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Found Money
By: Lisa Horn, CAS
Issue: 2010jan
Adding incentives to your product arsenal can help you sell deeper into current clients, reduce competition and boost your bottom line.
Are you leaving money on the table when you walk out of a sales call? While you probably didn’t literally leave a stack of George Washingtons in the conference room as a parting gift, you are essentially walking away from easy money if you don’t talk to your clients about incentives. Every year, more than $32 billion worth of incentive merchandise is purchased, and these dollars are being spent by your customers right now.
“Distributors leave money on the table when they don’t get involved in incentive programs because their customers already trust and look to them for solutions, allowing them to be engaged within organizations,” says Pete Mitchell, director b-to-b sales for Mansfield, Massachusetts-based Samsonite Corporation (UPIC: Suitcase). “In many cases, distributors only have to ask relatively simple questions that might potentially bring a fair amount of business that they don’t have right now.”
Karen Renk, executive director of Naperville, Illinois-based Incentive Marketing Association (IMA), agrees. “Since distributors generally have strong relationships with the customers they serve, there are huge opportunities with their existing client base to expand their sales by helping those companies develop and implement employee recognition programs, safety programs, sales programs and consumer offerings, when appropriate,” she says. “When distributors sell up, they are providing extra value with the services they offer a company because now not only are they servicing the organization’s promotional products needs but they are also helping it achieve additional business goals in areas such as increasing sales, motivating employees and engaging customers.”
Similarities And Differences
One appealing aspect of growing existing business through incentives…the similarities they share with promotional products. Both businesses require services that end users need help doing or don’t want to do themselves.
“End users choose to go to distributors because they can provide services, creativity and sourcing of products that end users simply can’t do or don’t have the time for,” says Mitchell. “The same situation applies with incentives. Since distributors can deal with a wide swath of retail branded suppliers, they create a one-stop shop, or one phone call type of transaction, for both the incentives and promotional products.”
Like promotional products, the incentive marketplace is also a relationship business. Distributors have strong relationships with their promo products suppliers, and they can easily develop the same kind of relationships with incentive suppliers.
But there are differences that must be considered. While the highlight of promotional products is the various ways they can be decorated, incentives are intentionally left blank because the stars of incentive programs are the brands themselves. “Incentives are typically not decorated because participants, the end recipients of the product, are consumers first and they see these brands at retail and aspire to own them,” says Mitchell. “While they aspire to own them, they don’t want them to say ‘Eat at Joe’s.’ And this is a major difference.”
The incentives sales cycle is also different from promotional products—it’s much longer, and the products are typically shipped individually versus the bulk delivery of promotional goods. “From the time you get a call for promotional products and you make a presentation or pitch, it might be anywhere from two to six weeks for a typical order,” says Ken Wittenberg, chief sales officer of Silver Spring, Maryland-based distributor Summit Marketing (UPIC: summit), who has been selling incentives for 27 years. “In the incentive arena, however, the typical order takes on average anywhere from three to 12 months, and this is a very difficult thing for many folks who want to see immediate gratification.”
End users are also more inclined to want proven ROI for incentive programs. “With promotional products, there’s often no ROI attached to them,” says Wittenberg. “It is understood that by branding the company it gets exposure, but it is sometimes rather difficult to measure. The incentive side of the business, however, is much more focused on ROI, and distributors must be prepared to demonstrate an ROI analysis of how the incentive program will benefit the company.”
Mitchell says that we as a marketplace must be able to place quantification on what we do. “For a long time, incentives were never subjected to any type of ROI,” he says. “When you are not subjected to providing ROI, you are no longer seen as an investment, you are a cost—and costs are the first thing to get cut. Incentive programs are investments. Companies invest a predetermined number of dollars for a certain period of time, and some kind of measurable performance comes out the other end. If distributors can’t express incentive programs in these terms, many corporations are simply not going to listen.”
Benefits, Opportunities, Challenges And Risks
When determining whether to add incentives to your list of offerings, you must consider the benefits and opportunities as well as the challenges and risks. Only then can you make an informed decision.
“The opportunities to sell incentives are there, especially when you think of how many corporations in this country employ people who respond to motivation and who react to recognition,” says Norma Jean Knollenberg, CPIM, outgoing president of Incentive Marketing Association and owner/president of Oshkosh, Wisconsin-based supplier Top Brands, Inc. (UPIC: topbrand). “Plus, promotional consultants benefit from the incremental sales to their regular business and increase their overall bottom line. In addition, pursuing incentive sales opportunities with their current customers positions them as full-service companies.”
While the opportunity to expand business with current clients beyond promotional products into incentives is real, distributors shouldn’t expect the sale to be free from challenges. “In the premium business, there is a gestation period from the time the initial fact-finding call is made until the orders begin rolling in,” says Knollenberg. “Accepting this and understanding what goes on in between is certainly not a challenge that can’t be overcome through education and help from premium reps and committed suppliers of branded merchandise.”
Renk says the first step is becoming well versed in the products used as awards in incentive programs. “Distributors must have a clear understanding of how incentive programs work and what type of award choices are best, as one product is not the right award for all types of programs or all types of applications,” she says. “Additionally, they must know how to access the type of awards that are most effective in an incentive program. Arming themselves with information is the first step in being able to provide their customers with these added services.”
Knollenberg agrees and says distributors must do their homework to avoid blowing the sale—and the relationship with the customer. “The greatest risk is that if promotional consultants do not do their homework first and try to sell an incentive program without knowing how to do it correctly, the incentive program can fail,” she says. “Not only does this affect future business with that account for the consultant, it affects the incentive industry negatively as well.”
For distributors who prepare themselves, the payoff not only comes in dollars but also in strengthening relationships with clients. “When distributors become more of a one-stop shop for their customer base, they can not only help clients with their promotional products needs but also with other critical initiatives to help organizations achieve their business goals,” says Renk. “Additionally, as they develop expertise in selling incentives programs, they can expand their overall client base by offering those types of services to new customers as well as their existing customers.”
Selling incentives in addition to promotional products may potentially reduce competition as well. “If you tell clients that you are happy selling promotional products and are not interested in the incentive business, then someone else will automatically get the incentive business,” says Mitchell. “Who knows what this provider will be able to offer the client for its promotional products needs. Customers are hard to find. If you have a relationship with the customer and you don’t sell wider and deeper within the company, sooner or later someone will pick you off.”
Program Components
When delving into the incentives business, it is imperative to understand how programs work and where distributors can contribute to the process. One of the first things to consider are the goals the organization wants to accomplish, such as increasing sales, boosting the quality of work, increasing market share, decreasing absenteeism or instilling better work habits. Once the goals are established, then the program can be designed to encourage the desired outcome.
“Next, you must clearly articulate those goals so the program participants understand what is to be accomplished,” says Renk. “The rules of the program must be developed so participants understand what is expected of them and what they need to do to accomplish the goals. There have to be methods for measuring the performance toward those objectives built into the program. And a communications platform must be developed so the goals and the performance standings are communicated on an ongoing basis to the participants.”
These decisions are typically made by the organization, that is unless the distributor is providing a turnkey solution. While they may not be in the actual decision-making process on how the program works, they do need to understand all program parameters so they can make the appropriate awards choice in the next step. “Keep in mind that awards must be appropriate to the goals of the program and may also need to be items with high perceived value to the participants who are engaged in a program,” recommends Renk.
How do you determine the appropriateness of award items? You must match the appeal of the product to the demographic you’re trying to reach. “There are certain kinds of product categories that do extremely well across all demographics,” says Mitchell. “Everyone likes electronics, for example. Luggage does well because it’s practical. Products you would like to have but wouldn’t necessarily buy for yourself—such as Godiva chocolate or a Movado watch—are also successful.”
Partner Up
Being new to incentive sales, how do you learn what products work in all the different types of incentive programs? Incentives reps.
“Incentive manufacturers reps are knowledgeable about the products they represent, and they have a nationwide network of fellow reps so they know if a particular product was used successfully in, let’s say, a safety awards program,” says Renk. “Additionally, they have many case studies and best practices in developing incentive programs to share with distributors. And, they can help distributors determine what kind of fulfillment plan should be put in place to properly service the incentive program.”
Incentive reps also perform the essential function of being the liaison between the branded product manufacturer and the distributor. “Distributors will have tremendous challenge in dealing directly with all the retail brands because they do not have a common way of coming to the promotional products business,” says Mitchell. “This is why their best friends in the world are the regional representatives that manufacturers hire to sell into those territories.”
And, more importantly according to Mitchell, reps know how to get branded merchandise suppliers’ attention. “They know how to get me on the phone, and they can tell distributors what to say and when to say it in order to get what they want,” he says. “These are things that distributors by themselves would be tremendously challenged to try to learn how to navigate alone.”
And for those who have heard incentive reps try to poach distributors’ clients, this is simply not true. “This is a huge myth that needs to be busted,” says Mitchell. “Typical reps derive 90 percent or more of their business from resellers, and the only end users they tend to deal with are the ones who don’t want to work with distributors anyway.”
Incentives reps are imperative to the sales process—they are the gatekeepers to the branded products and they know what works so they can help distributors look like experts. “Keep in mind that each rep has a certain number of brands that he or she represents,” says Mitchell. “If distributors are savvy, they’ll be calling on two or three of these reps in a given marketplace.”
So how does one find a rep? Check out the Incentive Manufacturers Representatives Alliance, imraorg.net, where you’ll find a database searchable by area code.
Next Steps
Once you’ve done your homework and feel comfortable talking with clients about incentives, where do you begin? “Sales incentives are the No. 1 use of incentive merchandise, so the first step distributors should take is to introduce themselves to the vice president of sales,” says Mitchell. “You want to get introduced around the building. It’s like viral marketing. The way to be successful is to get introduced to as many different functions of their client’s business as possible.”
Wittenberg recommends asking lots of questions. What are you doing to motivate your workforce? What do you do to reduce lost-time accidents? What do you do to keep your employees healthy? What do you do for internal recognition? “These questions prompt a response that will direct you to the right person or right department,” he says.
When distributors ask questions, Mitchell says they become more engaged in the process. “They find out that manufacturing has safety awards or human resources does annual service awards and recognition of outstanding achievers,” he says. “Perhaps the marketing department needs support for everything from product introductions to tradeshow giveaways. If you know more about the management team, you may learn they use incentives for board of directors meetings to senior management retreats. The most important issue is to start asking questions of your client base.”
Economic Impact
Even though the toughest economic days are hopefully behind us, finding new revenue sources is still imperative for survival. Maximizing current client relationships through offering incentives in addition to promotional products is one strategy that can be used.
For distributors who have clients in the consumer products arena, there is great opportunity for incentives sales today. “Traditionally in a down economy, there is an increase in consumer promotions, which we can see all around us,” says Renk. “There are more and more incentives being offered to encourage us to buy products.”
It also appears that companies may be reallocating incentive dollars away from travel awards and more into merchandise. “The Incentive Research Foundation conducted a pulse study, not a scientific study just an informal poll, where it found companies that were typically using travel for award choices in sales campaigns were converting to merchandise,” says Renk.
While many companies have scaled back some of their existing recognition programs and sales incentives, Renk believes there are going to be continued opportunities to help organizations rescale their programs and perhaps make more cost-effective award choices. “In a down economy, however, it is probably going to be more difficult to make a business case for an organization that has never done an incentives program to implement one right now,” she says. “But generally speaking, organizations that have a culture of employee recognition and have recognition programs in place are typically not going to abandon those programs. Incentives are more important than ever in a down economy because there are generally fewer people doing more work. These people must be engaged and motivated. And most importantly, organizations must make sure they’re not going to walk out the door the minute the economy gets better.”
Lisa Horn, CAS, former editor of PPB, is an Irving, Texas-based freelance journalist.
Get The 411 On Incentives
Check out these workshops at The PPAI Expo in Las Vegas. All sessions will be held in the Mandalay Bay Convention Center and are free to show registrants:
Tuesday, January 12
Get In The Game Of Selling Incentives, 8-9:30 am, Lagoon L
Intro To Selling Incentives, 10 -11:30 am, Lagoon L
Principles Of Results-Based Incentive Program Design For Promotional Consultants, 1:30 -3 pm, Jasmine E
Thursday, January 14
An Insider’s View Of The Incentive Business, 7:30 -8:45 am, Breakers D
Immerse Yourself In brand.
Plan your PPAI Expo 2010 schedule to include plenty of time to walk the aisles and visit the exhibitors at brand., PPAI’s incentive products showcase located in the Mandalay Bay Ballroom on Level 2. You’ll come face-to-face with the most sought-after retail brands in the industry and have a chance to speak directly with incentive experts who can answer your questions and share their insights about this growing segment of business. Stop by to learn the tools you need to seamlessly integrate the most in-demand incentives into your current offerings. brand. will be open during regular exhibit hours.
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