The American Express Customer Service Incentive program was initially implemented a number of years ago to reduce staff attrition in the call centre and create a positive culture around positive reinforcement of actions.  Quarterly performance based awards nominated through the program, are presented formally in front of management and peers at presentation ceremonies.  The program has since been extended to other area and applications.

Strategy:  All customer service reward recognition is delivered through points. Depending on department, the design of the program rewards staff quarterly in the first year of employment, and then half yearly, for tenure by awarding small amounts of points at each milestone.  E-cards have been designed to formally acknowledge a job well done in a positive environment.  A strong communications plan continues to reinforce the specific behaviours American Express is seeking. 

Results:  Employees look froward to receiving additional points and building a points pool to redeem for more significant rewards and in employee feedback surveys have cited the points program to be a driver of employee satisfaction.  Other areas within American Express look to the methodology of rewarding with points and are now using the program to reward for other behaviours, such as sales, completion of training, positive customer feedback etc. and have found the points platform to flexible, fast and an easy way to influence employee behaviours for short term incentives as well as a support to company loyalty.

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Money isn’t everything when it comes to motivating employees to reach targets.

Reward is not the word that comes readily to mind when business trainer Jason Ash reflects on an incentive program offered by a previous employer. “I was with an organization that offered personal development training as a reward for performance, but the downside was that I had to take holiday leave and pay for my own transport and accommodation to undertake the training,” he recalls.

It’s a different with this current employer MRWED Training & Assessment in Caboolture, north of Brisbane.

MRWED – named as one of the top places to work in 2009 by BRW – has introduced a “frequent flyer” style of incentive scheme that enables employees to accure points when they achieve certain milestones. The points qualify them for rewards such as extra days off, plasma televisions and a free day at the spa.

Ash says he prefers such rewards to cash bonuses. “There are times when money isn’t everything. I’ve got a young family and I can use points I accrue to win time off and take a family holiday. The program gives us [employees] the opportunity to work towards a particular goal that’s important to us.”

MRWED, which offers certificate and diploma courses for vocational and workplace trainers, introduced its reward program this year. Employees receive a set number of reward points when they reach performance indicators that they negotiate directly with their employer. Once accrued, employees can redeem the points for their preferred reward.

MRWED founder Marc Ratcliffe says he introduced the program to acknowledge the contribution of staff to the success of his business.

“Without them we don’t have a business. It also recognizes that everyone has their own individual tastes, preferences and wishes,” he says.

“The benefit for staff is that they are working towards something they really want. For the business, the benefit is a highly engaged and focused workforce going above and beyond to achieve the set goals.”

Ratcliffe says many companies reduced their spending on professional development in 2009, but with the economic recovery under way companies will need to review their strategies for attracting and retaining the best staff.

“Predictions of growing competition for staff this year will force business to take action or lose employees,” he says.

Growing competition in a resurgent economy also heightens the need for companies to boost the performance of their employees.

Dominic Toledo, Australian general manager of United States-headquartered rewards company, The Mint Organization, says reward programs provide employees with incentives to achieve performance levels in a range of areas. They include productivity improvements, loyalty, cost reduction, professional development and, most commonly, sales performance.

Toledo says non-cash, tangible incentives are more likely to motivate employees to achieve sales targets and business improvement objectives than cash. “We you ask someone to choose between cash and non-cash rewards, the majority of employees will request cash because they have more familiarity with cash [as a basis for remuneration],” he says.

We advocate the use of non-cash rewards because they are more likely to emotionally engages people. We find that when organizations use cash bonuses employees tend to view them as part of their salary and don’t have the same emotional commitment to achieving behavioural change.”

Written by: Leo D’Angelo Fisher, BRW Magazine, April 1-7, 2010

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You’ve come to this page wondering how to improve sales, increase margins, improve performance or morale… recognize and reward your employees, attract or retain customers or implement a sales incentive program.

Or perhaps your current Sales Incentive Program is not meeting your goals, or the Return On Investment of your current Sales Incentive Program has caused you to look elsewhere.

There are several important keys to creating and implementing a successful Sales Incentive program…

Key Point #1

Sales Incentive Program buy-in is important from your employees, but only after the basic program concepts have been determined by you. In other words, it is unlikely a Sales Incentive program based upon an employee survey will be successful in meeting your recognition program goals.

WHY???  Simple… everyone* prefers cash, but industry studies show that cash is a poor motivational tool and oftentimes a very problematic type of program to undertake and sustain. Also, as industry surveys show, top producers are not motivated by cash.

Peer and management recognition, using merchandise and travel are the primary motivation drivers, and most preferred and beneficial to companies, in terms of Residual Motivational Value.   

Cash is the least effective method of rewarding or recognizing employees within a Sales Incentive Program.  Specifics of an industry study which detail statistical disadvantages of cash-based Sales Incentive award programs are found here:  Incentive Industry Survey

Here are a few highlights from the survey:

Question: Agree or Disagree? Most people think of cash as a part of their total remuneration package.

Answer: Nearly 3 of 5 respondents (57%) agree that a cash payment is perceived to be part of an employee’s total remuneration package.

 —————————————————————————————————————————————————————————–

Question: Think about your experience with cash awards, merchandise awards and travel awards.  Which is remembered the longest?  Which would be remembered next?  Which would be remembered for the shortest time?

Answer: Over half of the respondents perceive that travel is remembered longest (57% agree), merchandise is remembered next longest (52% agree), and cash is remembered for the shortest time (58% agree).

 —————————————————————————————————————————————————————————–

Question: Agree or Disagree?  People prefer merchandise or travel because it is something they would not get for themselves.

Anwser: About 3 of 5 respondents (61%) agree that they can build a more exciting, memorable program around travel than around cash.

 —————————————————————————————————————————————————————————–

Question: Agree or Disagree? You can build a more exciting and memorable program around travel than you can cash.

Answer: Slightly fewer respondents (48%) agree that that they can build a more exciting, memorable program around merchandise than around cash.

 —————————————————————————————————————————————————————————–

Question: Agree or Disagree? Bonus payments are often looked on by employees as something they are due.

Answer: Slightly more than half of the respondents (51%) agree that employees often look at bonus payments as something they are due.

——————————————————————————————————————————————————————————

Question: Agree or Disagree? Bonus payments can have a negative impact if they are not paid or are not large enough.

Answer: Nearly 7 of 10 participants (68%) agree that bonus payments can have a negative impact if they are not paid or are not large enough.

——————————————————————————————————————————————————————————

Question: What is your title?

——————————————————————————————————————————————————————————

The bottom line: 50% of employees who receive cash sales incentive awards in the proceeding year either do not remember what they used it for, or used it to pay down credit card debt.  While everyone wants cash, it is seldom used, or remembered as an award.

Now, as an example, lets look at merchandise (specifically on-line merchandise award programs) or sales incentive programs utilizing travel awards. I often say to prospective clients, who usually have had some personal successful sales experience – think back…  remember the times you received cash?  Can you even remember what it was for?  Now think about merchandise awards…I’ll bet you not only remember what you got it for, but have fond memories of receiving and using iit, hoping to earn similar awards in the future!

Key Point #2

The point is, there’s a scientific reason for the success of Sales Incentive programs which utilize travel and merchandise:  It’s the BRAIN, or more precisely, how the brain functions!

Research shows that the way the brain processes information is responsible for non-cash rewards having a greater impact on people than cash awards. Offers of non-cash rewards are visualized or imaged by the right hemisphere of the brain. Such images or mental pictures trigger emotional responses which can be quite powerful.

Conversely, offers of strictly monetary rewards are processed by the left hemisphere, which lacks the ability to create images. When a monetary offer is received, the brain’s left hemisphere assesses the information and determines whether the offer is sufficient, relative to the time or effort required to earn it. The emotional response is what drives behavior, not rational thought. With cash, its reduced to one issue – simply how much.

Got it?  Here’s the basic equation:
Cash = Left Brain: (analytical Side)= How Much $$$?
Merchandise and Travel = Right Brain: (Emotional Side) = Fantasy

That’s why Sales Incentive award programs utilizing merchandise and/or travel awards are 3X (Three Times) more effective than recognition programs using just cash rewards, as shown below in figure 1.

Key Point #3

“Take as much as you want, just clean your plate”.  Did you get that as a kid?  I did… the key here is that from our youngest years, most of us are taught NOT TO BE WASTEFUL.  This translates to – “Hey, if you get a cash award, spend it wisely… constructively… don’t waste it on toys or vacations when there are more pressing things that need attention… that new roof, or pay down some credit cards, for example. Figure 2 below, demonstrates that over 70% of respondents feel that purchasing a merchandise or travel award, such as those typically offered in Sales Incentive on-line award programs, would not be a justifiable expense, per figure 2 below.

Voila!  Using cash to reward??? Hello new roof, goodbye Incentive Motivation!

Key Point #4

Do not lightly undertake any Sales Incentive program.  Talk to experts first.  Once you start a cash or gift card program, it’s very hard to take it away – and nearly aLL companies who are giving cash awards – sooner or later – wish they hadn’t gone down that road.

Many companies find out the hard way, once they’ve begun a cash-based Sales Incentive Program and realize it was a mistake, and employees perceive the change as a negative, take-away move, even if they’re moving to a more exciting program with great award selections.  It takes time… and we can help.

If you choose to go it alone, our advice is to work to slowly wean off a cash program over a period of 3 years. Structuring the change carefully makes it easier to swallow for your employees.  Replace it with a meaningful merchandise and/or travel award program, including group or individual travel options.  One of the key points is, whatever you do, you need to communicate your appreciation.

For more info on structuring a successful employee recognition program, talk to us first: corporatesolutions@i-points.com.au

By: Wayne B. Hodges
Senior Vice President
Co-Founder World Incentives

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Despite the fact that organizations spend over $100 billion annually on incentive programs, many business people question their effectiveness. Now, a ground-breaking study proves that incentive programs can boost performance by anywhere from 25 to 44 percent, but only if conducted in ways that address all issues related to performance and human motivation. The study found that most organizations lack the knowledge or will to create properly constructed programs that yield desired results.

The Incentive Federation determined that in any given year organizations spend approximately $27 billion a year on merchandise and travel incentives. Cash incentives included, the total exceeds $115 billion.

Numerous researchers have studied the impact of incentives and related programs for at least 100 years without establishing a clear consensus among business circles as to whether or not incentive programs deliver measurable and meaningful performance results. “Incentives, Motivation and Workplace Performance: Research & Best Practices,” conducted by researchers for the International Society of Performance Improvement, and funded with a grant by the SITE Foundation, was designed to analyze the complete body of scientific research on incentive programs, determine what if any research-supported conclusions exist as to their effectiveness and the circumstances under which they can succeed, and to benchmark these findings with actual business conditions through surveys and interviews with business executives whose organizations use incentives.

The study was designed to help answer four questions: Do incentives increase work performance (and under what circumstances)? Which incentive programs are most effective? What types of organizations need incentives? And what model best expresses how to select and implement successful programs?

The study yielded surprising evidence about the effectiveness of incentive programs and the elements behind success. Some of the key findings include:

• Incentive programs improve performance. Incentive programs increase performance by an average of 22 percent. Team incentives can increase performance by as much as 44 percent.

• Incentive programs engage participants. The research found that incentive programs can increase interest in work. When programs are first offered for completing a task, a 15 percent increase in performance occurs. Asked to persist toward a goal, people increase their performance by 27 percent when motivated by incentive programs. When incentive programs are used to encourage “thinking smarter,” performance increases by 26 percent.

• Incentive programs attract quality employees. Organizations that offer properly structured incentive programs can attract and retain higher quality workers than other organizations.

• Longer-term programs outperform short-term programs. The study found that incentive programs that run for a year or more produced an average 44 percent performance increase, while programs running six months or less showed a 30 percent increase. Programs of a week or less yielded a 20 percent boost.

Source: The International Society for Performance Improvement

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The increasing cost of employee benefits and the shortage of qualified and skilled resources are the two biggest global human capital challenges organisations believe will impact them in the next three years, according to findings of Aon Consulting’s 2008 Benefits and Talent Survey.

Given the current economic climate, finding a way to improve the value of employee benefit programs without a significant increase in costs is a major hurdle for corporations in addressing these challenges.

Recognising this, organisations should change the way they approach employee benefits to maximise the value to their employees. Below are key factors for success for any employee benefits program.

Keys to a Successful Employee Benefits Program (EBP):

• Partnership approach with supplier: Be selective, ensure your supplier is not only delivering value to your employees but also to your company.

• Cover all the key benefit areas: A comprehensive EBP must address lifestyle, financial and health and wellbeing benefits. Education on key benefits is also critical and EBP should actively support the work/life balance of employees.

• Build in flexibility to adapt to existing and future needs: Program should interact with existing benefits, eg. super, employee assistance program, share plan. Allow for future changes or additions to the benefits. Brand the EBP – it’s yours after all.

• Communicate effectively and frequently: Engage employees on the program with a well planned communication and education strategy. EBPs work best when employees are fully aware of what is available to them and the value of the benefits on offer.

• Actively manage the program: Appoint a program champion within the company. Monitor usage and trends to measure return on investment. Regularly enhance EBP to ensure ongoing relevance.

Source: Aon Consulting Australia

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“Used astutely, taking part of your salary in benefits can bring excellent savings on tax.”

Adrian Lister is a deputy principal of a government high school. These school holidays the Lister family is touring a remote region of Western Australia in the four-wheel-drive he packages as part of his salary.

Sales manager Miles Williams recently moved from Perth to Sydney for work. Because he is living away from home, he is able to salary package his rent payments for up to two years tax-free. He also packages income protection insurance and his airport lounge membership.

There’s a common belief that salary packaging is a tax perk for high flyers but the reality is more down to earth. A director of packaging specialists McMillan Shakespeare, Anthony Podesta, says more than 50 per cent of people who lease a car through their employer earn less than $75,000 a year.

Salary packaging allows you to take a portion of your total remuneration in the form of benefits such as superannuation or a car. This in effect reduces your pre-tax salary; you pay tax on the reduced amount and, provided you’ve chosen your benefits wisely and structured your package correctly, you should end up with more money in your pocket after tax.

A senior tax adviser with packaging specialist SmartSalary, Simon Ellis, says administrative costs tend to limit salary packaging to medium to larger companies and the public service. “Some of the best salary-packaging benefits are only available to people who work for public hospitals and charities,” he says.

Employees of public hospitals can package up to $9000 of their everyday costs – from mortgage repayments to groceries – from their pre-tax salary without incurring fringe benefits tax (FBT). This enables hospitals to better compete with salaries in the private sector on an after-tax basis. Employees of charities fare even better – they can salary package up to $15,000 of their everyday costs tax-free.

For everyone else, salary packaging is limited to a defined menu of benefits. Super and cars are the most popular items, followed by a range of industry and job-specific items. Mining companies might offer remote-area housing benefits while Queensland Government workers receive electricity concessions.

“Understand the industry you work for, what you’re eligible for and what your employer offers,” Podesta says. Where salary packaging is available, it’s important to select only those benefits that you would ordinarily pay for out of after-tax income. And even then, make sure the numbers stack up for your individual circumstances.

“There’s no point packaging a car if you don’t need it,” says a tax partner at Ernst & Young, Paul Ellis. He says people need to pay careful attention to the administration of their salary package. “ATO auditors are looking at whether salary packaging is properly documented and implemented. Sometimes the documentation is too loose,” he says.

CARS

Cars are the most popular packaged benefit, even though the substantial reduction in marginal tax rates in recent years has reduced the financial rewards. Even so, Podesta says employees on salaries of about $45,000 and above still have the potential to benefit. Podesta estimates that someone on a modest salary driving a modest Australian or imported vehicle 20,000 kilometres a year would be better off by about $3000 a year after tax.

The Tax Office formula for working out the packaging value of a vehicle depends on the cost of the vehicle multiplied by the annual kilometres driven. The further you drive, the less FBT you pay. Podesta says an expensive car driving low kilometres would end up costing a fortune in fringe benefits tax. While the employer pays the FBT, they generally deduct a similar amount from the employees after tax.

Ironically, the runaway popularity of this tax perk could throw a spanner in the works. The Henry Tax Review is checking under the bonnet and industry insiders believe there could be some tinkering with the tax formula in future. “There has been a lot of pressure from green groups to amend the concession because [under the current system] the more kilometres you do, the more you save,” Simon Ellis says.

The most common method of packaging a car is a novated lease, where you choose your car and your employer pays the monthly lease rentals on your behalf. The lease, running costs and FBT are deducted from your pre-tax salary, leaving you with less taxable income, a lower tax bill and more take-home pay (see table below).

Under the employee contribution method you pay an amount from your after-tax income towards the cost of the car. “This allows you to pay FBT at your marginal tax rate [rather than the standard FBT rate of 46.5 per cent],” Paul Ellis says. If you earn less than $180,000 and hence pay less than the top marginal rate of tax then Paul Ellis says it often makes sense to make after-tax contributions for a salary-packaged car and car parking because they are taxed at concessional rates.

The key to gaining the most benefit from packaging is to choose the car you would buy if you were paying for it yourself. That might be a station wagon, a 4WD or a second-hand car. You can even package a car you already own. “You can sell your car back to your employer through a novated lease, get $20,000 back [for example] and pay off your mortgage then lease the vehicle back. It frees up cash flow and it’s tax effective,” Podesta says.

A tax partner with Deloitte Touche Tohmatsu, Elizma Bolt, says there is growing interest in packaging a car owned by the employee’s spouse. Called an associated lease, this allows a portion of the employee’s income to be redirected to the spouse, reducing the employee’s tax bill and saving the spouse car-related costs.

Despite the benefits of salary packaging a vehicle, there are potential pitfalls. Because it locks you into a medium-to long-term contract it can create problems if your circumstances change. If you lose your job or break the lease for any reason you must pay out the residual on the lease. Podesta says employees without job security should consider redundancy insurance to cover their vehicle.

SUPERANNUATION

Ellis, from Ernst & Young, says younger people generally don’t pay as much attention to super, especially now that the amount that can be effectively salary sacrificed has been reduced. Miles Williams, at 31, admits he has other priorities. “I use salary packaging to get tax benefits now, not for retirement purposes. At the moment there are other things I’d rather be saving for, such as buying investment property,” he says.

Employees aged 50 and over can contribute up to $50,000 a year to super from their gross salary and pay tax at the concessional rate of 15 per cent rather than their marginal tax rate. Younger employees can contribute a maximum of $25,000 at the concessional rate.

Hence, a 45-year-old on a salary of $100,000, whose employer pays super guarantee payments of $9000 a year, can only contribute an additional $16,000 a year ($25,000 minus $9000). If you inadvertently contribute more than your concessional limit you will be taxed at the top marginal rate of 46.5 per cent, including the Medicare levy, for any excess instead of the 15 per cent concessional tax rate.

“Sometimes people are not cognisant of changes to the super rules so they are sacrificing above their limits,” Paul Ellis says. “[This oversight] won’t crystallise ’til they put in their tax return at the end of the tax year and they will end up with a higher tax bill.”

GADGETS, LEISURE AND LOANS

Paul Ellis says the ability to package a laptop has reduced significantly since the rules were tightened last year. Now you can only package one laptop a year and it must be primarily for work-related purposes. However, there is still a wide range of items available for professional employees.

Mobiles, airport lounge membership, BlackBerries and other communication devices, taxis to and from work, in-house childcare and in-house gym memberships are still popular. “For generation Y there is not as much emphasis on owning vehicles – they are more inclined to use taxis,” Paul Ellis says.

Employees can also package shares in the company that employs them. The Federal Government has tightened up the rules and legislation is still pending but Paul Ellis says up to $1000 of shares is tax exempt, plus a further $5000 worth can be taken on a tax-deferred basis. This has effectively ended the once-common practice of salary sacrificing an annual bonus into a deferred share plan. Employees can also package up to $1000 worth of in-house benefits exempt from FBT. For example, if you work for a manufacturer of electrical goods you can package $1000 of their products tax-free.

One benefit that has been gaining traction recently is salary sacrifice of leisure facilities, such as apartments, where you lease the accommodation for your annual holidays. “The ATO seems to accept only half the value of that [leisure facility] is subject to FBT,” Paul Ellis says.

The remaining half is taxed at the corporate rate of 30 per cent. That means an executive on the top marginal tax rate comes out ahead by packaging the cost of the apartment. “It’s an evolving area and there’s some testing of the borders,” he says.

Preferred vehicle for savings

When Robert Tarabay’s employer, State Transit Authority NSW, introduced salary packaging for its employees, he grabbed the chance to upgrade his car. At that time he was driving a second-hand sedan and found it impossible to take his three daughters — plus luggage, prams and other items — on holiday.

Six years later, he is on to his second three-year car lease and is driving a seven-seat four-wheel-drive with plenty of room for his growing family. “We do more than 25,000 kilometres a year to reduce the fringe benefits tax and we’ve got the freedom to travel. There are consistent deductions from my salary — fuel, rego, tyres and maintenance are all covered — so there are no unexpected expenses,” he says.

Now they drive to Queensland most Christmas holidays to visit family and are about to head off to the Hunter Valley. Tarabay says he isn’t financially better (or worse) off after packaging his car — he’s used the opportunity to upgrade to a better vehicle than he could otherwise afford, at no extra cost. While his employer offers salary sacrifice into super, at this stage of life he has other priorities. “We’re focused on taking the kids out, sightseeing …having a good time while they’re learning,” he says.

Salary packaging nuts and bolts

Under salary packaging, or salary sacrifice, employees receive part of their salary in the form of benefits, such as the use of a car for private purposes. You receive a reduced salary plus benefits but only pay income tax on your reduced salary.

Your employer may be liable for fringe benefits tax (FBT) — at a rate of 46.5 per cent — on the benefits you receive and reduce your salary by an equivalent amount. Portable electronic devices, computer software, protective clothing, a briefcase and tools of trade are exempt from FBT provided you use them primarily for work and you only claim one of a certain type of item a year.

If the total value of your fringe benefits is more than $2000 a year, the full taxable value — referred to as reportable fringe benefits — will be recorded on your group certificate. You won’t be taxed on these but they will be used to work out the Medicare levy surcharge, superannuation rebates and deductions, the mature-age worker tax offset, child support obligations, higher education loan program (HELP) repayments and income-tested government benefits. You can make employee contributions out of your after-tax income towards the cost of benefits and reduce any reportable fringe benefits.

Source: Australian Taxation Office

CASE STUDY: John earns an annual salary of $100,000 and wants to know if he could stretch his take-home pay further by salary packaging his next vehicle. He wants to buy a $40,000 car and estimates he will drive 20,000 kilometres a year. John would be $2983 better off salary packaging his car and $3954 better off if he makes an after-tax employee  contribution towards his salary package.

PACKAGE COMPARISON
                                                     No Packaging                     With packaging               With packaging
                                                                                              (no employee                 (with employee
                                                                                               contribution)                     contribution)
Gross salary                                     $100,000                           $100,000                              $100,000

Less: Car lease                                    -                                      (12,000)                              (12,000)
Car running costs                              -                                           (3,000)                                (3,000)
FBT paid by employer                     -                                              (7,679)                                        -
Plus: After-tax employee   
   contribution                                     -                                             -                                       8,000
Less: GST                                          -                                           -                                          (727)
Taxable salary                                100,000                               77,321                                    92,273
Less: income tax                             (27,850)                            (18,778)                                   (24,759)
After-tax income                               72,150                               58,543                                    67,514
Less: Car lease (incl GST)                 (13,200)                                  -                                               -
Running costs (incl GST)                      (3,300)                               -                                                -
Employee contribution                           -                                         -                                         (8,000)

Total disposable income                        $55,560                          $58,543                                 $59,514

SOURCE: SMARTSALARY

Written by: Barbara Drury, Sydney Morning Herald, October 7, 2009

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For years end users have been rewarded for remaining loyal to certain brands and companies with reward programs. Now vendors are realising that resellers are just as important in this process and offering them programs to keep their business.

It’s no secret that the printer consumables market is very a competitive one and according to Penfold’s Research in 2007, of the $11.81 billion that the office products industry represents around $2.5 billion of that accounts for computer consumables- over 20 per cent of the total market. Considering the number of OEMs, distributors and sub-distributors that are inthe channel, vendor’s have had to come up with new ways of keeping customers loyal and it would seem that reward programs are the plat du’jour. Like them or loath them, reward programs are here to stay especially considering that they are present with in most industries today including airlines, supermarkets, car parts and of course credit cards.

In August of last year HP launched its`Supplies Rewards’ program for resellers who purchase genuine HP consumables. “This program was set up in an attempt to get resellers, no matter what their size, involved with HP,” said Jason Su, HP South Pacific market development manager. “We also have our `Supplies Channel Health’ program which is open to resellers who purchase in excess of $100,000 per year but with this new program it has opened up avenues to smaller players which is fantastic for us.”

This program was intended to run for trial period for six months but Su stated that due to the popularity of the program, the vendor would keep it running for a lot longer than that initial period. “Since we launched the program the number of resellers that have signed up have been higher than expected and the responses that we are hearing are very positive. The program is free and it offers our resellers something for nothing, which in this day and age is a huge bonus. We have really focused on offering members, top quality lifestyle orientated products and vouchers,” said Su. “By providing quality prizes at the lower end of the price scale as well as excellent products at the higher end, the program offers something for everybody but the trend that we are seeing however is that members are saving their points to get a high end prize.”

Another relatively new program around is Lexmark’s STAR (Supplies Target and Rewards) program, which was unveiled on 1 July last year. In a statement released by Lexmark, it says that the company is focused on offering resellers the “best possible deals including access to exclusive promotions, use of the Lexmark authorised supplies partner logo and special pricing”. The goal of this program is to broaden the distribution of Lexmark genuine supplies, there by offering customers greater choice when purchasing.

While some manufacturers are unveiling programs others are looking at how their program can better serve its customers which sees Brother making changes to its current scheme. The `At Your Side’ program is currently under going a little bit of a face lift so that going forward it will be able to offer members of its program a little bit more. “At the moment we are looking at ways to help resellers combat things like Fringe Benefit Taxes and offer cash awards that may help with the running of their business,” says Heidi Webster, Brother’s marketing specialist IT and Office Products.

“At the moment the program is available on purchases of our laser categories and acouple of labelling lines, and we are finding that our resellers are happy with the current arrangement.” The way that the Brother program differs in relation to others is that is more an incentive based program that rewards resellers on their sales. Given three months to reach their goal, resellers can then claim their award and also go into the running for a major quarterly prize, an incentive inside the incentive. As Brother just celebrated its 100th birthday the last prize draw saw 10 lucky people head off on a five-star holiday to Japan.

“We set targets for our members to reach, which to be honest are extremely obtainable, and that way we make sure that when they are selling products our brand is fresh in the mind of the sales person. Although it is a reward there is still that responsibility there that the job has to be done as well. Yes the rewards are there if targets are met but if you fail to reach the goal then you lose whatever points you have and have to start again. We find that this is a good way to keep resellers motivated and the redemptions that are available are all excellent prizes that sell themselves.”

But it is not just manufacturers that are getting in on the act, some distributors have also come up with their own rewards program which reward customer loyalty rather than brand loyalty. Melbourne based distributor Tonnex launched its program, Reseller Rewards, in February 2007. Currently there are over 1000 dealers signed up to the program with many more to come, especially after a recent deal with the Office National group.

“Our program was launched to reward our customers no matter what brand they purchase,” said James Rendell, Tonnex’s national marketing manager. As one of the first rewards programs in the industry, Tonnex has used it to benefit members in many varied ways from promotions to the issuing of bonus points.

Warrick Hosking of Newsxpress with his Bosch Hot Air Gun thanks to Tonnexs' Reseller Rewards.

“The key for us was simplicity and value. If a customer has to spend $1 million to get a set of golf balls then they are not likely to be motivated. Likewise if they have to put in too much effort to participate then this again is less than inspiring. It must be achievable, it must be engaging, and it must be attractive,” Rendell says.

“We have tried to cater to everybody’s tastes by including everything from homewares to push bikes to power drills and kids toys. But by really focusing on the type of rewards that we offer, the reseller is certainly getting more for their dollar with our program.”

Not all vendors though are sold on rewards programs, with many still believing that offering excellent products at excellent prices is a better way to do business. A spokesperson from Ricoh said that while it can understand how programs like rewards can be attractive to resellers, the company was happy to continue dealing with resellers and concentrate on offering better rebates.

Another manufacturer that shares this belief is Epson. Mike Pleasants, director of marketing communications at Epson said, “Epson provides incentives and rewards to resellers who buy consumables direct from Epson. These are negotiated individually with each reseller. Epson has no generic reseller rewards program.”

So with all of these programs and many more out there, what advantage do they offer resellers when it comes to using the points or awards accumulated? Richard Brown of Rosebud Stationery and Office Supplies on Victoria’s Mornington Peninsula says that being able to pass on prizes to performing staff is an excellent way to keep them promoting the products.

“If my staff are aware that if they sell more of a particular brand there is a chance that the incentive on offer will be a worth while one receiving. It can motivate them (the staff) which in turn can only help business. The other use that we get from these programs is that we can leverage the points to use in a promotion to our customers. If we can promote that if you buy your products through us then you have a chance at winning something like a flat screen TV, then there is definite value in using the programs.”

The idea of getting something for nothing these days is an attractive one, especially considering economic climate in which we are in. One thing remains clear though, and that is that resellers are certainly better off with these programs in place. The added competition vendor’s face when it comes to promoting their product has forced them to generate ideas that can benefit the dealers out there. Even as things start to slow down the prospect of getting a reward could just be the tonic that it needed to give a business a little push back on track.

Ref: 46255474 Copyright Agency Limited (CAL) licenced copy

Stationery News

January, 2009

Page: 16

General News

Region: National

Type: Magazines Trade

Monthly

The program was launched to recognise the tenure of all consumer and business customers (over 2 million) by rewarding the customer with their choice of gift. The gifts were sourced and developed inline with the pre-determined tier.

Customers are sent an SMS/email or DM directing them to the tailor built client website where they insert their mobile phone no and special password. This directs them to the relevant tier based on the above criteria where they have a choice of about 15 items from merchandise, experiences, vouchers and magazine subscriptions. The website then takes their order and that file comes through to Pinpoint daily.

There are different tiers depending on the profitability of the customer. We also chose rewards that has a strong brand fit but broad enough to appeal to over 2 million customers.

All rewards are sourced and fulfilled through Pinpoint where each reward is our client branded with the use of various sized “belly belts” plus a personalised postcard thanking the customer for their custom.

The SLA’s for delivery are very fast – customer will receive their reward within one week (Australian wide delivery – times depend on geographic location)

Initial response by customers has been extremely positive.. Most customers denote tenure as the mark of loyalty.

Pinpoint won this tender because of our experience in the customer loyalty area, our breadth of products, our fulfilment capabilities and our efficient processing and despatching ability.

For more information about Pinpoint sales & channel incentive programs, employee recognition & rewards or customer loyalty programs

call 02 9352 3888or email us