BCA

By John Riley

With a depressed economy and lagging sales, companies have significantly reduced their purchases.  As a result, sales personnel are dealing with tight fisted buyers intent on preserving their company’s money. However, with a little extra effort and creative thinking, a salesperson can find a way to pry some of that money loose.  That extra effort can be influenced by an incentive program.

 Incentive programs are most commonly associated with sales campaigns, however , they can also be used to increase employee loyalty.  Both programs have been effective. Over the years, these programs have become more pervasive, as  management felt pressures to increase revenues and profits.

 The Incentive Federation conducted a study in 2003 and found North American companies spent approximately $27 billion a year on travel and merchandise programs.  They also found that 78% of respondents remembered travel and merchandise longer  than cash payments.

 Companies have found, as they move to online administration, they can cut costs and improve their ability to exercise good control. The Incentive Federation pegs the cost savings at 60% . When you consider the printing costs of all the literature, direct mail and catalogs or brochures used to implement earlier incentive programs, savings were substantial by switching to the Internet. Other cost factors are award selection and award fulfillment.

Ironically, cost is also the reason many companies have not used incentive programs.

The Federation’s Harold D. Stolovitch, Richard Clark and Steven J. Condly conducted an additional study that revealed more metrics:

When incentive programs are directed toward individuals, performance increases by 27%.

When the program is directed at teams, performance increases by 45%.

Some 92% of respondents who reached their goals credited the incentive plan.

A properly structured incentive plan rewards only those who meet their performance goals. That means you don’t pay for substandard performance. In general, any function that generates metrics can be measured and therefore is a candidate for an incentive plan.  A basic tenet of designing a plan is to have ‘stretch’ goals, i.e. goals that can only be achieved with extra effort. 

 In my own experience, most of the metrics mentioned above were validated while with my former employer. For example, one year, we took 350 of the top building product distributors on a week-long trip to Monaco and London with accommodations at quality resorts . Each year it was a different international locale.  There was not a single distributor on that trip or any other trip who didn’t extend that extra effort to make sure he or she was included.

Travel tends to be more popular than merchandise.

Another incentive program was used in the agricultural market. Again, distributors were the target, but this time the awards were merchandise.  The awards were individual  and pegged to the distributors specific merchandise interests which were determined in advance of the program. In this case, the length of the program was six months and tied to the farm building construction season. The program achieved its objectives  and was continued for four years.

 As a testimonial to the success of incentive programs, the Online Incentive Council , a strategic industry group of the Incentive Marketing Association,  recently reported the online incentive industry is doubling every year. 

Online incentive programs properly structured and administered by the right provider can make a difference in your business.  Revenues can increase.  Costs can go down.

 If the sale department is worried about meeting their quota this year, an incentive program could be the answer.

 Microsoft, the IT giant, is seeing the online stranglehold previously enjoyed by its Internet Explorer platform in China gradually erode under pressure from a number of domestic rivals, the latest figures suggest.

According to estimates from iResearch, Microsoft once held a 96% share of the web browser market in the world’s most populous nation, but this has now declined to 57.8%, and the exact total could be lower still.

Ding Li, an analyst at iResearch, said “according to my research, nearly 96% of China’s internet users have used an IE browser at some time in their lives, but only 50% of them keep to it regularly now.”

In particular, Microsoft’s share is being squeezed by three local alternatives with a combined market share of 31.1%, and which are “adopting advanced techniques and updating their products continuously,” Ding said.

Tencent has developed its own web browser, TT, and hopes to attract some of the 300 million people who are members of QQ, its instant messaging service, to switch to its new system.

“Its users are Tencent’s most prominent advantages. If TT can combine QQ software with its Tencent TT browser, it may become a browser with the biggest amount of users in the future,” Ding said.

Qihoo360′s360 Secured Browser, which is known particularly for protecting the privacy and data of its users, has increased its market share by 50% over each of the last three quarters, to 8.4% in all.

Qi Xiangdong, president of Qihoo360, argued “safety has become a top priority for people when choosing a browser. The 360 Secured Browser uses its ‘isolation mode’ to block any Trojan horse virus.”

Maxthon is another competitor to Microsoft, and offers a range of user-friendly features, such as tools allowing consumers to identify and access their favourite web portals from any computer.

Chen Jieming, ceo of Maxthon, said “most of our users were born between the 1970s and the 1990s and we are trying to attract those born before the 1960s to use our Maxthon browser.”

Chen said Google’s web browser, Chrome, has also struggled to make in-roads in the rapidly-developing online marketplace in China, for a mixture of technological and cultural reasons.

“Even though Google’s browser uses many of the most advanced technologies from all over the world, it still hasn’t gained popularity in China. Some Google Chrome functions aren’t even compatible with some Chinese websites,” he said.

Other multinational operators such as Firefox and Opera are also struggling to establish a substantial presence in the country as yet, according to Ding.
Printed with permisson of the World Advertising Research Center
Data sourced from Alibaba; additional content by WARC staff, 09 September 2009

Procter & Gamble, the FMCG giant, is looking to substantially increase the amount of revenue it generates via the internet, and will heighten its digital adspend to help achieve this goal.

Forrester, the research firm, reported that eCommerce retail sales reached a value of $156.1 billion in the US last year, a figure it predicts will grow to $229.1 billion by 2013.

Nielsen also estimates that only one third of Americans currently buy packaged goods on the web, although it forecasts sales levels will see an uptick of at least 20% each year in the short-to-medium term.

At present, online delivers just 1% of P&G’s annual revenues, or $500 million, a total the world’s biggest advertiser hopes to drive to $4 billion going forward.

Lucas Watson, P&G’s global team leader, digital business strategy, said “some categories see as much as 30% to 50% of their business in e-commerce. Our forecasts don’t suggest consumer products will ever work like that.”

Despite this, he argued it is “not out of the realm of possibility eCommerce will be more than 1% of our sales. Getting north of 10% would be an aggressive goal, but somewhere in between that would be, we think, within the realm of possibility.”

The Cincinnati-based company has recently started adding links to the online portals of various retailers to its own brand websites, a programme it now intends to roll out globally.

During the first quarter, the owner of Tide and Pampers also boosted its digital advertising expenditure, taking the medium’s share of its budget to 4%, TNS found, and this did not including all search, video and targeted ads.

“Whether it’s an investment in a banner ad, in a search-marketing ad or in a shopping experience … we will look at all of those and their ability to drive revenue for our company,” said Watson.

“The ability whenever the consumer raises her hand and says, ‘I’m ready to buy,’ to connect her directly to a purchase rather than have her wait and go to a store, we think of it as providing better service,”  he added.

Moreover, Watson suggested marketing mix models have shown digital advertising is providing P&G with a strong return on investment, even though “many people predicted it would not happen that way.”

Printed with permission of the World Advertising Reseach Center

Data sourced from AdAge; additional content by WARC staff, 09 September 2009