I poised the following question to an on-line professional sales group that I’m a member of:

“What type of short term sales incentive rewards work best?  I was wondering what people in the group thought were the best types of short term incentive rewards? Research shows that most people will tend to pick cash but that performance actually is better with non-cash rewards (trips, merchandise, etc…). What are your experiences with this – have you seen a difference in sales results with different types of rewards?”  Within 24 hours I had received 45 responses.  I summarized those 45 responses and created the following summary that I presented back to them.  I thought that this might be interesting post for this blog as well… here is my summary:

Thanks everyone for such great input on this question. Your responses have definitely provided some great insight into what makes an effective short-term incentive. I will attempt to summarize the 45 posts on this so far and would love more feedback in case I’ve missed something.

In general, it appears that most respondents felt that cash is a key part of the overall compensation, but that it is probably NOT the best medium for a short-term program. There is a strong preference for non-cash and recognition type of rewards. As Greg D put it, “Recognition drives as much healthy sales will as money.” As indicated in the question itself, research has shown that non-cash awards typically outperform cash awards in the same incentive program. The general gist from the responses so far seems to support that finding. Dick O said it best when he said, “I can’t remember all of that cash that I’ve won. ..I’ll tell you though, that I remember each time I was recognized.”

There was also a significant emphasis on not having a “one-size fits all” approach and to create individual incentives whenever possible. Dana W summarizes this feeling with “No one incentive is going to work for all people.” Another aspect that was discussed was bringing in others (spouse, family) to the reward. These types of rewards were thought by some to provide “extra” incentive to earn them. Allowing sales person input into the actual award was also mentioned.

A key component to this all was brought up by Tim M and Tom F – that the structure of the incentive is as important or more important than the type of reward offered. On this I would have to agree. In my experience, how the program rules are structured, who is eligible to win (or more importantly believe that they can win), the timing of the incentive, and how results are measured are going to make or break any program. As Tim stated, “…the type of reward has less to do with the success or failure of a contest or incentive than the STRUCTURE and TIMING of the incentive.”

Thanks to everyone for their input – I’d love to have more discussion on this and how incentives can be structured to be more effective moving forward. On an end note, just some of the fun reward offerings that I found interesting: bottle of wine and dinner, time off, give to charitable foundation, becoming a member of a special “club.”

Kurt