A large specialty products company that was facing intense competition within its industry and an industry-wide slump of approximately 20% decided to challenge all employees to turn the situation around in the next fiscal year. They designed a program that identified what each division and work unit would need to accomplish to produce the desired result. They then placed a value on the relative importance of the performance in relationship to their unit and company goals. A multi-tiered incentive program was put in place that included benchmarks from inside and outside the organization to measure the success and effectiveness of the program. With over 600 employees in 7 work sites, it was critical to have buy-in from the entire company. The company identified 35 of the key players that would most influence the ultimate outcome of this effort. The incentive for these 35 would be an all-expense paid trip for the employee and companion on a 7-day western Mediterranean cruise in private veranda staterooms. Incentive awards of varying value were assigned to everyone underneath so that employees could see appreciation for their work. At the end of the fiscal year, not only did they meet their goals but exceeded them, beating the industry average by a +30% gain and one of the most profitable years in their company's history. The cost of the incentive awards in relationship to the profits accumulated was a little over 25%. A handsome reward for everyone concerned, particularly shareholders of the company.
2. Company Annual Managers Meeting and Awards Program
Individual stores of national fast food franchise chain are owned and operated by holding companies that may own multiple stores. Because the fast-food industry is so highly competitive and profit margins razor thin, operational efficiency is key to profitable operations. Store managers play a critical role in achieving this and can literally make or break a store. One of the holding companies that owns and operates 37 of the franchise stores developed a very innovative point-based incentive program for store managers as a means of achieving this efficiency. Point values are assigned for items like reducing costly employee turnover (the industry average is nearly 300% in a fast-food restaurants), reducing down time on equipment by regular and thorough preventative maintenance, high mystery shopper scores, innovative local marketing to move featured products, reduction of customer complaints and a wide variety of other tasks that reduce real dollar expenditures and improve store profitability. Each year the holding company conducts its annual meeting either on a cruise ship or a nice land resort and those store managers who have achieved a certain level are allowed to bring their families on the trip with expenses for the employee and spouse fully paid by the company. In addition to business meetings, the company has a very special awards ceremony on the last night that highlights the best performers that have helped the company increase profitability for the year. The camaraderie of the store managers and healthy competition between them is refreshing to see and a testament to skilled owners who know how to get the best from their employees.
3. Member-Get-A-Member Campaign
A member-based Health and Fitness club needed to bring in new members. Frustrated with the effectiveness and costs of traditional membership campaigns, they decided to use existing members to increase their membership rolls. They designed a program that was 60 days in length and based on the number of new members each member brought in who joined for at least one year. The grand prize was a 4-day Mexico cruise for two including round trip airfare. A second and third prize of a 2-night 3-day Las Vegas package including round trip air was included. At the end of the campaign, the club experienced a 16% increase in total membership. The cost of the reward versus the financial gain from the new members was very low and the reward was much less expensive than traditional newspaper advertising and other methods used in past campaigns. The club indicated it was one of the most cost-effective campaigns they have done and have incorporated it as an annual event in their business plan.
4. Customer Loyalty Program
A large lumber and building supply store in a suburban city were suddenly faced with the opening of a Lowe’s and Home Depot in the city in near proximity to their store. Obviously, this was a major concern for the nearly 50-year-old company because of the ability of both new competitors to underprice them and the name recognition that is attached to those two brands. The manager of the Home Depot went so far as to tell the owner that they would put him out of business within a year. Thinking creatively, the owner and his wife threw a lavish customer appreciation party for contractors and their spouses at a local hotel. During the party, the owner announced a new program wherein the contractors would be awarded points based on the dollar value of their purchases over the course of the year. At the end of the year, if the contractor had spent $150,000 with them, they would earn enough points to attend an all-expense paid trip for two for one week in January (the slowest time for builders due to weather). This event became the annual Customer Appreciation trip and locally was as much a social event as a business event. Spouses actually put pressure on the contractors to make their purchase from the business because they looked forward to the trip. The first year, 90 contractors qualified and the group of 180, contractors and spouses went on an 8 day Mexico cruise. The second year, 82 contractors qualified and the group of 164 went to a posh all-inclusive in Mexico and had a great time. If the contractor spent more, he could take more people. The owner of the business calculates the cost of the reward to be equivalent to a 3% cash discount. If a contractor earns the trip and doesn't go, there is no payout. Do the math, 90 X $150,000 minimum is not bad. By the way, the Home Depot manager that made the bold prediction of putting the owner out of business is long gone.
5. Sales Incentive Awards Program
A lawn and garden equipment manufacturer saw a loss of sales to a competitor. The manufacturer conducted a survey of its dealers to try to determine exactly what influenced people to buy the competitors' equipment over theirs. At the conclusion of the survey, the manufacturer identified 3 minor features their competitor's equipment had over their product that seemed to influence buyers. Interestingly, price was not one of the issues. The manufacturer immediately went to work on correcting the features on all the new products. They offered a discount program on all old products to move it out of inventory. The manufacturer adopted a combination product relaunch and dealer incentive program to recapture market share from the competitor they had been losing market share to. The Dealer Incentive program involved a very exclusive Presidents Club promotion whereby Dealers could earn this prestigious trip based on dollar volume increases in sales over a 6-month period. This not only promoted the number of units sold, but also profitable accessories sold with the unit. The manufacturer saw a spike in sales from dealers who perceived the product as improved and at the same time the reward for their efforts as valuable and desirable.
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