Design may seem like an irrelevant or unnecessary concept when executing a performance improvement program. All you need is some exciting rewards and a technology to track and administer the back end, right? A trip of a lifetime to the Olympics, to Hawaii, to the Mediterranean? The neatest new tech toys and gadgets? Aren’t those alone enough to power your incentives?
These carrots certainly play a powerful role, but they represent only one element of a performance improvement or incentive program. Many companies either take a pure “DIY” approach to building incentive programs, or they hire an outside company to fulfill the rewards, travel, and technology. But there is value in applying design expertise prior to selecting a scintillating reward or travel experience for top performers.
The power of design lies in its ability to turn a top performer recognition activity into a business strategy that generates incremental growth and pays for itself. Design can also elevate incentive and reward programs from a tactical activity to a key part of a company’s broader engagement strategy.
Here are three primary reasons why it makes sense to proactively recommend and include design as part of an incentive or performance improvement program:
- Design applies thought leadership to enhance program fairness and outcomes. Too often, incentive programs focus only on rewarding the top 10%. Research from the Sales Executive Council showed that a 5% increase from the middle 60% of performers yielded 80% more revenue than a 5% increase from just the top 10% alone.1 This is a breakthrough observation, yet it is still not widely applied today. Performance improvement programs that do not include a growth strategy for the middle of a company’s performance curve are missing an opportunity to engage more people and improve performance across a much broader spectrum of their sellers or buyers.
- Design uncovers key insights to amplify performance. Your performance improvement program should not just reward outcomes. The program should also identify, reward and reinforce the right behaviors that lead to positive outcomes. Design considers all precursors to performance to ensure that extrinsic motivation is being built on a solid foundation. It then determines the up-front structure of the program to ensure you are not just blindly focused on the outcomes. It identifies the exact behaviors that will help to generate your desired outcomes in a way that aligns with your brand and the audience’s values.
- Design applies data and insights to measure and improve financial returns. Properly designed incentive activities will have a focus on not only rewarding top performers, but also on creating sustainable, measurable growth from selling channels. The Incentive Research Foundation indicates that 82% of the top performing companies use both qualitative insights and analytics on program performance to determine the return of the program.2 Too often, program data only looks at enrollment, earnings and redemption statistics. With this information alone, incentive buyers don’t know what kind of a performance lift or financial return they’ve generated for their investment. In the absence of this information, it’s only a matter of time before this year’s budget dollars become next year’s budget cuts. Up-front design can include ROI modeling that suggests the performance you should expect, and ongoing ROI calculations so that you can make mid-course corrections.
Engaging an independent design firm is a best practice among companies with the most-effective performance improvement programs. The Incentive Research Foundation has found that top-performing companies spend up to 43% more than average companies for independent 3rd party design..3 And while there’s a tendency to not complicate incentive program execution or selling with a formal design discipline and return-on-investment process, introducing “ROI” into the conversation will help to elevate the program to a more strategic level.
By applying design expertise prior to sourcing a rewards supplier, companies can ensure that performance improvement initiatives are aligned with strategic priorities. Design is a way to take performance improvement beyond a sole focus on outcomes and enhance the focus on the behaviors that build lasting relationships. Design helps ensure the program delivers incremental growth and performance lift. Finally, design opens the door to obtaining key audience insights that can amplify performance beyond just the sales data and the incentive program. Ultimately, design is a path to identify factors that build emotional connections to a brand or product. And that’s how growth and brand loyalty can be sustained long after the short-term incentive has ended.
1 – Sales Executive Council