The incentive business is booming. One would think the promise of cash is generally incentive enough for competitive salespeople to cross quota finish lines each year. However, businesses invest approximately $1 trillion per year in sales teams, reported the Forum for People Performance Management and Measurement’s white paper: “Making the Case for Sales Incentives to the Tune of 10% ROI.” Incredibly, sales incentive industry research indicates motivational programs such as gifts and trips are more effective than monetary rewards when it comes to companies seeing returns on their collective trillion-dollar investment. In fact, a 2005 study by the Incentive Federation titled “A Study Among Current Users of Merchandise and Travel Items for Motivation / Incentive Applications” found four out of five participants named “travel awards and merchandise” as more memorable than cold, hard cash. Seventy-four percent of those surveyed noted the relative ease with which they were able to generate excitement around a program offering travel versus trying to hustle sales teams with dollars.
As two multimillion-dollar distributors, Glenwood, Minnesota’s American Solutions for Business (ASB) and Cleveland-based Proforma, are on alternate paths to incentivize their ranks—paths granting both companies tremendous success. Even so, Proforma’s founder and co-CEO Greg Muzzillo said: “Travel has a high[ly] perceived value because it incorporates luxury, relaxation and family time.” He also mentioned the popularity of “giveaway” incentive programs, including electronic prizes such as “laptops, iPods and stereos,” and a program offering the winning salesperson 30 seconds to grab what he or she can from warehouse shelves stacked with gifts.
Prizes and contests might push salespeople closer to their quotas, but ASB president and CEO Larry Zavadil believes the highest performance can be harnessed by offering employees a tangible stake in a company’s success. In lieu of dangling the cash carrot in exchange for a lucrative year, ASB has been 100 percent employee-owned since July 2000. And since its founding in 1981—then boasting a sales staff of three and revenue under $1 million—ASB is now an organization employing 550 sales associates, registering $249 million in 2006 sales. Company stock grew in value by 700 percent six years after Zavadil implemented his employee stock option plan (ESOP).