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Cash Loses, Merchandise and Travel Win Big

Cash Loses, Merchandise and Travel Win Big

Basic incentive programs involve either merchandise or travel-related awards. The 1999 study sponsored by The Incentive Federation estimates that American businesses spent $27 billion on merchandise and travel for motivational use. For more information on the Incentive Federation study, click here.
Another type of incentive is cash. However, cash as a motivator is an unemotional award. Its value is concrete, and while it could be used to purchase a lifestyle award, most likely it will be charged against a burgeoning pile of bills or deposited into a leaky checking account where it soon ceases to exist. And with the demise of the cash award goes the memory of its origin.
According to an article in September 1995 Potentials in Marketing, it seems that all human behavior stems from one of the brain's two hemispheres: the left, which thinks in rational, linear terms; or the right, which operates in terms of images, emotions, and feelings. When companies offer money as a motivator, they are addressing performance issues from a rational, left-brain point of view. Tangible rewards, however, are often more motivating because they appeal to the right brain, eliciting images.
BI Performance Systems in Minneapolis offers tips to motivate people to their highest performance:
Offer tangible rewards in a way that people can visualize themselves receiving and enjoying them, like riding a new mountain bike or cooking out on a new gas grill.
Provide rewards that are sufficiently enticing to elicit the required visualization. The reward has to be meaningful to the participant or he or she will not pursue it.
Supplement the reward offer with verbal direction and by celebrating short-term successes.

Merchandise vs. Cash

1. In 1994, Goodyear Tire & Rubber Company sponsored an incentive campaign to improve sales of tires. Two groups were formed; one was offered monetary rewards, and the other an equivalently priced selection of merchandise and travel-related rewards. The group receiving lifestyle and travel rewards outperformed the monetary awards group by nearly 50%. This was the first documented evidence that cash, as a motivator, is not as effective as merchandise or travel.

2. In a May 1998 Promo Magazine Special Report, it was noted that LifeUSA attracted new agents and sent sales soaring by abandoning its annual cash incentive program for a more inclusive campaign that gave out merchandise and travel.

Only top-producing agents were included in previous years, so the company built multiple award levels into their incentive program to involve new agents as well as old pros. By the program's conclusion, policy enrollments exceeded LifeUSA's initial goals by 700%. The 10,000 certificates issued were more than twice what the company had planned for.

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