That’s right – oxygen is good for you. In fact if you don’t have it you die. Oxygen is critical for:
Breathing
Living
Cleaning tough stains out of your laundry (ask Billy Mays)
Now that you know about oxygen – go breathe some and feel better. And then repeat.
Stay tuned – ‘cuz next week I’m gonna say the same thing but in reverse order.
Recognition and Rewards Drive Engagement
Yup, got it. Oh, you want to tell me again about it? Sure go ahead. Oh, a webinar about it from a different company? Sure go ahead. Oh, wait, a white paper about recognition creating 29.2 million jobs in the fourth quarter and fixing the global warming problem? Thanks. Oh, and yes you can have my email address so you can send me a link to another white paper telling me that recognition is a good thing for all employees ( not just good ones.)
Aaaaannnnnnd... more and more posts, articles, tweets, webinars, updates, LinkedIn group updates - all about how recognition is good and can create an ROI measurable to the 2,345,693,303 digit of PI.
Is this NEW information?
Isn’t recognition covered SOMEWHERE in the SPHR exam? Didn’t the first 3,451 press releases about a new recognition update make it to your inbox? How is it possible that we are STILL having this discussion?
Recognition works. It needs to be sincere. It needs to be timely. It needs to connect to mission/values/goals.
Got it? Great, next on the agenda – brain surgery.
I cannot believe there is a demand for the same white paper topic, blog post topic, webinar topic week after week, month after month, year after year.
Someone help me understand.
I learned about addition and subtraction early on in my life – I’m pretty sure I don’t need to go to a webinar every month to hear about it again. I got the concept.
So where is this demand coming from?
It’s a question, a rant, an observation.
Here’s what I want to see…
Webinars that talk about WHY we don’t teach managers how to do recognition correctly. We wouldn’t put up with CPAs that can’t do a T-Account and couldn’t find their debit with both hands would we? Why do we put up with managers who won’t/can’t do recognition?
Where’s the webinar on how to fire someone who won’t recognize correctly? Or at all? That’s a skill we need to implement more often.
Fer chissesakes – recognition is a mission critical skill today. Get on it.
Reading is so 2010. Listening is all the rage now with kids. You need to jump on board.
Over on TLNT.com today is a 26 minute podcast I did with Lance Haun (@theLance.) We cover the incentive industry, why HR is more interested in rewards today - why engagement is key to success and how that has affected how incentives and rewards are positioned. We hit on the "AIG Effect" - patriotism versus mercanaries - cash vs. non-cash - all the biggies.
Basically, it's a bar conversation without the bar (insert sad face here.)
Pop over - spend a few minutes and let us know what you think.
Thinking about the “normal” incentive program process today. The “normal” process looks something like this (your mileage may vary…)
Announce program with flashy four-color printed brochure – or if you live in the 2000’s an html email with a link to a website that is just as flashy.
Follow up with monthly mailings – or if you live in the 2000’s a monthly html email that is just as flashy (and may include flash – still!) FYI – lot’s of people have their email set to “text only” so all that work you’re doing on the flash/html emails – no one but the client and the designer are seeing it.
Monthly statements via email – I don’t think anyone does printed and mailed statements any more.
Maybe, just maybe, a couple of “random” emails to the participants reminding them to redeem and earn fabulous points!
That’s pretty much the norm. A few forward thinking companies are doing a bit more… but I emphasize the word “bit.”
Rethink Communications
I’ve long held that you’ll get more bang for your incentive buck if you put more money into communication and connections to participants and less into the actual award value and points earned. I’m not suggesting you do away with awards but take about 5% of the money you were going to spend on the awards line item in your budget and give it to communications. Your program will be better, the participants will understand the program better, they will keep the program more firmly in the center of their mind and everyone will be happier (‘cept the incentive supplier, wink.)
But I2I – Where Should I Spend That Extra Money?
Thought you’d never ask. Here’s an idea…
First - think of the process your participants go through to earn the points. I mean actually write down the steps necessary to earn points. Take a sales incentive program…
Indentify target account/person
Connect with target account/person
Present to target account/person
Follow up with target account/person
Answer objections, etc. with target account/person
Get deal done!
Now, normal programs reward the person at the end of the process. Then… and only then… do they present the participant with …
“Congratulations… You’ve Earned 100,000,000 points – go redeem for some slippers in our fabulous catalog of awards!”
Repackage…
I’ve also gone on record that the behaviors need to be rewarded – not the outcomes – so the first thing is to redeploy the points you were giving in a lump sum when the deal closes (in this example) AND then include a communication element in the process so it looks more like this…
Communicate they could earn 50,000 points if they indentify target account/person when they get into your CRM/Sales Contact management system – right there on their screen – pop-up, button, whatever – communicate they can earn points BEFORE they do the behavior.
Communicate they could earn 20,000 points if they connect with target account/person via an email to the participant on Monday when they come in to work and are setting up their weekly call list.
Communicate they could earn 100,000 points when they present to target account/person immediately after the initial contact meeting is held (you can probably see it on their calendar) to get them moving toward scheduling the presentation.
5, 6, Etc.. etc… etc… You get the idea.
The point is this… Use your communication money to inject the program into the participant's normal process regularly – and highlight what they could earn.
Why do I say this?
This is why…
"The Neuromarketing takeaway from this research is that exposing customers to point values at the time of purchase can amplify the effectiveness of the loyalty program. Want to encourage sampling of a new product, or drive upgrades? Or get a customer to visit you instead of your competitor? Try something along the lines of, '100 extra Rewards Points with every purchase!' "
"Choices were influenced by points even when consumers were provided with other truly discriminating information (e.g., price) and the irrelevance of the loyalty points was readily discernable. This implies that irrelevant information can influence choice when other, easily justifiable bases for decisions are available and, therefore, that irrelevant information can function as more than a tie-breaker."
What this means to me is that each employee, sales person, distributor and dealer has a choice to make each day relating to your product, service, incentive program. Presenting the choice along with a reference to the program and the awards will INCREASE the likelihood they will do the behavior.
Injecting your program communication money into the process of the program will ensure the participants see the message each time they need to make a choice – increasing the effectiveness of the program.
Or … you could just sent the monthly mailer out. They look nice next to the four credit card offers, the “val pak” and the note from your realtor “friend” about the house they just sold up the street.
Your choice.
Take some money from awards – put it into intelligent and relevant communications and do your program and your company a favor.
Login- a few keystrokes and clicks later you have a loyalty program.
The program allows the merchant to track checkins, updates to statuses, purchases, etc. and then reward those behaviors with points redeemable for whatever the merchant decides and of course, for merchandise from an award catalog.
Full transparency – I’ve never used the service so I’ll be a bit ignorant on the specifics of the business model but it looks to be based on making money through the sale of merchandise items for points, or, and this is a total guess… taking a cut of any deal offered to customers. There isn’t a lot of info on their site about this so I’m guessing.
The pitch is they can bring the big company frequency/loyalty program to the small company on Main Street, USA. That, I’m all for. I also like that they reward loyalty behaviors other than just purchases (ie: checkins, recommendations, etc.)
An Aside:Warning – their terms and conditions state THEY can use any information you collect through the service. Meaning – they get your customer list and can use it how they want. I’m sure there isn’t some diabolical intent here but the bottom line is they own your customers names and details too. Someone may find that info valuable at some point and the merchants’ customers may be getting offers from someone else in the future.
Living in a House VS Building A House
Enough about what they do. What I really wanted to get into is a discussion around how amateur evaluations of loyalty and incentive programs sound great – but aren’t. It’s kinda like saying “because I live in a house I can build a house.” Really… let’s see how that works out for you. Just because you’re a member of a loyalty program doesn’t mean you know how they work.
At one point in the video (actually more than once) Scoble uses airline frequent flyer programs as the model for Chatterfly – saying something to the effect, and I’m paraphrasing not quoting - “the airlines use these programs successfully to drive loyalty therefore they should work for the local merchant.”
Not sure if I buy that. And here’s why (and why you need to have someone evaluate these types of marketing programs)…
Airline Frequent Flyer Program Value
Airline frequency programs are based on ticket purchases – and a vast majority of people in airline loyalty programs do NOT spend their OWN money on tickets. They spend their company’s money. In other words – you’re not investing YOUR OWN cash.
Airline frequent flyer programs seem simple – one mile for each dollar spent. However, miles and dollars are not equally valued. A flight to LA from NY may be $700 and a flight from LA to SF may be $500 – the airlines have a variable starting point for their award calculation – and, as anyone who’s ever paid for a ticket out of their own pocket you know there is some serious calculus behind what an airline charges for a ticket. It’s not the same as the price for a Grande Latte – which is the same no matter when you buy it and where you might buy it (regional cost of living equations aside.)
The math doesn’t work… let’s review
For purposes of discussion we’ll assume the average ticket cost is $500 and the average “award ticket” can be earned at 25,000 miles (this too varies considerably between airlines and programs.)
So… a dollar spent = a mile earned and therefore: $500 ticket = 500 miles.
25,000 miles divided by 500 miles = 50 tickets
Out of pocket for the traveler = $25,000
Award value = $500 (one ticket “free” at normal average ticket prices)
Award value as a percentage of purchases to earn the award = Approximately 2%
So the math says the airlines are giving away about 2% of their revenue in awards. (We could go on too about the value of an airline seat and how it has a specific shelf life – an empty seat =$0 so any amount is better than $0 – not the same with tangible goods.)
Now let’s get into the real “value” of an airline ticket. As most of us know – an airline ticket isn’t just an airline ticket – it’s a portal to a destination. A destination where we’ll spend a week or at least few days, enjoying the sights, the sounds, the food, the fun, the surf the sand, etc. In other words, we don’t look at the ticket in isolation. The ticket gives us the ability to have a much larger award – a vacation or something that feels like a vacation. The ticket value is not $500 – it is an “experience” as MasterCard would remind us – that is priceless.
Loyalty programs for airlines are hugely successful for those two BIG reasons
It isn’t your money
The award to you get is much more than the award offer from the sponsor.
The Amateur Evaluation
So let’s apply the same ideas and thoughts to a local merchant. Let’s just say a restaurant.
If we use the same math as above – you’re looking at about 2% of spend as a reward. I know it can vary but the amateurs in the crowd want to use airline loyalty as a starting point so I should too…
Average meal cost (guessing and variable by region) = $50
2% of Spend = $1.00
Spend required to get a “free meal” (assuming that would be one of the award choices) = $2,500 (remember – this is YOUR money – not someone else’s.)
Now, assume you want to use your points for something other than services offered through the sponsor – like say an iPad (I only use that ‘cuz it might drive some SEO here on the site.)
Cost of iPad = $500 (roughly – I’m into easy math)
Point value using industry standard ½ cent points = 100,000 points
Amount you need to spend at the restaurant to earn an iPad = $25,000 (for the real math geeks – that’s $68 per day for an entire year – no days off, no holidays, no weekends – every freakin day for a year!)
Yep… you’d have to spend $25,000 at a restaurant to get an iPad if we applied “normal” airline frequency payouts as our guideline. And the iPad is just an iPad – no beaches, no family time, no shared experiences (okay – we can probably say something about accessing cool apps and membership to the Apple fanboy club – but really not the same as a vacation is it?)
Why You Need Experts
This is why you need experts in the field. Scoble is a very smart guy. Yet, he falls victim to thinking that because a concept works in one place – it should work in another – ignoring (or being ignorant of) the variables that go into creating a workable, successful loyalty and incentive application.
Social Currency
I realize I’ve spent the entire post talking about the financials here – and that is one HUGE variable in the equation. But there ARE ways to use these local, small business programs effectively without having to make your customers live, eat, sleep and breathe your product.
And that is to leverage social currency such as badges, special VIP seating, notification of specials, special VIP events, etc. There are a variety of awards you can bestow on your best customers that have nothing to do with redemption and point values.
This is where Chatterfly could have some real juice – connecting all those non-purchase loyal behaviors to social currency.
But that also means you need to really understand your offer, your value, your position as a vendor/merchant to know what those social currencies are and how to leverage them.
Whew…
If you’ve stayed with me this long I salute you. Love to hear your comments on whether you think local programs are valuable – and if the mode of points for “prizes” is applicable in the small scale, day-to-day world most of us live in. I think it takes a different approach than points for purchases.
Been a tough weekend and I don't have anything original to add here today. But don't despaire... you can still get Incentive Intelligence goodness in two, two, two outlets today!
First... Fistful Of Talent
Do you practice "Moral HR?" Do you know what that is? It's doing what's right when you don't have to. Check the post on Fistful Of Talent today and weigh in. Do you think you practice moral HR - or do we really live in a Gordan Gekko world? Your call...
Second... USA Today on Incentive Trips
Had the pleasure of chatting with Charisse Jones from USA Today the other day on incentive travel awards in today's economy. Her article (along with Roger Yu) was posted yesterday online. Yeah... we get a bit of a nod in the article. Not sure if it made the print version (if someone saw it let me know in the comments.)
If you're at all interested in what is going on in the industry and what other incentive companies are experiencing it's a good snap shot of today's incentive travel world.
So there ya go... two nuggest from Incentive Intelligence... No go tell your friends all about it.
And - take some time today and reach out to a person you know on social media and talk to them phone-2-phone or face-2-face. It might just make a difference.
Traditionally, incentive programs were designed around the idea of “do this get that.” It’s been an axiom of program design. Give people a reason to do something and they will do it. Mostly, we’ve focused on our inner Gordan Gekko and assumed participants are rational and will do the things that maximize their personal ROI on the effort required to earn an award.
And, except when badly designed, these programs work pretty well. Actually, when badly designed they work even better – but to the detriment of the whole versus the individual… again I’ll cite Wall Street as our cautionary example.
But new research is showing that maybe, just maybe, awarding people with stuff they can’t ever use or own is better for the person earning it – and better for the company offering it by actually spurring higher levels of performance.
Prosocial Incentives
Yeah, you read that right – a new term that I’m sure will be bantered about with the same frequency as “gamification” – is an incentive that, to quote a recent article in the Washington Post on the idea, is
“a novel type of bonus spent on others rather than on themselves”
The article highlights a study done by Harvard Business School, the University of British Columbia and the University of Liege. To pull from the Washington Post article:
First they researched how the recipients “felt” about themselves after earning the proscocial award and the results:
“…Compared to people who did not get the charity vouchers, the employees who donated $50 said they were happier and more satisfied with their jobs. (The opinions were unchanged among those who got the $25 donation.)"
They then looked at actual performance (‘cuz hey, we don’t really care how they feel do we, we just want to know if the results were better)…
"They decided to study the effect in both sales and sports, giving Belgian pharmaceutical sales teams and Canadian recreational dodge ball teams money. Some were told to spend it on themselves, while others had to spend it on a specified teammate. The researchers found that those who had to spend the money on other teammates performed better, in terms of sales made or games won, than those who spent the incentive on themselves."
The author does note (as I do in a lot of these cases) that this is an academic study and didn’t really control for the myriad of variables within a larger organization but it is an interesting guide post for program design.
Something for us to consider – if not implement.
Our Recommendation?
I’d recommend you do both – create a win-win-win. Award the individual with something for themselves – and add a little sumptin’ sumptin’ to the award they can then use on someone else.
Recipient wins, the social target wins, the company wins.
Pret A Manger Has a Different Take On Prosocial
The article also references Pret A Manger’s unique recognition strategy which I think is pretty cool too…
"And 'when employees are promoted or pass training milestones, they receive at least £50 in vouchers, a payment that Pret calls a "shooting star,"' Clifford reports. 'But instead of keeping the bonus, the employees must give the money to colleagues, people who have helped them along the way.' The message? You didn’t do it alone, and need to recognize those who helped you get there."
Nice way to really cement the idea that “we’re all in this together.”
Ask yourself – could you do this in your company? Should you?
How would this impact your next channel incentive program? If your company has a charity they support – or if your client has one – why not tie some of the awards earned in the program to that charity or cause and connect the earner to it through awards.
I’m not talking about just throwing up an “option to redeem” for charity contributions – I’m talking about you being prosocial and making it an automatic thing – 5% of earnings go toward a charity.
Is this something you’d be willing to do? Would taking 5% from a budget allocated to awards and moving to social causes really cause a program to fail?
Or, as this research suggests… cause it be more successful?
I’m in the latter camp and think you should be too.
And a video treat for those that might want to consider social responsiblity and including "prosocial" incentives... (video embedded - RSS and email subscribers may have to click through to see video.)
A couple weeks ago I posted a link to our "compendium" of articles from the incentive, engagement, recognition and reward world. My initial thought was to create one each week. But that was too much work - and I'm all about reducing the "too much" part of work.
So, I've just added on to the last compedium. Over time it will grow and grow... kinda like that stuff in the back of your refrigerator.
This go-round we have about a dozen new posts - listed before the ones I put in last time. This way - if you're new to the compendium - you can review the history. If you've seen it before you can just view the newest batch.
Incentive programs provide rewards for hitting specific goals. Typically, the incentive program will announce the requirements and as you perform and hit the specified hurdles, you earn awards – points, credits, what have you.
Your points are good for merchandise, gift cards, travel, you name it.
All good in the hood right?
Maybe not.
Maybe you could enhance performance by simply asking a question before you start the program.
"Research shows that if you want to get people to do something, you should ask them to predict if they will do it. An affirmative answer greatly increases the probability that they will follow through."
The research highlighted in this article goes on to say...
Ask customers about their intent to buy your brand or product. Even this small step (mere measurement) will have a positive effect.
Get an affirmative answer. Plenty of studies show that if a person states a positive intention, they are more likely to act on it.
If possible, get a public or tangible commitment. This may not always be possible or even appropriate, but if it happens it will further increase the probability of future action.
While this post is all about consumer behaviors – getting people to “buy” – why wouldn’t the same hold true for incentive and performance programs?
Commitment and Consistency
We’ve talked about these social psychology triggers before. People like to remain consistent with their past behaviors and commitments. Prediction is a form of commitment.
So...couldn’t you increase the chances of your audience following through on program goals if you hit them with a double whammy – asking them if they will participate and hit goals – and reward them when they do?
It’s not really a new idea...
In the days before electrons we used to send out a commitment card to the participants asking them to commit to the program and complete a wish list of items they might want to redeem for out of the award catalog. We’d also offer bonus points for completing the card.
Little did we know we were ahead of the curve.
So... Now go back to the three points highligted above...Take out the words “buy your brand or product” and replace it with “participate in the program and earn and redeem points for awards.”
This doesn't have to be only for incentive and reward programs. Any performance issue you want to focus on can take advantage of our human desire to be consistent.
Before telling an employee what to do - ask them if they think they CAN do it. Ask them if they think they WILL do it. Ask them to predict outcomes. These questions can increase the odds it will happen.
I have gone on record here that the traditional players in the incentive industry really need to think about their long-term viability.
Traditional companies have seen the market get tougher and tougher as their business model get’s disintermediated squeezing margins, software vendors encroach on their space, new award options are developed by outsiders, and thought-leadership is usurped by just about everyone. All things that point to an industry resting on its laurels.
Loyal readers know I don’t recommend specific companies (our model is about program design – not fulfillment) but I’m not against highlighting companies that I think are doing good stuff. In the past, I’ve referenced, Globoforce and I Love Rewards – and now I need to add MotivAction, LLC to my list of companies to watch.
The Big Deal
MotivAction, LLC out of Minneapolis, MN recently issued a press release about a new platform for their award programs and I really like the concept. Called “The Big Deal” (might want to check with Shanter - I wouldn't want to get on the real Big Deal's bad side) – this new patent-pending technology adds a layer of game play and special access to the traditional earn and burn strategy employed by most companies.
"The Big Deal" in a nutshell...
Paraphrasing their recent press release:
Companies pick specific activity goals. Once those goals are achieved by the program participants, they “unlock” access to specific, time-sensitive deals on awards. The deals are determined by the client and are communicated via the program website, email and mobile communications.
The key here is that the “award” is not only the points that the participant would normally earn for activity in a program – but the access to deals. The participant isn’t just working to earn a “point” – he/she is now working to be one of a select few that can get behind the velvet rope and redeem their points for lower priced awards. Leveling up so to speak.
I’ve not seen the process in action but I can guess that what may be offered in the catalog for $100 in points could be offered through “The Big Deal” for say $75 in points – but only for a limited time and only if you hit specific metrics in the program.
The Real Win Here
While MotivAction seems to be selling the “deal” aspect (ie: lower point values on awards) I don't think that is the real win.
The real win is increased program performance. Here's my thinking...
1. Scarcity – By establishing a threshold for access to the deals you increase desire.
We all want something we can’t have. Another Cialdini principle in action! By making access limited – you increase focus and attention on the goal thereby increasing program performance and the influence the program has on results.
In addition, making the offer time-sensitive (short term) it increases the scarcity factor. Not only is access limited based on my performance (I got in and you didn’t neener, neener) but I have to redeem within a time frame creating an urgency that normally doesn’t exist in point award programs. And that means...
2. Redemption = Engagement.
Many companies see unused points as a positive thing especially if they are in the old model of bill on redemption – meaning they don’t pay until someone actually orders an award. However, unused points are really a big negative. When participants redeem they get to experience the award and the feelings that award brings them. No one ever got excited looking at a bank statement (well maybe Bill Gates does) – but put a 55 inch LED TV in the living room around SuperBowl time, and you got a party!
Redemption is the surest sign your people are engaged in the program. This new twist on the program should increase redemption – which in turn should increase engagement with the program.
3. Redemption = More Performance.
I’ve said this before – when you have big balance of points in your program bank account you don’t need to perform. Why? You can redeem any time. But as you spend down those points and experience the thrill of the new doodad or that trip – you want to do it again. But you’ll need to earn more points (positive feedback loop or vicious circle? You decide.) In either case – redemption begets earning. It’s a fact. The more I redeem, the more I like it, the more I need to earn to redeem again.
The Big Deal creates more reasons to redeem and therefore should increase the reasons I need to earn and ultimately – increase the results of the program.
4. Increased program communications.
Traditionally incentive programs have stayed on a standard schedule of one communication contact a month. It’s what we did when we printed everything and in many cases it’s what we did when we went electronic. This program creates additional program communication triggers. I would think they would communicate the “deals” when they are announced, when people are close to unlocking a level, when the time for redemption begins and ends. All events that require an increase in the amount of communication with the participant about the program. That is a good thing. The more I talk about the program – the more the participants are aware of it and incorporate the earning possibilities into their daily behaviors.
So... “The Big Deal” by MotivAction, LLC – nicely done folks. Nicely, done.
A somewhat new service is available in beta called "Scoop.it."
Scoop.it allows you to create a "newspaper" of sorts from things you find interesting on the web. I'm experimenting with the service and of course I thought of you, gentle reader.
I asked myself - "what would help my readers in their day-to-day life and business." And I answered - "a grouping of articles that someone else took the time to read and evaluate so that they can see what's hot and what's not in the incentive industry with little or no effort on their part."
That, is what Scoop.it facilitates. And that is what I'm offering to you. So, for the first (and possibly the last - but probably not) time I give you the...
I subscribe to over 350 different blogs, sites, what-have-yous on a variety of subjects from science and pyschology to how to build steam-punk watches. In addition, I monitor my twitter stream where I'm following 2,000+ people. I also get a lot via email. I have a lot of info coming in.
It's from all those input streams that I find ideas for posts on this blog, posts on the FistfulofTalent blog and posts for clients and friends. It's how I keep up with the industry and business in general.
And now you can have a subset of that firehouse, vetted and consolidated for your reading pleasure.
Many of the feeds I get are from incentive and reward companies. Some of their blogs have some interesting stuff you should be aware of. In fact - if you want to be sure you're at least included in the first pass shoot me a note and let me know where your site is and I'll take a look and add it to my reader list.
CAVEAT: If you have your feed set up to only show a "summary" or an excerpt so that I have to click through to the site - forget it. Don't bother sending me the site info. Feeds that only show a summary are simply padding their web page stats trading clicks for readers. I don't click through. I ignore the content ... period. No exceptions. A feed reader is for me to get info WITHOUT clicking out to your site. So don't suggest your site if it only offers a summary feed. (btw - none of your readers appeciate it either - it's a pain in the ass and it shows that the site is about you not them - they will remember that. Just sayin'.)
Hope you find it interesting and helpful. Let me know what you think in the comments. Continue or cut? Your call.
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