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The best way I know to mess up a great promotion is to offer a Sales Incentive that is out of balance with the sale. For instance, an incentive package that has a perceived value of $1200 does not work with a $200 sale. It's just too good to be true! As a rule of thumb, the perceived value of a sales incentive should be between 25% and 40% of the value of the merchandise or service. How do I know that? Well, over the last 20 years I’ve been creating Sales Incentive Programs using everything from travel certificates, to electronics products, to major retailer and restaurant rebates. I helped just about any type of company sell pretty much any kind of product or service. I have to admit, I’ve been tempted to lead with my best card many times but my experience has taught me that this is not how you win the game. You see, an incentive should be just that. Something that helps people to make a decision that they are leaning towards but for some reason they just can’t commit. When the incentive becomes the most important reason for making a purchase, there is something wrong with the promotional idea in the first place. I’ve had customers that were sitting on inventory that just wouldn’t sell because there was no demand for it any longer. We looked at adding something to sweeten the deal but the truth was the customer still didn’t want the item. Most of the time, if you want to run a promo, selecting a more desirable item will be far more profitable while building long term customers through product satisfaction. If you just want to dump inventory, try EBay! One of the biggest problems with using incentives is the tendency of salespeople to overstate the value of the incentive thinking this will help them make a deal. If you have invested in a good incentive program, overstating the value will actually work in reverse. Smart customers will shy away because it doesn’t set well with them and the gullible ones will be pretty upset when they find out there were deceived. You know, if an incentive isn’t really worth anything, it won’t be much of an incentive. Every now and then I get a customer who is just plain cheap. They want something that looks great but they don’t want to pay anything for it. I can design incentives to meet pretty much any budget but, as the old saying goes, “You can't make a silk purse out of a sow’s ear”. A well designed incentive program will cost far less than the perceived value of the incentives. Still, If you do not want to invest in your incentive program, don’t be surprised if your customers don’t want to invest in your products. So, if you are thinking of a new promotion using sales incentives, here are 3 tips for success:
- Pair the incentive with a premium product, not a loser.
- Keep the perceived value of the incentive below half the value of the product.
- Don’t exaggerate the value of the incentive.
Tags: incentives, motivation, profitability, promo, rebate certificates, rewards, sales incentives, travel certificates
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