Study Finds 'Best-In-Class' Companies Prefer Non-Cash Motivators
By Alex Palmer
March 15, 2013
Top-performing sales organizations are more likely to use non-cash rewards than poorer performing companies, a new study finds. A survey from the Aberdeen Group and distributed by the Incentive Research Foundation (IRF) found that organizations considered “Best In Class” were 90 percent more likely to offer public recognition, and 94 percent more likely to offer peer-to-peer recognition for progress towards sales goals than organizations that did not perform as well.
The study, which drew on the responses of 312 firms, categorized “Best In Class” organizations (BICs) as those comprising the top 20 percent in terms of sales performance and compared their practices to average firms, and “laggard firms” (those in the bottom 30 percent). Titled “Non-Cash Incentives: Best Practices to Optimize Sales Effectiveness,” the research found that 100 percent of BICs use incentive travel to motivate their sales force.
Organizations with formal recognition programs for their sales team reported 14.8 percent higher team quota attainment and 5.9 percent higher customer renewal rate. Melissa Van Dyke, president of IRF, saw these findings as indicative of the importance of formal recognition at both an organizational and individual level, and that this study adds to a growing body of IRF research confirming the value of formal incentive programs.
“Formal recognition programs tend to show that an organization acknowledges the importance of reward and recognition not only to high-performing cultures but also to high-performing individuals,” she said. “The programs create value by not only keeping top performers engaged, but also by emphasizing how work should be done, which creates a halo effect for teamwork and customer satisfaction.”
BIC firms were more likely than other organizations to use a wide variety of award types, including 23 percent more likely to offer group travel, 75 percent more likely to offer company sponsored events, 60 percent more likely to offer peer-to-peer recognition as a year-end sales incentive, and 26 percent more likely to list teamwork as a very important part of the sales process.
The report also found benefits for those organizations outsourcing their recognition programs. Those organizations that outsource their incentive management to a dedicated incentive house reported conversion rates of 30.4 percent, versus the 23.9 percent of firms that did their rewards in house. Outsourcing firms also reported lower average sales cycles than in-house organizations (4.2 months vs. 5.3 months).
"This was an interesting finding of the research. Although we do not have detailed data around these findings, it seems that organization's who are focused on rewards and recognition seriously as a motivational tool benefit from the experience and best practices that an outside provider can bring. This helps create efficiencies and ultimately better results for their programs and the business results these programs are targeted at improving."
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