Incentive Intelligence

Chris Brogan - Anchoring and Social Proof - Influencing Your Audience

If you pay any attention to the social media space you probably have heard that Chris Brogan - Social Media Consultant and the face in front of (behind?) New Marketing Labs, talked about how much he charges for his services.

$22,000 per day.  

I'm guessing there were a few raised eyebrows when that number hit the interwebs but Chris does a great job of walking through the logic of his pricing on his post... 

"I charge that much because I don’t want hundreds of takers. I want 2-3 takers a month at that rate."

He then highlights the other ways you can get his thinking at different price points.  His day rate is for his undivided and focused attention on the client.  His day rate is designed to limit the number of takers. 

But this post isn't about pricing or even about consulting fees - it's about influence and how this little bit of information could (probably will) have an effect on the entire social media consulting space.  

And if you're smart - a lesson to be learned about setting goals and objectives within your performance programs.

Anchors

The rate Chris quoted puts a number out there for all to see.  It's now public.  In psychology-speak this is called an "anchor."  This means (given Chris's expertise, reputation and results) others who do the same "type" of work will probably see that number as the high end of the spectrum.  The "industry" now knows what the limit is.  I'm sure there are others, as even Chris points out in his post - Godin, Kawasaki - who may charge more, but we don't know their numbers exactly and it doesn't really matter.  We have Chris's number and he's a good point of reference for people at that level, in that space.

Now, assume you're a Social Media Consultant charging $20,000 per day but don't have the reputation and the history of success that Mr. Brogan has - your day rate just got lower.  Why would a client hire you for $20K when they can get the best for a few grand more?  Your services didn't change.  But the anchor for your services did.

 Now assume you are a very, very good social media consultant with great references (maybe even Chris himself) but you only charge $1,000 per day.  Congrats - you can probably give yourself a big raise.  Not that you're doing anything better - just that the anchor for the work you do is now known and you can point to it and say - "hey, I do similar work as Chris and I'm only $10K per day."  Your clients may now think your $10K rate looks like a bargain.

That's what anchors do.  They provide context for discussion and allow for comparisons.

Social Proof

The other thing this discussion does is create more business for Chris - and all other Social Media Consultants.  (This to me is the either the genius of Chris or the best lucky accident in the world.)

The mere fact that Chris sets the bar that high to LIMIT the number of takers communicates:

1. There are a lot of takers and he needs to limit them.  Potential clients are now going to think - "jeez... I better get in on this social media stuff 'cuz there are so many people out there who want this that Chris has to charge a huge number to keep it manageable."
    
2. There are a lot of people willing to spend $22k for this stuff so - "I'd better get ANYONE in here to talk about it - even if I can't afford the top guy - I'll take someone who knows something about it - and at $10K it's 50% cheaper."

As I mentioned in my money quotes slide preso in my review of the book Switch:

"In this entire book, you might not find a single statement that is so rigorously supported by empirical research as this one: You are doing things because you see your peers do them."

Chris single-handedly established the price point and the demand in one fell swoop.

Love it.

Your Performance Program

These concepts are important to your performance program and goal setting from this perspective:

1. The goals achieved in the past are your anchors.  Those are the points of reference for your people.  If you've set them too low, or too high, they will affect the results of your program.  They are either a positive anchor in that they communicate they are achievable or they are negative in that they aren't.  Only you know what is doable.
    
2. The goals other people have hit in the past show what is possible.  They are the social proof that these goals are doable.  Allowing others to see the performance spectrum eliminates any confusion on whether the goals are correct, attainable, etc.  People are influenced by what other people have done.  Your people, just knowing someone else is hitting those levels - will work harder to prove they are part of that club.

In Closing

If you're wondering.  No I didn't raise my rate.  No it isn't $22,000 per day.  

But then again - I'm no Chris Brogan.  As he says at the end of his post:

But are you measuring against me? Maybe not a good plan.

Word.

Leadership Training Everywhere - But Not a Drop to Drink

• 142,000,000 - the number of listings on google when searching for leadership.
• 33,500,000 - the number of listings on google when searching for leadership training.
• 21,300,000 - the number of listings on google when searching for leadership training courses
• 13,100,000 - the number of listings on google when searching for leadership consulting firms
• 1,600,000 - the number of listings on google when searching for leadership consultants

For context - searching pornography only returns 11,600,000 hits (that may be a function of the audience not being able to spell such a long word since "sex" gives you 365,000,000 hits.)

Why are those statistics interesting?  Here's why.

Having a wonderful lunch with a friend and former client yesterday we talked about the top problems companies face and the topic of leadership came up.  We puzzled about the sheer number of consulting firms that offer leadership training, the number of blogs and articles on leadership, and the focus most companies put on leadership.  My friend's experience indicated that poor leadership seemed to be a root cause of a lot of the other problems typically encountered at a company (I'm paraphrasing a bit - after all it was an hour-long lunch.)  

But even with all that focus on leadership - we still have the problem.

We ended with this question...

Why, with so many resources and what seems to be a big concern of most companies - is leadership still such a huge issue?  Why hasn't this either been solved or at least been moved down the list of problems companies face?  

Why can't we seem to get leadership right?

Here's where we netted out...

• Companies identify leadership as a problem.
• Companies hire people or buy programs to address leadership.
• People go through the process of "learning leadership."
• People go back into organizations and are measured on the EXACT SAME THINGS they were measured on BEFORE training on leadership.  

In other words, we don't measure leadership - we measure everything else.  Profits, losses, costs, quality, errors, etc. 

Here's some homework for you all.

Do we need new metrics for managers that have more to do with people and less to do with the output those people are responsible for?

Examples I came up with...

• Voluntary turnover to go to a lesser or same type job at another company/department (lower is better)
• Voluntary turnover to higher level jobs outside the company (in other words there wasn't a job open or that could be created for that person in the existing company.) (higher is better)
• Voluntary turnover to start own business (higher is better)
• Number of employees promoted OUT of a department to new, greater responsibility jobs WITHIN the company (higher is better)
• Level of recognition by other employees, departments, managers for the work of direct reports (this would mean you have to have a recognition program that is trackable - something you should do whether you end up using the data or not - but you should.) (higher is better)

What metrics should we be looking at the would indicate somone is a good leader?  

What proof is there that the money spent on leadership training is money well-spent?  

I believe that until we create new metrics for managers we will constantly have the need to train on leadership.

Anyone care to weigh in?  Anyone, anyone?

Only 14 Days Left to Get FREE Motivation Research for Your Sales Team

If you have a sales organization you need to read this post.

2009 is rapidly coming to a close.  Many of you are planning 2010 budgets, working on new ideas and proposing new marketing and sales programs to drive business after getting hit pretty hard by the economy.

Here's something you should do. If not for me - for yourself.

Find out what really motivates your sales staff.

An online friend of mine - Paul Beaumont is working on a Masters Degree in Sales Management at Portsmouth University in the UK. He has chosen to study Herzberg’s 2-Factor Theory on motivation.

The information in Herzberg's initial study was featured in the HBR under the title ‘One More Time – How do You Motivate Employees’.  This article is the most requested article from HBR - requested 1.2 million times - so you know it's what people care about.

This research is important because the initial samples Herzberg studied were administrators, accountants and on one occasion ‘welders’.

But was never applied to Salespeople who are frequently targeted by incentive and reward programs.

Paul is asking the tough question:  after 40 years are Herzberg's findings still relevant? 

You have the opportunity to receive the results from this study - for FREE.

 

Why wouldn't you want that?  All you have to do is participate.

What could participating in the study provide you? 

You could find out...

• If fiscal reward systems motivate. (a point Herzberg was trying to press)
• Areas where greater leadership and management intervention is required
• What’s working/what’s not working, in terms of your Sales Management strategy
• What really motivates people
• What de-motivates people
• A model indicating the relative importance of all factors
• Major successes, opportunities or short-falls within selling organizations
• Best practices from other companies
• What changes can/cannot be implemented to increase/decrease positive motivational change within their salesforce.

In other words - you can get many thousands of dollars worth of research on your sales organization for FREE!

C'mon - jump in!  As a practitioner of incentive design I want to know - but the results are only as good as the input - and the more input the better.  And Paul needs some more input.

Here's how to play ....

To register an interest, simply join the group “Sales Motivation Research” and complete the sponsor application form.

Jump over to Paul's profile on Linkedin for more info.  Follow the links to the online survey and VIOLA - you're part of the solution!  The survey only takes 20 minutes and will provide you with data that could just change the way you interact and lead your sales team.

There is only a couple of weeks before the survey closes - be part of something great and click the links above to read about how participating could help you design the best sales force motivation program ever!

 

The Ultimate Employee Engagement Quote

"We’re so focused on getting the job done (sales generated, products produced, costs contained) that anything that distracts from that takes a back seat.

We know in our hearts that recognition works but it’s a distraction."

That quote came from a comment to a post by Ben Eubanks on his new blog UpstartHR.  In the post that drove that comment Ben posits that there is a 1000:1 ratio of criticism to praise in today's workplace.

Unfortunately, I agree.

Recognition is a distraction from the real work, like generating sales, containing costs.

The real work?

As long as business managers think this way - it will be this way.  Nothing will change.  I mentioned in my comments on Ben's post that evidence for engaging employees (or other audiences for that matter) through ongoing recognition directly affects results and is freely available and freely implementable - but it is hard.  And therefore it's not done.

Recognizing contribution is a distraction?

Providing positive feedback is a distraction?

I'm not singling out the commenter - they simply pointed out the reality of the situation.  Most managers would agree.  Maybe not publicly - but privately they'll tell you - "I don't have time to worry about their feelings - I have goals to hit, numbers to make.  If they want a trophy - go to a kid's soccer game."

Hey - I'm not about rewarding and recognizing "all" effort - only good effort.  But we've arrived at a place where taking notice of effort and commitment and engagement is now a distraction.

And it's pathetic.  

And another thing...

Another comment to Ben's post hinted at something that has always bothered me about the whole reward and recognition space.  The commenter (again - sorry Victorio - I know we're kindred spirits but your comments really got me thinking) mentioned that because the work is hard it gets relegated to HR...

"...which is why talent management tends to fall under HR’s umbrella. It’s a hard job that doesn’t get its fair share of respect and resources. The business leaders focus on the numbers and don’t have to worry about the human processes needed to impact those numbers. We then become easy scapegoats when things (meaning people) don’t work well."

I agree that because it's hard and because the word "human" is in it HR gets the task of looking at all these engagement issues.  Relegating recognition to HR is like hiring a proofreader. 

When I was a lowly marketing schlub, we wrote a lot of copy for client promotional materials and individually we were responsible for the quality of the materials.  Then we hired a proofreader and ya know what - the quality dropped.  The quality dropped because us marketing folks stopped proofing our own copy and just sent it to the proofreader.  If a typo entered the copy it was the proofreaders fault.  Hey, I just write the copy - they proof it.  So we now had one person responsible for proofing all the copy which now included more typos than ever because we weren't proofing our own copy.  Even if the proofreader caught 99%% more typos than we did - the fact that the sheer number of typos starting out was higher our overall quality dropped.

A similar thing is happening in the HR space - as HR becomes more responsible for tools of engagement, the rest of the management team becomes less responsible - and the total amount of non-recognition and non-engagement goes up.  (And manager to employee recognition isn't something that can be handled by another department.)  No matter the tools installed or the work the HR department puts into it they will never be able to impact engagement as long as managers see it as "HR's responsibility."

Measure What Really Matters

Until we start holding managers, supervisors, VPs, Execs, C"X"Os responsible for engagement we will never get it right.  Start measuring recognition and start getting engaged!

Cutting Back on Business Travel Could Cost You 17% of Your Profit

Yeah, I said it. 

Eliminating business travel will cost your company 17% of profits the first year - and it will take more than 3 years before profits recover to match profits from the time you cut business travel.

That's not just me saying it - that's from a new study by the US Travel Association audited by the Wharton School to ensure the methodology was sound.

We don't really have a dog in this fight - but we think the data is significant.

Here at I2I we don't fulfill awards because it causes a conflict between recommending the right solution and recommending something that we get paid to fulfill.  We'd much rather just provide unbiased advice. However, we do think there is value in many of the incentive awards available.  Group incentive travel being one of them.  Also, from an employee engagement and channel engagement standpoint - meetings travel is a great way to reinforce and drive culture and business practices.

But due to the "AIG" hangover the past 10 months the business travel industry has taken a big hit - mostly undeserved (I posted here, here, here and here on this issue.)   But we've got a bit of light at the end of the tunnel.  Actually, pretty bright light.

New Survey From US Travel Association, Destination & Travel Foundation and Oxford Economics, USA

Yesterday I was on a press call with the above mentioned groups who walked us through a new study that proves a causal relationship between spending on business travel and performance and productivity.  The links to the study are here for Executive Summary and here for the Full Report.

The study is really the combination of two separate surveys of corporate executives and business travelers, a review of related research, and an econometric analysis of business travel on corporate performance.

There are some interesting bits of data from the executive surveys - but that is "opinion" - not necessarily fact. 

The key part of the study is the econometric study.  Covering 14 sectors of business over a 13 year period using US Bureau of Labor data the study proved...

• A business will lose 17% of it's profit if it eliminates business travel as a tool!  That loss is pretty much permanent since it creates a new growth curve - below that which you would have had without cutting back.
• There is a positive and causal relationship between spending on travel and corporate performance - $1 in travel spending returns $12.50 in incremental revenue and an average of $3.80 in incremental profit.

That is significant.

Remember - this is based on statistical modeling - not just the "opinion" of the executives (interestingly - their opinion did fall in line with the fact-based models.)

If you were considering cutting budgets for business travel in 2010 - don't.  It will cost you money.

If you want to drive some significant profit growth - think about beefing up your customer visits, your trade show attendance, your employee meetings and your group incentive travel.

The Newest Employee Engagement Score

Do you have a company logo-identified catalog featuring shirts, hats, key-chains and coffee mugs?

Do you want to know if your employees are engaged with your organization?

I have the definitive measure of employee engagement...

Sales of logo identified merchandise to your employees.

That's right.  To find out if your employer brand is something to brag about and if your employees are happy and proud to work at your company simply track purchases of your logo-identified merchandise.

If you have a great employer brand - folks should want to wear the company colors.  I'm guessing Apple and Zappos does big business in their employee logo store.  AIG - not so much.

If your sales chart looks like this - good for you.

If it looks like this ... ya might want to check and see what's going on.

You could also check your purchases by employee tenure - if the newbies are buying the shirts and jackets but the 5-year folks are shunning the store you've got a problem.  If sales go up as tenure goes up that might indicate you're doing a good job.

Hey HR Folks - Did You Do an EROI?

ROI is big these days.  Everyone is making sure they do the ROI - Return on Investment - for any expense in order to justify that expense.  But I think there is a step missing in the process based on the questions I've been getting, some tweets I've seen and some recent posts in my blog reader.

The questions vary but in general they are:

"How do I do the ROI on my "X" program."

Many would applaud the person for asking the question.  My initial reaction is - "Huh?  How could you even have run the program if you haven't figured out how to justify the expense?"

In other words the time to do the ROI isn't after the program has started - or after its been completed.  The time to do the ROI is before it even get's greenlighted as an expense item.

EROI

What I'm talking about is EROI - or - ESTIMATED Return on Investment.  That's right - taking the time up front to ask yourself how you will measure your initiative and establishing the appropriate measures, costs, expectations, results, etc., before you run the program.  This is critical for a couple of reasons...

1. Establishing the EROI makes you go through the process of identifying the value of the program and the outcomes.  Without taking the time to do the EROI you are simply checking off a box - "Employee reward program?  Check.  Employee Peer2Peer program, check, Engagement Program - check."
   
   What does any of that mean?  Nothing - it's just a CYA so that you can point to it when the CEO or other CXX person asks "what are we doing about employee engagement."
   
   
2. Doing an EROI allows you to look at various outcomes.  I'm not suggesting you run a full Monte Carlo simulation but I am saying that you need to look at the program from a few different angles.  What would happen if the market collapses?  What would happen if sales doubled?  What would happen if the factory went on strike?  Assigning probabilities to events that could impact your program will allow you find any holes in the structure and give you a "watch list" that you can use to continually evaluate the program and adjust if necessary.

If you don't do the EROI - you have no business doing the ROI.  Finding out if your program works without the first step of estimating its impact is like putting up the umbrella after you're soaked to the skin. 

Take the time to evaluate the potential impact of your program before you run it. 

What "Brüno!" Can Teach Us About Incentive and Reward Program Measurement

I had a nice chat yesterday with a friend that works at one of my old employers.  He's been very good about letting me know when a typo slips through on one of my posts.  I appreciate the fact that he reads the blog - and I really appreciate the fact that he knows that typos drive me crazy.  We're all subject to them - even when we proof and proof and proof.  So Kudos to you Don.

During our conversation we touched on the fact that programs need to be reviewed to ensure that they are achieving their intended goals.  I said something about reviewing the program after the first quarter and he said he'd review the program at 30 days to make sure it didn't start out poorly - giving the program manager a chance to react quickly and improve/change the program.  I thought for a minute and agreed. 

I was caught up in "old school" business thinking.  Again, none of us are immune to traditional SOPs (standard operating procedures) - those rules of thumb that are ingrained in us from early on.  I'm glad someone called me on it.

But the real "aha" moment came this morning as I was reading some overnight tweets.  One caught my eye - "Did twitter Bury 'Brüno!'"  From the article:

"...but "Brüno" saw almost a 40% drop in ticket sales from Friday to Saturday, and an even steeper drop in viewership moving into Sunday, which is incredibly unusual on opening weekend."

The industry thought the movie would do $50 million plus and ended up only doing $30 million or so.  A huge disappointment.  The article doesn't directly blame twitter for the drop off but it does offer this bit of warning...

"...It seems a bit hasty to blame Twitter for the failings of "Brüno" at the box office — the "Brüno" Twitter stream currently has plenty of positive mentions for the film — but it does point to a shift in consumer response times. When people can immediately voice their opinions, there's going to be less room for branding and marketing to go unchallenged."

Twitter - and a variety of other connecting technologies have seriously shortened the time frame for information and feedback.  And as more people have the technology in their pockets to connect, the cushion a company has for reviewing, measuring and correcting programs has shrunk significantly.  While the "old school" would say review quarterly... the new school would have been in class, taken the final, applied for graduate school and graduated long before you got your first whiff of a problem with your program.

My new thinking based on my conversation:

• Solicit feedback immediately upon launching the program with an on line survey to check if the message was delivered and if your audience understands the intent and goal of the program.
• Solicit feedback weekly for the first 4 weeks to make sure there isn't a drop off in attention to the program and get feedback as the audience gets more accustomed to the program and how it works.
• Monthly check in on the progress of the program.  Is there anything new popping up that would limit the program's effectiveness?  Are the messages still clear and understandable?  Did anything change in the market or the organization that would necessitate a change in program structure, design, direction?

I don't think any of these time lines are etched in stone - but I do think that we need to reevaluate the time line for soliciting feedback. 

Our feedback loop should be as short as the communication loop - and that my friend - is getting pretty damn short these days.

gubw6snj45

 

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Program Peripheral Vision - Why Channel Programs Need to Look For Outliers

Many channel programs measure one or two things to determine who earns an award(s).  Commonly they will be either sales or product - either revenue or margin - either specific products or bundles of products.  The program is designed to sell, push, market, present - whatever the sponsor wants.  The program is an inside out program with little if any regard for what the participant wants/needs.  (I focus on channel here but it also holds true for other audiences.)  But tracking and following those metrics could potentially drive your business in the wrong direction - setting you up for failure in the future.

"What?" you say - "how can driving sales in a product I need to sell be a cause for failure?"

Simple - if you measure one or two things you're missing 100's of other pieces of information.  Most program analysis is designed to track the objectives of the program.  If the program rewards sales of Widget A - then the reports will show sales of Widget A - by region, territory, customer, etc.  When management reviews the program results each month/quarter/year they are looking to see if the program has achieved the objectives for Widget A.  That's good.  You should focus on program success.

But - if you only see data on Widget A you miss information on Widget B - which could be more valuable than the success of the program and sales of Widget A.

Innovators Dilemma

A very smart guy wrote a book called "The Innovator's Dilemma" - Clayton Christensen - back in 1997.  The book primarily looked at the technology industry and made the case that upstart companies have a knack for unseating incumbents.  His point was that the incumbents are focused on what they do now - the upstarts are focused on what will be done in future.  The focus on now made the big guys blind to the future and vulnerable to the market change.  By the time the incumbents saw the change it was too late.

So what does this have to do with channel incentive and reward programs? 

This...

If all you measure is the sales of stuff you want now you're missing the information needed to be prepared for the future.  But, by analyzing the data from your channel program over time you can be prepared for shifts in the market and be ready to capitalize on them.

When tracking your program results look for things that surprise you.  Does your traditionally top-performing distributor selling less of Widget A, but a little more of Widget B?  Is that normal?  If not, put a pin in it and see if it continues to be "abbey normal."  Watch the progression of that outlier.  Next reporting period - did Widget B sell more at that distributor again?  Was there a similar pattern with other distributors?  Make a call - understand what is happening.  It might only be a blip on the screen today - but it could be an invasion tomorrow. 

By forcing yourself to look at the outliers you can start to see patterns you wouldn't normally perceive.  Consider it your "peripheral" vision.  Peripheral vision isn't very good at specific images - but it is good for seeing movement - changes in the scene - allowing you to move your main focus to that thing you saw "out of the corner of your eye."

Next time you get the results of your incentive program (heck - any report on performance) as yourself - what is on the periphery - what are the outliers?

You just might find the next objective for your incentive program.

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Channel Reward Programs - The Invisible Driver

For over 20 years I've put together channel reward programs.  From simple 3-month product-based incentive programs to annual recognition group travel programs.  In that 20 years I can probably count on one hand the programs that included the single most important success driver.  99% of the programs designed to target distribution channel performance miss out on the biggest opportunity to truly impact results.

Your Field Sales People

Most, if not every company that sells through an independent distribution network have "field sales people."  These are company employees who are tasked with calling on the distributor, dealer or jobber, and building relationships with, solving problems with and generally maintaining the ongoing business relationship with your customer.  These are your most important audience members when launching a distribution incentive and reward program.  But the goals for these folks should be different than the goals for the distribution channel.  Unfortunately, when they are included - the objectives they are assigned have very little to do with the real value they bring to the program.

If the field sales organization is included in a distribution program it is cursory at best.  They might be given some introductory materials on the rules and the phone numbers their customers should call if they have questions.  They might in some very rare instances be given a sales objective tied to the roll-up of their customers in the program.  However, their real value isn't in driving sales - it's about driving engagement.

Field Programs Should Focus on Connecting

To really drive distributor programs design a concurrent field program that rewards and recognizes the field for their efforts in generating buzz about the program.  Their job is a communication and administrative conduit - not another sales driver.  If the distribution program is designed correctly you don't need to layer a sales program on your field - you need to ensure the program is delivered, understood and managed correctly.

Your field program should have objectives that change over the course of the program - from launch to conclusion there are many activities that should be measured.  Some examples include:

Pre-Launch

• Has the field person reviewed the program rules and awards?
• Has the field person been "certified" to explain the program to their customers - do they know how it works and how it will affect their customers?"
• Does the field sales person understand how it affects them? 

Launch

• Has the field sales person called on their customers and asked them about the program?
• Has the field sales person presented the program to a customer and explained how they earn awards?
• Has the field sales person helped each of their customers define an award objective and put a plan in place to help them reach that goal?

Mid-Program

• Has the field sales person reviewed the program results to date?
• Has the field sales person called on accounts at the top to congratulate them - or the ones at the bottom to see what the issues are?

Program Close

• Has the field sales person put together a plan to recognize their customers personally if they are top performers nationally, regionally, etc.?
• Does the field person have tools available to provide communication to local business magazines and periodicals that can help reinforce their customers success?
• Does the field sales person meet with their non-earning customers to discuss what/why/how they fared in the program?

All of the objectives above will tremendously impact the success of your channel program - and most if not all of the objectives above are ignored by most companies.  Don't throw your money away on a program for your channel if you're not going to enlist your most important audience.

If your program fails - ask your field personnel why.  They will either say "what program" - and you have your answer - or they will have specific information from their customers on why.

 

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