The LightLine

A digest of incentive marketing news, trends, research & opinions Vol. II/Summer 2004

Brought to you by The Light Group, Inc.

Welcome to the summer edition of The Lightline, we hope you enjoy these tidbits and encourage your feedback. Simply hit our contact page and let us know what you like, dislike and what you’d like to see in the future.

SALES MOTIVATION: THE DIFFERENCE BETWEEN GREAT AND AVERAGE SALES PEOPLE

Gallup has interviewed more than 250,000 sales representatives, 25,000 sales managers and more than one million customers. They found that the very best performers sell between four and 10 times as much as average performers. They produce significantly greater profitability. They tend to stay at their respective companies longer and develop more loyal relationships with their suppliers and customers. This last point -- customer loyalty -- became even more important as Gallup researched the key factors linked to sustainable business growth. Customer loyalty, it turns out, is a much more important predictor of company growth than customer satisfaction. Satisfied customers will go elsewhere, but loyal customers tend to stick around.

Therefore, developing customer loyalty is increasingly recognized as the most important foundation for ongoing business growth, and the sales force is an integral part of this process. According to Gallup, on average, the top 25% of a sales force generates nearly 60% of a company's actual sales increases. But, this very same group is also responsible for more than 90% of the customer loyalty that is being generated by the sales force.

The point here is that the more loyal you make your sales reps the more sales they will create. What better way to keep them motivated than a well-planned Caribbean getaway. It works every time.

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SURVEY SHOWS TRAVEL AWARDS ARE MORE THAN 89% EFFECTIVE

A recent Maritz Travel Company survey of 2,100 corporate employees who completed an incentive. trip showed that 89% agreed that they kept the travel award in mind while working and 91 % agreed the chance to earn the trip pushed them to work harder.

DID YOU KNOW…
Cash, debit and stored value cards, gift certificates and travel are taxable in an incentive program because they cannot be considered as “tangible personal property” (according to the IRS code 274j) unlike incentive catalog merchandise (on and offline) which has a definitive tangible value.

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RETURN ON INVESTMENT: JUSTIFICATION FOR INCENTIVE PROGRAMS

ROI is the kind of input management needs to justify approval for implementing incentive marketing programs. Here’s a formula you can use immediately. Simply, divide the total gross profit (or projected GP) generated by the program by the cost (or estimated cost) of the program. For example: If a program generates $9 million and GP is 40% of those sales, or 3.6 million and an travel incentive program cost is 400,000 (including transportation, accommodations, entertainment, F&B, on site meetings, trip supervision gifts and consultation) then divide the 3.6 million by $400,000 and you get a 900% return on investment! What company wouldn’t spend 400K to make 3.6Mil?

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RESEARCH SHOWS INCENTIVES HELP WORK FORCE INCREASE A CORPORATION’S MARKET VALUE

Watson Wyatt Worldwide, a Bethesda, MD, based human resources consultant studied 405 public companies and found that a well managed, work force may increase a company’s market value by as much as 30%. Evaluation of staffers was based on how workers were “rewarded” (cash and non-cash) and how flexible and congenial was the workplace environment. A WWW spokesperson said” Human Capital is as powerful as R&D as a link to performance”. The Light Group has always professed: “Incentive marketing is the difference between success and failure."

In a recent study conducted by the Incentive Federation, Westfield, NJ, 82% of the respondents said they used incentive travel and or merchandise rewards as sales incentives. 65+% agreed that incentive travel and or merchandise awards, are more memorable and far more exciting than cash awards.

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Incentive FAQ of the month

Q. Where can I find research studies about incentive marketing as well as educational seminars?

A. Try The Society of Incentive & Travel Executives, www.site-intl.org. They have good stuff.

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For inquiries, comments (may be published) and news items or questions you’d like to see in Lightline contact the Editor at mincentive@aol.com If this newsletter has been forwarded to you and you would like your own subscription visit www.incentivesmotivate.com and go to “contact us” page.

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The LightLline is a publication of The Light Group, Inc. and its associated companies. All rights reserved.

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