Get into incentives

Carrots may not make you see in the dark, but they do have the power to raise your sales figures. Want to give your profits a push? Try a big, fat, shiny incentive, says Catherine Toole.

Last month a story entitled 'From Digi with love' ran in thehe power to raise your sales figures. Want to give your profits a push? Try a big, fat, shiny incentive, says Catherine Toole. Infomatics news section, about a sales incentive on offer from Digi to the ilion sales force. A #26,000 BMW Z3 (the car from the Bond film Goldeneye) was to be loaned to the salesperson selling the most Digi kit each month and then given outright to the top Digi salesman of the year. Shortly after the article appeared, Infomatics newsdesk received an email from major accounts manager Matthew Huggins: "I read with enthusiasm your article on the Digi BMW Z3 promotion and I can say with my hand on my heart that it is the best promotion I have ever been offered ... what a prize and what a company."

If his colleagues are sniggering behind their hands at this point, Matthew will be quick to remind them that it is he who has been at the wheel of the Z3 for three out of the last six months. He believes that a creative incentive can be a very smart move for manufacturers and directly affect their sales. "I have to admit I was very chuffed when I was given the keys to a #26,000 car, it's the ultimate, isn't it?" says Huggins. "It's the kind of incentive that works both ways; Digi wanted to highlight its products and we get the chance to win a great car. When it was announced, it went round the whole company and Digi suddenly became the top product to push; it definitely made you want to sell more."

The idea of motivating employees by dangling 'golden carrots' is not new. IBM was one of the first companies to recognise that a clever bonus scheme could supply a huge return on investment. In its heyday, almost 50 per cent of staff remuneration came in the form of lump sum bonuses, health and pension perks and car allowances. The aim was to retain staff and reward loyalty. Famously, IBM invented the Hundred Percent Club, with membership restricted to sales people achieving 100 per cent of their target or more. The top ten per cent of that number were then elevated to the 'Golden Circle' and feted at a luxury convention at an exotic destination.

The status and kudos attached to belonging to these elite groups ensured that the sale force continuously aimed high.

Golden handcuffs

Today, the IT industry is booming and the much-publicised skills shortage means that top flight IT sales people are like gold dust. A large basic salary and commission potential is no longer enough and companies are aware that their most valuable assets, their sales staff, are being pitched on an almost daily basis. Stephen Parsonage, MS of Executive Services, told Infomatics that "What our industry does in times like these, when there are more jobs than candidates, is to throw money at the problem." This, he argues, is not necessarily what the best salespeople are looking for, "In fact, they usually need more than money to be persuaded to move; a product with a technological edge, a fast-moving company or perhaps a share option. Shares are very popular at the moment, especially with so many new players in the market who will probably go public at some point, so share options can be worth a fortune."

These so-called 'golden handcuffs' - tying staff into your employ with the promise of a big share payout at a future specified date - are an increasingly popular method of motivating staff loyalty. Other companies favour profit or performance-related bonus schemes to ensure that staff continue to have a vested interest in performing well. However research conducted across 134 American high tech companies earlier this year reveals that 'being set challenging work assignments', 'career development opportunities', high quality management' and a 'favourable work environment' all outrank 'variable pay arrangements and incentives' as key factors in each participant's decision to remain with a company.

Many UK employers, recognising these new key employee motivators, are already combining self development with incentives and rewarding employees for increasing their 'hot skills' or offering 'milestone'-based bonuses.

These incentives are increasingly popular as they benefit employers as well by discouraging staff who have amassed new skills to take them straight out to market.

Creating an incentive which benefits both employer and employee, or both manufacturer and reseller, seems to be the key to success. If an incentive is linked to improved performance and especially if an incentive is linked to sales performance, the incentive-giver is unlikely to lose out.

"It is absolutely crucial to think a sales incentive scheme through thoroughly," says sales manager turned consultant Moira Hegarty. "Common mistakes are to make a scheme overly complex or unobtainable - the result is that the sales staff will just disregard it. Another very important thing to do, especially if you are a manufacturer trying to get a dealer to prioritise your kit, is to market the incentive scheme properly, get the sales people excited and interested and give them constant feedback on how the scheme is going. Finally I'd advise getting the sales team themselves to guide you on what they find motivational, what kinds of things will really get them interested because there are a lot of schemes out there at the moment and frankly, if yours doesn't measure up to your competitors', you may feel it in your bottom line."

It ain't what you do

Perhaps most interestingly of all, it appears that most successful sales incentive schemes rely far more on getting the right approach than actual monetary value. As Five Myths of Sales Incentives, a report published by Integrity Centre, concludes, 'Sometimes sales people crave recognition more than any other group in a company because they need it to feed their ego. Since most sales people get commissions, the incentive is often lost with a straight cash reward.'

Ilion's Huggins agrees that where sales incentives are concerned, "Cash bonuses are attractive but they lack imagination, they're a bit sleazy, really." Referring to some of the incentives he has recently been offered, aside from the Digi BMW, he sites a Cabletron trip to Monte Carlo, which he was awarded for achieving its best quarterly sales, as one of the best.

"I would never have gone to Monte Carlo myself, so it was a chance to see the place and stay in a great hotel, take helicopter rides, go to the casino ... it was much better than cash."

Huggins also sites an Intel scheme where points were accumulated and converted into holiday vouchers and a monthly 'race off' between the top 3Com salesmen on a video game, as schemes which have recently caught his attention.

So in summary, it seems that with sales incentives, it ain't what you do, it's the way that you do it. Unless, of course, you've got a Z3 to give away.

THE CURRENT TOP FIVE INCENTIVES

Travel. Jet your top salesperson to an exotic location. Often a partner will be invited to go along as well - the idea being that they will help persuade the individual to try harder so that they can go again!

Event tickets: Just about the only way you can afford to see the World Cup.

Flash kit. From cars to PDSs to PCs, if it's new and fast and expensive, it's a good incentive.

Relax and bask in the glory. Once the selling's done, some extra time off, health farm action or a premium round of golf are popular.

Cold hard cash ... but some say it's 'sleazy'.

These were the leading orders taken in June according to all the sources available to us. If yours isn't here, please make sure we get details of the next one.