Anatomy of an Online Incentive Program
By By Kenneth Hein
February 1, 2006
Sta-Dri—a 40-year-old plastics manufacturer based in Mankato, Minn.—has long been a leading maker of disposable gloves, table covers, aprons and bibs for the food service industry. The Atlantis Plastics–owned brand manufactures millions of "barrier plastic" products that are used in the kitchens of schools, businesses and hospitals across the country.
While the brand is hardly a household name, Sta-Dri is a fierce competitor within its sector of the $11.7 billion food service disposables industry. Still, when marketing manager Scott Sorensen first joined the company, he knew he could cook up more sales for the veteran brand. Especially since the category is expected to hit $14.4 billion by 2009, according to The Freedonia Group, a Cleveland–based research company.
One of his first orders of business was to stimulate the company's distribution channel with an incentive program. He considered it to be "low-hanging fruit" since it "was something that was asked for by brokers and customers. I knew it could provide immediate impact," he says.
Easier said than done. Formerly, as an employee of Acuity brand lighting, Sorensen was one part of an entire department dedicated to promotional activities, but once he joined Atlantis in late 2004, he was the entire Sta-Dri marketing department. Making matters more complex was the fact that although in the past reps had organized small, territory-specific initiatives, the brand had never run a system-wide incentive program.
Faced with the complexities of creating an incentive program from scratch, Sorensen sought help. His boss had recently spoken with a representative from SalesDriver and suggested Sorensen set up a meeting with the Carlson Marketing-owned company, which specializes in creating online incentive programs. After the meeting, Sorensen had found his solution in the form of a turnkey online incentive program, one that was ready for use without further programming. He was now ready to get it going. The Online Solution
SalesDriver is one of several software solutions now available in the incentive industry. While using such a tool to conduct an incentive program had been uncommon just five years ago, today it is becoming the norm.
Some 43 percent of companies surveyed last year by the Incentive Marketing Association's (IMA) Online Incentive Council said they had run an Internet-based program. This number is likely skewed by the fact that more than half of the respondents (55 percent) were from companies with 100 or fewer employees.
Nevertheless, nearly three-quarters (74 percent) of the respondents said they were very or somewhat likely to use the Web for their incentive solutions.
"Online incentive programs have come to the forefront. It's the standard. Paper catalogs have taken a deep second place," says Arnold Light, president of the Light Group in New York, which also creates online programs for clients across an array of industries. "We only have one paper catalog in place. It's for a couple of participants who don't have Internet access. It's been that way for the last two or three years. I don't see paper catalogs down the road at all for any incentive programs."
Nearly four years ago, the Online Incentive Council (OIC) was forming a strategy to have online incentive programs be accepted as "the way you do a program," says Mike Arkes, CEO of Hinda Incentives in Chicago. The hope was that the OIC wouldn't have to educate the industry any further because the Internet would already be where all programs are based.
Today, "we're there," Arkes says. "Why did we get there? It's a matter of efficiency. The old way of communicating point balances and statements via the mail is very expensive and inefficient."
Another reason online incentive programs are so pervasive is that many companies, especially their sales organizations, have decentralized offices, says Theresa Featherston, director of sales and marketing for INmarketing Group, a Mahwah, N.J.–based company specializing in online recognition and incentive programs. "There are people scattered all over the globe. There has been a natural progression to online, since everyone has laptops and virtual offices." Taking a Test Drive
While Sorensen was encouraged by the meeting with SalesDriver and was indeed ready to attempt his first program, he was not totally sold. Just to be sure he was spending his new company's money wisely; he set up a test program.
He ran a short, two-month trial involving Sta-Dri brokers, manufacturers' reps who sell to distributors. The "2005 Broker Rewards" pilot program began in January 2005. The idea was not only to test the viability of an online incentive, but also to educate the reps about the kind of program Sta-Dri was planning to roll out for distributors.
Each of the brand's 22 reps received an e-mail with an introductory flier announcing the program, as well as a PowerPoint presentation they could use to explain it to their employees. The program had 100 percent participation.
The goal of the program was simple: to increase sales of two specific product lines (disposable aprons and gloves) by 10 percent. By the program's conclusion, Sta-Dri saw 11 percent growth across the board for the first two months' sales as compared to the prior year.Communication is Key
Not only were Sorensen and his higher-ups sold on the use of online incentives, the revenue derived from the test program paid for a four-month distributor program that kicked off in April 2005.
The objective this time was for distributors to boost sales by a minimum of 20 percent. Because the distributors had less of a vested interest in the brand than its reps did, and because they had never been exposed to an online incentive program from Sta-Dri, the initial communications about the program were vital.
Overall, communication is crucial to any successful online incentive, INmarketing's Featherston says. "Communication is the end-all. If [participants] don't know a program exists, it doesn't matter how much money you throw at it. People need to know it's there."
If first-time participants are confused by the concept of an online points-based incentive program, she suggests comparing it to an airline's frequent-flier program. "Then they say 'oh yeah,' and you're off and running."
One mistake the early adopters of online incentives made was to move all communications online, says Paula Godar, director of marketing communications for Maritz Incentives in St. Louis. Direct mail, telemarketing and other forms of offline communication are essential, she stresses.
"Adding print or promotional materials is helpful. Send products that fit in. If it's a travel event, send items like suntan lotion and other things that make you think of that location. Different people want different kinds of communication," Godar says. "You really need the mixture to make an impact."
Having a big kickoff event to get the program rolling is often helpful as well. This shows management is really behind the effort.
The OIC is planning a new research project this year that will measure the effectiveness of online and offline communications and their relation to Internet-based incentive contests. "We want to put a number on the effectiveness of using targeted e-mail, direct mail and one-to-one [communications]. There is a true difference between doing nothing and doing targeted communications," says Brian Galonek, president of Sturbridge, Mass.–based All-Star Incentive Marketing and chairman of the Online Incentive Council's education committee. "Some programs languish because they're not communicated well."
When Sta-Dri's reps made their regular sales calls, they not only talked up the new product lines but also the fact that there's an incentive program where distributors could win a TV, a trip or Harley-Davidson motorcycle. Because the reps had already participated in the test program it was easy for them to explain its benefits to distributors.
Sta-Dri also contacted the distributors themselves with teaser e-mails that read as follows: "Attn: Food Service Distributor Sales Managers. Starting in April, take advantage of the most aggressive incentive program available in the food-service industry. Realize immediate rewards and track your progress online. Upon completion of the promotion, distribute within your sales team as you see fit! It's fast, it's easy, and your targets are provided the day you sign up."
The company supplemented the online communication with a direct-mail push to hit distributors in their mailboxes as well. About a quarter (23) of the 100 Sta-Dri distributors registered for the inaugural program.Increasing Rewards
Sorensen was careful in choosing the structure of his program; he set up three tiers of achievement. Participants received one Sta-Dri buck for every four cases of product sold. Once they achieved 110 percent of their 2005 objective, the bucks were activated for redemption. If they failed to hit this first target, they were disqualified. "We couldn't expose ourselves to lackluster performance and then still give them an award," he says.
For added incentive, once they hit the 111 percent threshold they received a buck for every case sold. From 121 percent on, they received two bucks per case sold. "We increased the size of the carrot so they had a reason to keep going," says Sorensen. "We had great success keeping all of the distributors engaged."
Selecting the right structure is essential, Light says. "There has to be value for the effort performed. You don't want them saying, 'I broke my back to do this, and all I got was an AM/FM radio.'"
Educational components can be included to help participants reach their goals. "If someone realizes they are having trouble selling a product, they can link to some product knowledge and get some immediate coaching," Godar says. "We're seeing lots of people link to other performance improvement tools like training sites." Some programs offer additional points for completing training.Keeping Score
As is the case for the majority of programs, Sta-Dri set up an online scoreboard where reps could check in as their points accumulated (http://stadri.incentive.salesdriver.com
). "Having access, literally, twenty-four hours a day to see how they're progressing is important," Godar says. They can say, 'I'm doing great' or, 'I need to step it up because I'm really behind.'"
Sorensen says the distributors' activity within the program ran the gamut. Most checked the site regularly. Others called up after it was over and asked for their username and password, having never checked the site, so they could find out how many points they had earned and what they could spend them on.
When participants hit all of the desired goals, award redemption needs to be easy. "Once distributors made a conscious decision to participate, the next thing that required an iota of energy from him or her was, at the end of the program, to spend the Sta-Dri bucks they earned," said Sorensen. "It's absolutely effortless."
Offering a wide variety of prize choices is crucial to creating a positive program. After all, everyone has her own idea about what is truly a motivating prize. A mother of three may not be all that interested in a Harley, but maybe she has always wanted a Cuisinart and never got around to buying one. Then again, perhaps she harbors a secret Easy Rider fantasy.
"The more choice from an award standpoint, the better," says Mark Sullivan, vice president of SalesDriver and new president of the OIC. "Companies have really figured out how to poll, survey and understand their participant base."
The hottest prizes according to Sullivan: iPods, flat-screen TVs and individual travel awards. One hardworking Sta-Dri distributor earned his very own Harley hog, while others chose TVs and other popular prizes.
In addition to shipping winnings in a timely fashion, Godar suggests holding an awards show. Allowing top performers to tell their success stories will motivate others to perform the next time around. For those who can't attend, e-mail a highlight reel throughout the organization.
While the Sta-Dri distributors were pleased with their prizes, no one was more satisfied than Sorensen and his superiors. The brand realized 38 percent growth to the bottom line, according to Sorensen. The program helped him make a serious splash at his new company. And it certainly wasn't hard for him to convince the company to run another program this year. The next four-month effort debuts in April.
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