Forget Cash, Show Me the Goods!
May 06, 2008
There's a special place in salespeople's hearts for high-end merchandise
By Mike McCue
When the person driving the wagon wants his team of horses to start pulling, he has to decide whether to use the carrot or the stick. While urgency might occasionally mandate the use of the stick—like when the dastardly villains with guns are riding up the trail in close pursuit—most people agree that motivational tactics are more effective than punitive ones.
Still, the horses don't move when someone promises them a carrot down the road; it has to be dangling right in front of their eyes before they lift their iron-shod feet. Human beings are obviously much more complex than equines, but it's still a valuable lesson for sales managers: Merchandise motivates.
It really is that simple. There is a time and place for gift cards, cash, public recognition and reward travel, but if you really want to get people buzzing, show them product! People say that money talks, but merchandise provides an all-out assault on multiple senses: the intoxicating smell of quality leather, the vivid colors on a high-definition TV, the ground-shaking rumble of a high-end surround sound audio system.
Receiving a tangible reward for achievement occupies a special place in the human psyche, says Jimmy Beyer, national sales manager with Sony Electronics. "Choosing product for an incentive program has a special impact because you're allowing people to win something that they might not go out and buy on their own," he says. "If you give someone a big-screen HDTV, they're going to be very excited about that. If you give them a cash reward in the same amount, there's a good chance they will spend the money on something else … maybe even mundane expenses like gas or groceries. A few months later they might not even remember what they spent it on.
"That really lessens the impact. Sales managers want their people to remember the rewards that hard work and extra effort bring to them, and a few tanks of gas or bags of groceries just don't cut it. But give them something exciting that they can touch and feel, and every time they see it they'll remember that their hard work isn't just appreciated, but rewarded in a tangible way."
As with most decisions in life, there are trade-offs to using merchandise as well. Unlike gift cards or reward travel, products need to be built, shipped and stored, so using TV sets, audio equipment, luggage or watches in an incentive program requires a little extra thought and planning. Beyer reveals some other tips and insights for the sales or marketing manager who is looking to make a big splash with reward merchandise:
SMM: What are the issues a sales leader must understand if he or she is considering the use of products and merchandise in an incentive program?
JB: There's a place for all types of incentives, including gift cards and travel rewards, but one of the biggest advantages to giving merchandise is that you can choose the hottest, latest and greatest products on the market. For an electronics company like Sony, there's a lot of buzz around the release of new products—the newest 1080p "true high definition" LCD flat panel TV or high-end surround sound system—and sales leaders can tap into that energy to generate excitement. Team members can go to a store and see the actual product with their own eyes and hold it in their hands. What's even more exciting is when we have a few months to work with sales managers on their plans, because then we can offer products that aren't yet available anywhere, at any price. If managers know that Sony will be releasing a brand new product in three months, they can build their programs around a product that's so new and cutting-edge that it isn't even commercially available yet. And sometimes, by working with the manufacturers, you can even get a discount that allows you to give away products that have a retail value higher than you're paying for them. That's a valuable way to stretch resources in tight financial times.
SMM: What about the challenges presented by using merchandise, then?
JB: Probably the most common mistake people make when choosing to use merchandise is that, unlike gift cards or travel vouchers, the product needs to be created, shipped and warehoused. At the beginning of an incentive program, some managers choose their reward items by going online or to a retail store. The problem is that by the time the program ends and the sales leaders go to source the product, they discover that many of the items they chose are highly allocated, and sometimes even discontinued. Then salespeople don't get their rewards when they were supposed to, and if the product is discontinued, they end up with a substitute that might or might not have the same appeal for them.
SMM: If the manager chooses a merchandise reward, how much lead time needs to be built into the schedule?
JB: It's impossible to say because every product is different. There is no single answer that eliminates all of those problems. That's why we like to work with sales leaders when they're in the planning stages of an incentive program, usually about three to six months before fulfillment. That allows us to guarantee two things: that the reward merchandise delivered is the exact item that was promised when the program started, and that it will be available on the date it was promised. I can't stress how important both of those things are. Salespeople work very hard to reach their goals, and when they get something different from what they ordered, it can be very disappointing … even when the replacement merchandise is of the same type and approximate value. Salespeople are expected to deliver the revenue they promise in their forecasts—and to deliver it on time—so they expect their team leaders to treat them the same way.
SMM: Does a sales leader need to have the framework of the plan in place before engaging with product manufacturers, or can you help them develop the details, in addition to providing the reward merchandise?
JB: We can simply provide the merchandise if that's the way a company wants to go, but the process works best when sales managers talk to us first. For example, if someone wants to implement a service award program, the intent is to improve employee retention and reward people who stay with the company for a long period of time—five years or more. The rewards you choose are different from the ones you'd pick for a safety awareness program because the timeframe is so much shorter. What's hot today will probably still be hot in a month, but it might not be five years from now. Even the way you present them to your teams depends on the timeframe. If it's a short-term program, use the details to generate buzz. If you opted for a TV as a reward, show your team a picture of the exact unit and all of the details. But if you have a longer-term program, don't give too many specifics—such as the exact model number—because that model might not be around when the program ends.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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