Having a Choice Elevates Customer Engagement Levels

Perks.com CMO Deb Broderson participated in a recent webinar titled, “Why Cash is Not King in Your Channel Incentive Programs.” The webinar delved into the psychology of sales incentive programs to ask what really motivates channel partners and their employees, and what promotes the highest levels of customer engagement.

Loyalty360 caught up with Broderson to learn more about this intriguing topic.

What are the positives of choice-based incentives from a customer engagement/customer experience perspective?

Broderson: Choice increases engagement levels. Participants are creating wish-lists, looking at a catalog of potential rewards, thinking about the trip they can take, etc. The choices, and thinking about the choices, increase participation levels. Our research with clients has proven this, as has independent research. In fact, a University of Chicago study detailed the detailed results of a cash vs choice test. The cash-based participants had a 14.6% improvement in productivity. In contrast, a staggering 38.6% of non-cash incentive participants showed productivity improvements. There is no emotional connection to a paycheck and no associated memory to share. Cash rewards are spent and then forgotten. 

Can you talk a bit about why cash rewards might not be the only effective sales incentive?

Broderson: While everyone has heard the term “Cash is King”, the facts don’t support the statement. Cash is not a motivator. It has no trophy value. It’s typically paid out in a paycheck which means it gets blended in to a salary (which ultimately means that it will be used to pay bills). Participants typically don’t remember how they spent their cash incentive and those who do remember use the money to pay bills and household items. There is nothing about a cash reward that engages the user in the award and research suggests that to increase levels of participant engagement. Individuals need the ability to make choices even about the incentives that they earn.

What are a few best practices when it comes to high levels of channel partner engagement and performance?

Broderson: Too often, channel incentive programs do not consider the individual and that there really is a Science of MotivationTM. Key to the science is balancing Intrinsic (internal) and Extrinsic (external/financial) motivational factors. Intrinsic motivation is a strong indicator of job performance, whereas concentrating on monetary rewards takes attention away from participants’ fundamental needs such as learning new skills, nurturing intellectual curiosity, and enjoying tasks that are critical to keeping employees engaged and motivated.

Next is an understanding the impact of Maslow’s hierarchy of need. A successful channel incentive program does not need to address all areas of Maslow’s pyramid, but it is important to understand them. Channel incentives cannot control physiological needs at a partner’s organization, but can and should ensure the program is an important element of a partner sales reps compensation. While a channel incentive program can’t control job stability, the program can feed into that partner sales reps learning, which adds to their sense of security. A sense of belonging is a very important element of the pyramid, so consider incorporating a teaming element to the channel incentive program and, finally, add social recognition.

Why do companies turn to incentive programs to gain mindshare and increased loyalty to their products and services?

Broderson: Simply stated, well thought-out and effective channel incentives programs are a powerful tool to foster greater effort and drive targeted behavior. Incentive programs can inspire, motivate, and encourage participants to perform better and realize their true potential. Channel incentive programs help both the vendor and the channel partner achieve revenue targets, penetrate new markets, and gain new customers. They can also help the partner realize “softer” goals such as completing certification courses, marketing certification, and achieving targeted customer satisfaction scores.

What makes a successful channel rewards program

Broderson: A well thought-out and effective channel rewards program is not one-size fits all. It is a powerful tool to foster greater effort and drive targeted behavior. Incentives programs should account for all audiences (Business Owner/Manager, Partner Sales Rep and Vendor Channel Account Manager.) Understanding what inspires and motivates each audience is vital to the program success. A successful rewards program will:

  • Understand who you are trying to incent through partner profiling and participants’ demographics.
  • Recognize that a successful sale is the result of a string of productive activities that combined lead to the sale.
  • Reward behaviors through the entire sales cycle from enablement to pre-sales through the sale to post sales
  • Map out your solutions different sales cycles, and configure promotion length around those sales cycles.
  • Include your CAM’s to encourage cross functional collaboration and team work throughout the sales cycle.
  • Consider the extrinsic and intrinsic motivators which have a direct impact on your culture and values.
By connecting rewards with what is most important to the participant, you can instill a deeper sense of recognition, acknowledgement, and fulfillment among those individuals—and in turn, promote positive, authentic engagement.

What are some of the keys to channel incentive success?

Broderson: There are five key areas that we recommend for focus:
  1. Understand who you are trying to incent. Build specific promotions for each partner specialization, considering the demographic make-up of your partner organization, and adjusting over time to meet changing needs.
  2. Start adapting strategies to motivate and engage millennials through behavioral based promotions tied to the sales cycle, not just the transaction. Reward behaviors that lead to the sale, i.e. MQL to SAL to SQL.
  3. Give participants control by offering choices as part of the rewards system. Consider financial rewards as part of the program, not as its center piece. Non-monetary options create an emotional context for the reward.
  4. Promote a culture of recognition and collaboration to impact the participant’s satisfaction, morale, and engagement. Consider the extrinsic and intrinsic motivators that have a direct impact on your culture and values.
  5. Include your CAMs. Ensures that all stakeholders are aligned and derive tangible benefits. A unified approach to incentives builds deeper relationships with partners, improving the effectiveness of complex solution selling.

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