etc.) is administered.  Unfortunately, we seem to be loosening our standards on behavior that deserves punishment.  Many of you reading this can point to a boss or two who are a**holes and treat people poorly.  That should be a punishable offense.  But many times it gets a simple slap on the wrist or worse, is ignored.

Suggestion for better workplaces

Create a "10 Commandments" of your company and punish ANYONE who violates them.  No situational ethics here - if it's the VP of HR and they violate the code - whack!  The only way the workforce will understand that there are some lines you don't cross is to show them that punishment is the appropriate and immediate reaction to violations.

Punishment in Work Teams - It may be the right thing...

Work is more team-based and social today.  Most professionals - and I'd submit - non-professional positions rely on the ability to network with, work with, cooperate with  and collaborate with other people.  The meteoric rise of social networking tools such as Facebook, Twitter, Linkedin - and the amount of conversation about them is testament to our fascination with connecting to others.  While we may think that is a purely social phenomenon it is infiltrating the work process at a similar rate.

From the web site PHYSorg.com:

"A paper by economists at The University of Nottingham entitled 'The Long-Run Benefits of Punishment' has shown that, in the long-term, using punishment as a means of coercing co-operation can prove to be a successful strategy."

Yep... in work groups that rely on cooperation, punishment is a good strategy.  In the study they focused on the "free-rider" phenomena that plagues teams resulting in a few people not pulling their weight on a project but getting the same basic credit for accomplishment by virtue of being on the team.

Key to using punishment in group situation however, is the team members belief about whether it is a short-term assignment versus a long-term assignment.  From the article:

"Differences in results from the short and long games also suggest that people behave differently, depending on whether they see themselves working in that group over the short term or the long term. While punishment was moderately harmful in the short games — where the experiment was carried out only 10 times — it was highly beneficial in the long games."

Where does all this lead...

From my point of view - sanctions and punishment are critical for establishing cultural norms for your company.  Some things are JUST NOT DONE around here.

Second, if you have teams of people working together for an extended period, setting up rules and norms for the team - and enforcing punishments - is good for performance. 

What say you all - does this ring true in your world?  Do you think punishment has any place in the busienss world?  Is it used enough or too much?  Let me know.