Virtual carrots

Companies that wish to motivate their sales staff with rewards are discovering the utility of online incentive schemes – they offer speed and convenience for companies and staff alike. And they are a valuable information source for the former,

Only a few years ago, the way to impress and motivate sales staff was to produce a glossy brochure full of all the rewards that were available to high-performing individuals. Today, whether they are designed for internal or external sales staff or for consumers, most incentive and reward initiatives have some sort of Web-based component, and many staff schemes are now handled exclusively via the Internet.

But even those companies which fully understand the value of internal and external motivational schemes are often wary of relying on an electronic solution. Concerns vary from the cost of the system to doubts about finding an option to suit an organisation’s specific needs and, of course, scepticism about the additional benefits.

It comes as no surprise that companies in the IT and electronics sectors have, to date, shown the keenest interest in adopting fully Web-based solutions. Here, “motivation company” P&MM has had success with its Rewardbanking website, which allows full branding and personalisation for clients. P&MM points out that, critically for employee satisfaction, real-time reporting means that sales results can be verified, reported and the recipient of the reward notified on the same day, rather than waiting several weeks for the centralised checking of sales figures.

Technologists using technology

In the cut-throat world of new technology, incentives for salesforces are of vital importance. Imaging equipment supplier Brother has applied an Argos Business Solutions (ABS) online system to motivate its distributors and resellers. Its paper-based Brother Bonus Points scheme has just moved online, and has already demonstrated a very high take-up.

“Our plan is for the scheme to be totally Web-based,” says Phil Jones, marketing director at Brother’s imaging solutions and technology division. “But this always depends on our customers’ company policy – whether they allow their salespeople desktop Web access during working hours.”

You do not have to look far to find the immediate benefits for Brother. With the previous, paper-based system, members of customer sales teams had to fill out a form and fax it to Brother, where the data would be manually keyed into a database, burned onto a CD and sent to ABS for processing and points allocation. Jones says: “It was a very slow, laborious, ‘sticky’ process with a lot of hands-on elements. The administration involved was getting out of control.” It got to a point where Brother had to decide whether to take on two additional assistants to handle the processing involved or to look to alternative systems.

The Web-based solution that ABS offered, says Jones, combined a standard “back end” from the supplier with a Brother-branded “front end”. Since the system is new, the priority is to establish it as a stable platform that can subsequently be built on. Crucially, the online system allows Brother to collect far more data about each salesperson, including the other brands they represent. If this first stage is successful, the scheme could be extended from the 400 or so distributor staff currently collecting points to the entire reseller salesforce, estimated to number about 16,000.

Another electronics company using Web-based incentives is Microwarehouse. Unlike Brother, the company has been running the system, supplied by P&MM, for over seven months. Sales director Chris Simpson believes that a key benefit of the switch has been a far greater spread in the allocation of the reward “pot”. He says: “It was fairly ad hoc before, with only a few big prizes going to the people who sold the most. That way, only a handful of people were incentivised, and the rest weren’t.” Now, he adds, the scheme is seen as a positive benefit in staff loyalty and retention.

A few bugs in the system

Simpson admits that the new system has not been without its problems. Since managers are incentivised in different ways, depending on their responsibility for specific teams or overall performance, keeping track of staff movements within the company is vitally important. In a more general sense, he says, an automated online system can allow individuals to abdicate responsibility, for instance, for ensuring that sales staff not only know which products to push, but are also well-informed about them.

The cost question does not arise for Microwarehouse, since P&MM’s set-up and monthly management fees have been funded by its suppliers’ monthly contributions. Like Brother, the company has seen a huge reduction in the administration and reporting burden, especially among category managers. Since tax issues are catered for automatically, employees’ concerns about possible comeback from the Inland Revenue are allayed.

Not all companies can depend on willing suppliers to finance their online systems, and P&MM says it designed the basic architecture of its Rewardbanking programme with a view to making it as easily and cheaply adaptable as possible. Board director John Sylvester says: “People can have a fully branded version of our base-level platform up and running for less than &£5,000.” This, he argues, is not much more than would be spent on publishing a launch brochure.

Likewise, ABS plays down the cost implications of its PLUS Reward Management tool. “There is a small initial set-up charge, but we are talking hundreds, not thousands, of pounds,” says general manager for rewards Chris Hartley. There is also a monthly membership fee of 40p a person each month. “We did some research before launching six months ago, and cost was a major concern,” he says. “People felt that over 90 per cent of the budget should be going into the scheme itself.”

Of course, where Web-based access outshines paper-based alternatives is in its ability to function as a flexible rather than a fixed communication tool. Sylvester explains: “It gives you a platform that is active, enabling you to add hugely to the value of the system by sending out electronic mailshots. Where there is a promotion on certain store vouchers for short periods, for example, distribution in hard copy might cost more than the actual value of the promotion.” Communications are clearly much faster, and budgets will often stretch further, he argues.

Keeping track

The ease with which the reward portfolio can be updated is another key benefit, says ABS. Hartley says: “One of the features we are developing is a communication package that allows clients to see what salespeople are using their points for. We are looking at ways to get them to spend their points against particular trade schemes or special offers.”

Designers of business-to-business incentive schemes are no doubt studying aspects of consumer online points programmes in order to learn some new tricks.

Companies such as MyPoints have been operating in the US since the mid-Nineties, and MyPoints now boasts about 10 million adult members. MyPoints Europe has been in the UK since September 2000, and has notched up over 270,000 members here. The purely Web-based vehicle rewards consumers with points for receiving offers, responding to them or providing data.

As Brother has already discovered, a reward-driven scheme can go well beyond being a simple means of providing incentives and increasing sales: it can also supply huge amounts of valuable data. And of course, consumer systems such as MyPoints see themselves as database companies offering a direct marketing service.

According to MyPoints Europe marketing director David Brosse, while staff incentive schemes have tended to migrate from paper to the Web, in the consumer market, the trend has been increasingly away from purely Web-based initiatives towards tie-ins with bricks-and-mortar retailers and big brands. He says: “It is also important for members to receive something physical – in the form of vouchers – through the post. This has helped to build trust in our brand.”

Keeping up with the customers

Like MyPoints, US-based online marketing specialist e-centives believes that more brands now see the Internet as essential in retaining (and ideally acquiring) customers. But they are still lagging behind consumers themselves. President and chief executive Dadi Akhaven cites research from Jupiter Communications which suggests that ten per cent of US consumers’ media time is now spent on the internet, while only three per cent of advertising spend has moved online. Understandably, Akhaven is eager to see more Web-based incentive and marketing programmes: “Companies should be thinking about tomorrow, not today. It’s a question of being smart and forward-thinking.”

Research from Forrester is even more encouraging for e-centives and MyPoints. Apparently, 90 per cent of consumers want to receive promotions, 70 per cent want to receive e-mails from brands and 66 per cent want some sort of dialogue.

It seems we are still a long way from seeing the full potential of the Internet realised for brand marketing and communications. Incentives for, and data-gathering from, consumers and company staff are likely to be two of the major areas to benefit.

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