Articles Tagged ‘Non-cash incentives’

Looking to Build Loyalty into your Customer Service? Try Rewarding your Customers

Thursday, May 5th, 2011

When I was a kid my mom would motivate me by giving me an incentive when I did a good job. Of course I worked harder to get the goodies. In her own way, mom was a psychologist; she understood motivation. Incentives work for both employees and customers. Incentives should be viewed as added value for your business or a form of customer service. Any business has both internal and external customers;those that deliver the products and services and those that buy them.

There are many ways to incentivize adults so I decided to give expert, Jason McCallum, Director of Business Development for United Incentives in Philadelphia, P.A. a call and discuss the idea of incentives with him. One of the big questions is, what works the best and where should a business spend their money?

How did you get in the “promotions business?”

I got into this business because of my overall interest in influencing human behavior through marketing. When I was in the film industry I was responsible for managing marketing campaigns for film launches. I took the same strategies and moved to United Incentives, which has a great reputation in the incentive and loyalty industry. I felt it would be a great place to use my previous experience to create strategic marketing programs for brands and corporations.

Many business use some type of incentives but the question always arises, cash or gifts? What’s your take on it?

Many times cash alone isn’t enough to motivate people. Cash can be easily lumped into expected compensation and sustains little if any association with achievements. Non-cash rewards have lasting trophy value and linkage towards achievement, they can motivate specific behavior, establish a unique competitive advantage and increase ROI and profitability. Besides cash has no shelf life; it comes and goes.

Funny you should say that; even people who win the lottery talk about what the money will buy not how much they won. Everyone likes getting gifts.

For companies there’s a difference in the cost of cash and merchandise. For every dollar of cash, the income tax liability for a company is higher. For merchandise the income tax liability is only for the”net tangible value” (NTV) of the merchandise. If an item is valued at $100.00 the actual tax liability is on the NTV, which is around $80.00. The NTV is the value of the redemption less fulfillment, handling and shipping costs. In most incentive programs this runs about 20%.

Points in a merchandise program offer instant gratification. Cash or checks easily lose their gratification value.

If you have an online points program or a group travel program, they become constant motivators. People can continue to peruse the online merchandise catalog and dream about what they will be getting or how they can earn a trip for a vacation experience.This is something they would not readily experience on their own. Think about all the online programs such as those with American Express and Diners Club; people save their frequent flyer miles and rarely turn them in for cash; they turn them in for what the points can purchase.

There seems to be alot of scientific data out there about merchandise incentive awards vs cash.
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