There were lots of great entries in Incentive’s second annual Motivation Masters awards. The programs, which took place between Jan. 1, 2009 and March 31, 2010, included several glitzy, ultra-high-end travel programs. But one that stood out was a short, points-based incentive program for the frontline retail sales staff of the Western region of Dillard’s, a Gilbert, AZ-based department store chain with 296 stores in 29 states and annual sales exceeding $6.2 billion.
The company’s 2009 Dillard’s Awards—Back to Campus program ran from Aug. 2 to Sept. 12, an important sales period. It also ran during the height of the recession, when Dillard’s was facing a double-digit sales decline and manufacturers cutting back on the cooperative marketing dollars they were providing the stores.
Floor sales associates and their managers participated, with the salespeople earning points for selling regularly priced merchandise—not less-profitable sale items—from any of the participating vendors, and managers receiving a percentage of their employees’ point accumulations. There were also team goals with points bonuses, and one manufacturer gave out bonus points in the form of Golden Certificates on store visits for things like good customer service and properly displayed merchandise. Points were redeemed for brand-name merchandise, individual travel certificates, and event tickets on a Dillard’s-branded Web site run by its incentive provider, All Star Incentive Marketing.
The program was largely funded by the participating manufacturers (companies such as Coach and Nike) that provided co-op dollars to Dillard’s. Participating vendors received a Focus Week, when sales associates earned double points for selling their merchandise.
As a result of the program, participating vendors saw double-digit sales increases of regularly priced items during the program period, as well as sales spikes during their individual Focus Week periods.
Dillard’s has run similar incentive programs for the past two years, some during specific times such as Thanksgiving and swimsuit season, and others when a sales boost was needed or when a vendor sought a big push, such as with a product launch, says Jim Benson (pictured above), Dillard’s Western region director of sales promotion, responsible for 48 stores in states including Montana, Texas, Colorado, and California.
Right from the start, the programs were a success. “We had quite a few vendors who came to us in later months and said, ‘We want to do this again,’” says Benson. “They saw the numbers themselves. Others said, ‘We heard you had this program; how can we participate? We heard that it was very successful.’”
Flexibility Is Key
In fact, the program came from a sales incentive created by Fiskdale, MA-based All Star Incentive Marketing for dressmaker Adrianna Papell, which targeted salespeople at department stores, including Dillard’s.
But that program lasted several months and was national. Dillard’s was interested in driving sales in a three-to-five-week time frame, says Brian Galonek, CEO and vice president of sales of All Star Incentive Marketing. The result was Dillard’s Awards.
“We’ve taken that [Adrianna Papell] program and adopted it into our own and made it into our special program,” Benson says.
It offers a great deal of flexibility, which is key to a company like Dillard’s, whose stores target many different demographics. “My region covers hot, cold, and mild markets,” says Benson. Some are in major cities and suburbs, while others are in rural areas, he adds. Some are in affluent areas like Scottsdale, AZ, and some are in more moderate neighborhoods. As a result, not all stores carry the same products or even the same brands.
“We are very cautious about which vendors participate, so that all stores will at least have enough to earn points,” Benson says. He continues: “That’s a very big deal with us. The kids, men’s, juniors, and shoe departments all participated in the Back to Campus program. Each department has its own incentives, its own vendors, and its own Focus Week vendors. Everything is separate. Point values are separate. We’re constantly reviewing what we can do differently, what we can do better with these programs. We’ve learned what works and what doesn’t, and we’ve gotten to the point where we can put these programs together very quickly.”
What lessons did Dillard’s learn? The longest period for these programs is four to six weeks, and employees have to spend their points during each program or by no later than three weeks after its conclusion. “We found employees can lose interest; we want to create urgency to drive business in a particular window, and we found that keeping that window very narrow has been better,” Benson says. “The same with the Focus Weeks. At one point, we were running them for two weeks; that was too long.”
Besides, short programs can be good in retail sales, which tends to have high worker turnover, notes Ashlee Haag, All Star Incentive Marketing’s account manager for Dillard’s. A top producer can earn about $400 to $500 worth of points, she adds.
Another benefit is that the incentive platform makes it easy to tack on other initiatives, such as the Golden Certificates handed out by Coach during the Back to Campus program, says Galonek.
“The biggest thing is that we have had really great support from our store management,” says Benson. “I hear from them all the time about how great this incentive program is; they’re very involved in it. It helps them initiate conversations, to actively approach their employees, to drive a particular business. It becomes a great tool for them.”
ROI Is Key
Over the 25 to 30 times that Dillard’s ran variations of the Back to Campus incentive program in the past two years, vendors who didn’t participate after doing so the year before saw sales reductions, Benson says. “So we know it worked, and we’re confident in knowing that the program has had success,” he notes.
Measuring return on investment “is very, very important to our leadership,” adds Benson. “We are constantly being challenged to make sure our efforts aren’t going to waste.”
Adding that companies that don’t measure ROI “probably shouldn’t be in business,” Benson says, “it’s the most critical thing we do, and we try to do it for every single [incentive] program we do. We try to do our homework—what we’ve done in the past and the success of other events—then take that and try to apply it to future events. By doing that, we found that we keep getting better and better at what we’re doing. We keep seeing improvements, [and] the efficiency of this program just keeps getting better.”
Beyond higher sales, Benson says another benefit of this type of incentive program for both Dillard’s and the vendors who provide the co-op funding is brand-image preservation, because it helps them avoid consumer promotions—discounting prices—to boost sales.
“Even in the tough economy, you don’t want to keep having that type of activity out there in front of the customer,” Benson says. “When you come out of that tough economy, you don’t want to have that [discount] perception. So it was very appealing to the vendors to fund this type of a program.”
The Category Winners
All Star Incentive Marketing and Dillard’s took home the overall Grand Motivation Master award from the Sales Incentives category, but there were two other category winners.
In Channel Sales, the winner was Carlson Marketing’s massive overhaul of Subaru of America’s various training and sales incentive programs under the Subaru Foundations program umbrella.
In the Recognition/Engagement category, the winner was MotivAction’s Mpower engagement program for 5,000 distribution-center employees of pharmaceutical firm McKesson. It’s hard to argue with ROI that includes “this program saves lives.”