Transcript: Essentials of Online Incentive Programs Inclusion and Recognition

Transcription

1 Transcript: Essentials of Online Incentive Programs Inclusion and Recognition

2 The Essentials of a Successful Online Sales Incentive Program Inclusion and Recognition Paul Peters: Hello. And thank you for joining me today for conversations on incentive compensation. I m your host, Paul Peters. If your goals are centered on productivity, engagement, or sales performance you may find that driving these right behaviors can be challenging. Best practices and research tell us that employees respond best to positive, frequent, and consistent recognition, but how do we build the ideal program for our organization? With me today to help us build that framework for a successful, online incentive program is Rob Catalano, Senior Director of Marketing at I Love Rewards. It s a company that develops results-driven employee rewards and recognition solutions through best practices, ROI-based programs. Rob is a certified recognition professional and has consulted several top employers in North America on implementing and maintaining rewards and recognition strategies and programs. I Love Rewards is also a Varicent partner. In this three-part series we will discuss the essentials of a successful online sales incentive program. Today s conversation on incentive compensation will focus on inclusion and recognition. Rob, thank you for joining me today. Rob Catalano: Sure. Thanks Paul. Thanks for having me. Paul Peters: Before we start with the framework of a successful online sales incentive program, could you please tell us why a program like this is important and something I d like to consider at my organization? Transcript: Essentials of Successful Incentive Programs 2

3 Rob Catalano: Sure Paul. Primarily a sales incentive program is important because they have time and time again proven to work. I was actually part of a recent study published in January that identified that the best-in-class companies in sales performance used sales incentive program 67 percent more frequently than other non-performing companies. Also in the study, which was actually conducted by the Aberdeen Group, they saw a 63 percent larger average deal size as a result of a sales incentive program. Now meeting and exceeding sales quotas from a sales team is a challenge sales managers and companies will always face, but incentives are more important because they re a great way to drive the behaviors that you want to see in your sales process. And the reason that incentives and more than the incentives, but recognition of those activities works is because quite simply what gets recognized gets repeated. The more company or sales manager we are highlighting, or recognizing, and incenting the right behaviors we will see more of those activities over time that will eventually drive results. Another thing is that when you have an incentive program in place by nature your sales organization is made up of very competitive individuals that want to win. Competition isn t a bad thing when it comes to organizations, especially sales. They want to win in business, in life, and even win in incentive programs. This can even be seen in the social space right now with everyone trying to be at the top of a leaderboard or be the mayor of a place on Foursquare. It s these examples of gamification that show the internal competitiveness of us all. So in essence incentive programs are a great way to impact behavior to see more of the behaviors that you want to see in your business. Companies are looking to get more out of each sales person, and the most successful companies have realized that an incentive program is a huge opportunity to grow business and engage employees throughout every step of the sales cycle. Transcript: Essentials of Successful Incentive Programs 3

4 Paul Peters: Your first essential to success is inclusion, but when I think about incentive compensation the first thing that comes to my mind is sales team. Who else should I include? Rob Catalano: Incenting certainly works to drive sales people, but your strategy shouldn t be limited to the sales team. An overall sales incentive strategy is most effective when it becomes a fundamental part of company culture on all levels of the business, especially activities that are close to the sales process. So also if you think about all of the activities relating to a great sale, including great demo supported by your technical team, or great response time on prospect deliverables, or even adding details to the CRM tool which is always a pain for sales people or even delivering on implementation and delivery of a sale, all of those mentioned behaviors contribute to current and future sales. We need to assess what those behaviors and milestones are and get out of the mentality of only sales compensation for sales people but rather recognition and incentives to drive the activities of the rest of the organization that supports sales. I ve seen it time and time again. Incenting the whole company and engaging and motivating all employees to go above and beyond for the customer and the sale has proven to drive bottom-line results. A lot of companies wonder, how can they incent the rest of the organization with compensation and commission? Well we don t have to. We can incent those others outside of compensation using recognition and rewards. I know. It sounds like a crazy idea, but it s proven the employees prefer recognition and a meaningful position more than salary. Studies have been out there that show that, and what recognition provides is that intrinsic motivation where employees activities are actually valued at work, and that s important to people. For example, I Love Rewards runs several sales incentive programs for our customers that individuals don t get cash incentives at all. Transcript: Essentials of Successful Incentive Programs 4

5 Instead they get points to redeem for those points for an online category. So they can redeem for merchandise, or travel, anything that rewards makes it personally meaningful to them, and it isn t cash compensation by any means but rather recognition, and rewards, and personal fulfillment for doing a great job. Also the point solution helps gets away from that one-size-fits-all incentives that are done times by companies that don t really motivate employees but actually demotivate them by providing rewards that they really don t want. Paul Peters: Recognition is an essential. What is it about recognition that is important? Rob Catalano: We ve come a long ways since the early carrot-and-stick sales incentive model, Paul, which sent really predetermined criteria that employees need to reach to receive a reward. And really rewards by themselves don t work today, and I use the example that back in the day a watch and a plaque was given to employees, and that was kind of the old way it was done. It really doesn't work anymore. Actually the way it s being done today by giving someone a gift card for Starbucks doesn't work much either because it can be demotivating if I don t like the reward. But also just more cash doesn't work either, but being recognized by your actions and knowing that as an employee you re contributing, being recognized, in essence the result is you become more engaged in the business. And there s a Dr. Bob Nelson study, and Dr. Bob Nelson wrote a book that sold about 2.5 million copies called 1001 Ways to Reward Employees that said that employees are 11 times more likely to feel completely committed with an employer than had what he called a culture of recognition. Transcript: Essentials of Successful Incentive Programs 5

6 And we all want more engaged employees and recognition really helps drive that. In today s best practices combine both reward and meaningful recognition to employees across all departments and levels of a company that inspires continued passion at work and retains those tops employers. Another reason why recognition is important because non-recognized employees are unengaged. They often lack motivation necessary to drive results, and even when compensation or pay is competitive. So think about it. You can have the greatest salary and cash sales incentives, but it s intangible recognition that drives people. How many people do you know love companies to make less money? It happens all the time, and their position wasn t personally fulfilling and they often left for even less money. So we need to have fulfilled and engaged employees, and a great recognition strategy is a good way to get there. What I actually recommend is taking one percent of your compensation package for non-cash incentives. So take one percent away from employees variable and compensation pay to focus just on recognition and drive results most important to your business. I know that sounds crazy, but if you think about it a recent survey by the American Psychological Association found that only 43 percent of employees feel they receive adequate non-monetary rewards and recognition for doing great work. Traditionally cash has been king for commission-based sales teams, but in order to win in this competitive business environment sales managers need to implement additional innovative measures to motivate employees to close and fill their funnels for the future. And that s why recognition if such importance. So relating further to sales, relying solely on base salary and traditional cash commissions at the close of a deal doesn't keep a team motivated during longer sales cycles, and it doesn't encourage them to increase the prospecting activities necessary to fill a healthy sales funnel and raise the volume of sales. Transcript: Essentials of Successful Incentive Programs 6

7 So I ll end by saying that feeling valued at work is important, and an annual cash bonus, commission, or performance review doesn't always fulfill that. Frequent recognition that is meaningful, specific, and timely is an effective and low-cost way to deliver recognition that resonates well with employees to drive performance. Paul Peters: I d like to thank my guest Rob Catalano, Senior Director of Marketing at I Love Rewards for joining me today. Our next conversation on incentive compensation will discuss the essentials of building trust and interaction. To learn more about I Love Rewards you can find them online at Thank you for listening today. If you d like to hear more conversations on incentive compensation or learn more about Varicent Software you can find us online at Transcript: Essentials of Successful Incentive Programs 7

8 About Varicent Software Incorporated Varicent provides incentive compensation and sales performance management (SPM) solutions for medium to large organizations globally. Our solutions help organizations close the gap between business strategy and sales performance. Our innovative solution automates and accelerates all of the core SPM processes incentive compensation, territory management, quota planning, and roster management. With Varicent, organizations dramatically reduce sales administration costs, accurately match sales capacity to targets and drive improved sales performance. To learn more about Varicent, visit WORLD HEADQUARTERS Varicent Software Incorporated Phone: Fax: Toll Free: EUROPE Reading: +44 (0) ASIA-PACIFIC Hong Kong: LATIN AMERICA México City: General Inquiries contact Allison Miller at Copyright 2011 Varicent Software Incorporated. All other marks and names mentioned herein may be trademarks of their respective companies. All rights reserved. Transcript: Essentials of Successful Incentive Programs 8